Bank sues Nakumatt to recover Sh119 million loan

NAIROBI, KENYA: Woes of debt-ridden Nakumatt Holdings Limited continued to escalate on Monday after United Bank of Africa (UBA) sued it to recover Sh119 million unpaid loan.

The bank moved to High Court seeking to sell Parkview Shopping Arcade to recover its dues even as the retailer’s recovery got complicated with the possibility of Tuskys Supermarket backing out from the deal.

UBA wanted to auction the Sh600 million mall on Monday (today). However, Justice Fred Ochieng’ offered Nakumatt a temporary reprieve by stopping the sale until he delivers a ruling on May 9.

UBA told the court that it has served Mike Mwiruri, an assistant to Nakumatt CEO Atul Shah the intention to sell the building since it does not belong to the troubled retailer.

In the court papers, UBA said that Parkview guaranteed Nakumatt a loan of Sh250 million and Sh119m was still outstanding. It therefore wanted to sell the property to recover the sum.

However, Nakumatt lawyers opposed the sale arguing that the notice to sell was served to Nakumatt and not Peter Kahi who was appointed by the court as the administrator in January.

“UBA bank attended creditors’ meeting and Fred Chumo was their representative. They ought to get consent of the administrator or approach the court for the sale to proceed,” Nakumatt lawyers told the commercial court.  

But UBA says that it is Parkview Shopping Arcade that was used to secure the loan and since the mall is not the property of Nakumatt, they are justified to sell it.

“The bank is not pursuing Nakumatt but Parkview and thus it does not require consent from the administrator or approval of this court. The administrator has no locus to approach this court which is not party,” UBA’s lawyers told the court.

Nakumatt’s debt running to Sh38.9 billion has seen it default on many obligations including rent payment and loan repayment. It has shut down many branches and even evicted in some of the malls.

The awaited deal between it and its rival Tuskys could be headed for dead end after Tuskys told Competition Authority of Kenya that it is reconsidering a deal to invest in Nakumatt.