KRA, two banks risk big loss at Deacons
SEE ALSO :Uchumi creditors back new debt plan“This statement of affairs indicates that in the event of a liquidation (forced sale basis) the creditors are likely to lose 95 per cent of their debt, with unsecured creditors likely to lose 100 per cent of their debt,” a report by the company's administrator, PKF, seen by The Standard says. “The administrators have not received any specific interest from any investors or buyers.” Deacons owed a total of Sh1.12 billion to banks, the Kenya Revenue Authority, staff and its suppliers, with NIC having lent the retailer Sh387.5 million and UBA Sh152.8 million. Recovery of the money is difficult since the only significant assets available for sale are stocks, fittings and fixtures in the retail stores as well as some office equipment and motor vehicles. “The stocks, if sold on a quick sale auction basis, would realise significantly low values as compared to their book values and/or going concern. The fixtures and fittings once removed would only be sold as scrap and the brick and mortar costs would be a sunk cost,” the report said. Fragile market Deacons also operates in a very fragile market that is sensitive to style and stock may lose appeal if not disposed of quickly. PKF said investors could only get their money back if they forgave part of the debt and allowed the company to continue operations. The proposals include debt to equity conversion, sale of assets for loss-making stores, sale of subsidiaries in Rwanda and Uganda or their assets thereof and debt reduction through potential debt waiver by creditors.
Register to advertise your products & services on our classifieds website Digger.co.ke and enjoy one month subscription free of charge and 3 free ads on the Standard newspaper.