Nakumatt appeals ruling on its assets attachment

A photo Diani Mall, formerly Nakumatt Diani, in Kwale County. [Kelvin Karani, Standard]

Nakumatt Supermarket is seeking to appeal a High Court decision allowing its former landlord to attach its assets to recover more than Sh107 million in rental arrears.

On May 30, 2018, Lady Justice Ann Omollo directed Nakumatt to clear all outstanding rents as at the date of surrender of vacant possession or eviction.

Nakumatt's lawyer D Ngonze said they decided to appeal nine months out of time because they were negotiating with the landlord, but they failed to reach an amicable solution.

 “We are seeking revision of orders and a stay of execution of ruling dated May 30, 2018, and injunctive orders pending the appeal emanating from orders of Justice Chepkwony,” said Ngonze.

He said the High Court in Nairobi had prohibited all creditors of Nakumatt against any attachment, sequestration, distress or execution against any assets of the supermarket after the commencement of the winding-up proceedings.

Nova Holding Limited who owns a multi-million story building in Diani in which Nakumatt was an anchor tenant wants the court to allow them to recover Sh107 million rent arrears owed to them by the retail store that is under administration to be able to pay off the loans for the two banks.

Nova Holding Limited lawyer Willis Oluga said that the said rent arrears were meant to service Sh44, 825, 905 from Bank of India and Sh20 million from Prime Bank.

But yesterday Ngonze told Justice Charles Yano that Nova did receive a payment of Sh18, 216,000 from Naivas Supermarket after buying movable assets from Nakumatt.

He said that Nakumatt settled in full all the post-administration arrears upon payment of Sh 18,216,000.

The lawyer said the order issued by Justice Chepkwony allowing Nova Holding Limited to recover Sh 107 million through attaching their assets was grievous.


Ngonze said Justice Chepkwony lacked the jurisdiction to order eviction of Nakumatt from the premises because of the Nairobi Insolvency case that had barred eviction of Nakumatt from the premises pending the determination of the case.

He said that all outstanding arrears if any prior to the administration order given on January 22, 2018, remains a subject of the said administration and only payable upon due approval of the administrator’ schedule of payment by the creditors with the sanction of the insolvency court.

“Only rent payments in respect of the months falling after administration order dated January 1, 2018, is legally payable to the landlord,” said Ngonze.

He said the amount sort by Nova is colossal and is subject to the on-going insolvency case in Nairobi.

“The amount sought is Sh86, 811, 250 which is colossal and subject of the proceeding in Insolvency Case in Nairobi. There are orders insulating Nakumatt’s assets from inter-alia prosecution proceedings,” said Ngonze.

However, Nova Holding Limited lawyer Willis Oluga opposed the application by Nakumatt to appeal and saying the appeal is out of time, coming nine months after Justice Chepkwony issued orders to recover the rent.

“We oppose the application seeking leave to appeal the orders delivered on May 30, 2018. It is untruthful for Nakumatt to come to court 9 months later and cite negotiations as a reason for seeking leave to appeal out of time. No notice of appeal regarding the ruling of May 30, 2018,” said Oluga.

Oluga said there is no law that grants blanket bar to execution against a company under administration and that the Insolvency Act permits a party to undertake execution with approval of the court.

He said that the Nakumatt had paid Sh18, 216,000 and was remaining with an arrear of Sh88, 811, 250.

He said that Nakumatt will not suffer any substantial loss because Nova Holding Limited is a company in a stable financial position capable of funding the decretal amount in the likely event the intended amount is allowed.

Oluga had told Justice Omollo that they risk losing their premises to Bank of India and Prime Bank over Sh64 million owed to the banks.

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