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Uchumi fights off eviction in Buru Buru branch row

Uchumi Supermarkets  is facing eviction from
Uchumi Supermarkets is facing eviction from its flagship Buru Buru branch in Nairobi after failing to pay rent for 28 months. FILE PHOTO | NMG  Uchumi Supermarkets

Cash-strapped retail chain Uchumi Supermarkets is facing eviction from its flagship Buru Buru branch in Nairobi after failing to pay rent for 28 months.

Uchumi occupies the ground floor of Fairlane Centre in the heart of the Buru Buru Estate shopping centre.

Fairlane Supermarkets Ltd, which owns Fairlane Centre, wants the High Court to allow for Uchumi’s eviction after the Nairobi Securities Exchange-listed retailer accumulated Sh27.7 million rent arrears.

An eviction would mark yet another low for Uchumi, which for a long time was the only major retail brand in Buru Buru before the entry of Tuskys and Naivas.

30 branches

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The debt-ridden retailer has closed more than 30 branches over the past three years amid a biting cash crunch.

“Uchumi ceased all commercial activities at the premises in November 2018 yet refuses to yield possession back to Fairlane Supermarkets Ltd,” said lawyer Joe Murage, representing the landlord.

He told the court that Uchumi has continued to invoke High Court orders issued on October 2, 2018, in a separate insolvency petition, as justification for its breach, further stopping Fairlane Supermarkets Ltd from evicting it from the premises.

The building that Uchumi has refused to vacate is charged to Standard Charted Bank for a loan of more than Sh100 million, which the lender says it intends to call up.

“Fairlane Supermarkets Ltd stands to lose ownership of its property at auction, owing to the massive loan and Uchumi’s failure to pay rent for 28 months,” argues the landlord.

No justifiable reason

“There is no reason justifiable or at all, for Uchumi to remain in possession of the premises if it ceased all operations and/or commercial activities thereat.”

In April, Uchumi announced that it had concluded the handover for its Nairobi West branch to a franchisee.

Under the agreement, Uchumi will earn royalties for the use of its brand.

Fairlane Supermarkets Ltd has also sought to be enjoined as an interested party in an insolvency petition earlier filed against Uchumi by Githunguri Dairy Farmers Co-operative Society.

Uchumi is currently facing several insolvency petitions from aggrieved suppliers.

It is believed to owe suppliers Sh3.6 billion, with another Sh2.5 billion debt being claimed by banks that have charged assets against a total asset base of Sh6.1 billion.

There have been attempts to assist Uchumi regain its footing in the retail sector, but little has been achieved so far.

Anchor tenant

The landlord argues that the space currently occupied and unutilised by Uchumi is meant for an anchor tenant to attract foot traffic for occupants of the remaining space in the building under dispute.

“Uchumi has been using the orders granted on October 2, 2018 as a shield from meeting its rental commitments and a spear against Fairlane Supermarkets Ltd’s right to its properties as enshrined in the Constitution.”

Uchumi has been directed to respond to the application filed by the landlord before the hearing of the case slated for July 11.

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