For three years, the once giant retailer Tuskys tried to stay afloat and come out of a Sh4.5 billion debt hole.
Finally, the doctor declared that the patient who was in the intensive care unit fighting to be alive could not be saved.
The vital organs, he said, had already collapsed and even with the glove care offered in the process, the patient was showing no signs of making a comeback.
The doctor is commercial court judge David Majanja, who said there was no prospect for Tuskys to turn things around.
“Tuskys’ status reports on record including financials and recovery plans point to a company that is in extremely dire straits and that nothing seems to be improving," he said in a ruling last week.
The judge added: "The unsecured creditors must now put Tuskys to death to avoid suffering. It must now be liquidated."
And with the stroke of a pen, the empire founded by Joram Kamau ended.
Kamau started the family-owned behemoth after exiting Nakumatt Supermarket, and just like his former his employer’s business, his own will now be liquidated.
The names of the two supermarket chains will now be in the same chapter when history is written on the rise and fall of Kenya’s retail giants.
Kamau left Tuskys to his children, Stephen Mukuha, Monicah Njeri, George Gashwe, Samwel Gitei, Mary Njoki and John Kago.
By the time Justice Majanja ordered Tuskys to fold, the retailer had immovable assets that had been charged to the bank. These are not available for non-secured creditors.
Its disclosed assets were Sh137 million, including non-core assets worth Sh9 million. Sundry debtors owed it Sh91 million while its vehicles that had been proposed for sale were valued at Sh37 million.
Majanja observed that the Sh4.5 billion debt outweighed the retail chain's assets.
“I am constrained to find that Tuskys has no prospects of revival. It has failed to prove any viability of maintaining solvency and that after three years, there is no chance that things might turn out for the betterment of all the creditors who have been kept at bay by these proceedings."
The judge said Tuskys had already been accorded sufficient time and opportunity to restructure and turn itself around but nothing viable and positive has been forthcoming.
"Therefore, no meaningful purpose will be served if it is indulged or accommodated further by the court."
Owed huge amounts of money
Asset leasing firm Rentco Africa, home appliances firm Hotpoint, Pwani Oil and Brookside Dairy are among the firms that are owed huge amounts of money by the retailer.
In this case, Rentro was demanding Sh500 million, Hotpoint Sh248 million, Pwani Oil Sh70 million, and Brookside Sh127 million.
Hotpoint, Syndicate Agencies Ltd and Rosalita Ltd filed the liquidation case. Syndicate and Rosalita were demanding Sh11 million and Sh30 million respectively.
The judge ordered that the trio should advertise in order to allow other creditors to come on board.
There were a total of 45 creditors owed by the supermarket. They argued in the case that despite several demands to Tuskys, it had refused to make good its promise to clear its debts.
According to the court records, the common thread by the creditors was that they supplied goods or offered services to Tuskys but it failed to pay despite several demands to do so.
Justice Majanja was of the view that the case was not only about the debt but being unable to settle the money it owed creditors.
“In my view, there is sufficient and prima facie evidence based on the creditor’s claims to show the company is not only indebted but is also insolvent," he said.
"The court should therefore issue a liquidation order unless the company can show that it is not warranted on the basis that to issue such an order would be contrary to the general policy of the Insolvency Act or for any other reason.”
Tuskys opposed the cases.
In its reply filed on October 14, 2022, the retailer stated that it had already settled a debt owed to Equity Bank.
At the same time, Tuskys stated that it had inked seven sales agreements with Diamond Trust Bank and was in the process of signing a debt settlement agreement with the bank to settle its dues.
It told the court that it had devised a business turnaround plan that has been generating Sh55 million a month.
While pleading with the judge to allow it to live, Tuskys claimed that it had identified a way of raising Sh3.8 billion.
It argued that the only way to settle the stalemate was to allow it to enter an agreement with the unsecured creditors and Kenya Revenue Authority to settle its debts and stay afloat.
“Successfully achieving this last milestone will require the direction, skillset and business acumen of its directors and managers,” the retailer argued, adding that it should be given a 12-month moratorium to enable it re-capitalise and re-grow its operations.
Tuskys had planned to pay the creditors by sourcing funds from the sale of its non-core assets, bridging working capital, sale of inventory and trading margins, and further capitalisation.
However, none of the plans worked.
It blamed the cases and creditors for scaring away investors. According to Tuskys, the cases made the revival plan difficult.