Uchumi Supermarkets wants part of its multi-billion-shilling debt forgiven to enable it make a comeback into the market.
The ailing retailer, which owes suppliers more than Sh3.6 billion and lenders another Sh3 billion, has filed a creditors plan in the High Court outlining steps needed to save it from closing shop.
This includes a debt waiver and restructuring repayments as well as long-term recovery strategies.
“Part of the proposals under the creditors plan include restructuring, waiving off some of the retail chain’s debt as well as cost management,” said Uchumi Supermarkets Chief Executive Mohamed Mohamed.
“The creditors plan presents the most sustainable and viable route to normalcy while taking care of our suppliers, lenders, staff, shareholders and other stakeholders’ interests.”
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He said the plan demonstrates the retailer’s commitment to its stakeholders. “We urge everyone to work with us to return Uchumi to its glory days,” said Mr Mohamed.
The supermarket chain has applied to have Owen Koimburi as the Interim Supervisor as per the Insolvency Act 2015 to oversee the recovery plans while securing interests of the creditors.
Last year, Uchumi came under litigation by landlords and creditors to wind it up, forcing the retailer to find ways of surviving.
The supermarket has lost more than 25 branches after it exited prime Sarit Centre and Westlands branches. Capital Centre branch on Mombasa Road was taken over by another retail chain.
Its board and management put in place a team of external legal, accounting and retail consultants in December 2018 to identify and advise on the best options available for the listed firm to settle its obligations as well as restructure its liabilities.
Franchising, opening of smaller branches and going digital are some of the strategies that the board and management have identified for the chain’s return to normalcy.
Previous attempts to resurrect the retailer failed to bear fruit as monumental debts frustrated efforts to raise capital.
Uchumi’s initial plan included selling of land to raise funds to pay off debt and boost cash flow, cutting employee and freezing old debt while paying suppliers out of an escrow account held jointly with suppliers.