Lawyers cite pending court case in warning to creditors, landlords seeking to claim dues

Goods scattered outside Nakumatt, Nanyuki branch after landlord forcefully evicted the tenant from premises over rent arrears (PHOTO: FILE)

NAIROBI, KENYA: Ailing retailer Nakumatt is now hanging on a legal loophole to keep off creditors and landlords eager to collect their dues.

The supermarket chain, which is responding to an application filed by creditors, has now sought refuge in a moratorium which the retailers’ lawyers say is supported by Section 561(1) of the Insolvency Act of the Laws of Kenya.

This came even as the retailer was evicted from its Nanyuki branch over rent arrears reportedly amounting to Sh36 million.

Under the moratorium, the retailer’s lawyers say, no landlord has the right to forcibly kick out Nakumatt from their premises, and no creditor will again forcibly repossess its goods until the application at the High Court is finally heard.

The application by firms including Africa Cotton Industries and Gold Crown Beverages, which are seeking its winding up, and a host of landlords who are tied to it due to lease commitments, is scheduled for hearing on January 11, 2018.

“Take notice that certain landlords and creditors have filed an application for administration order in respect of Nakumatt Holdings Ltd at the High Court of Kenya,” said a legal notice from the lawyers yesterday carried in local dailies.

“Notice is brought to the attention of all landlords and creditors that an interim moratorium is in effect upon filing of the above application in pursuance to Section 561(1) of the Insolvency Act that any landlord or creditor may: exercise a right to reentry in relation to the premises let to Nakumatt; or repossess goods sold to Nakumatt only with approval of the High Court, after the hearing of the application, and as per the aforesaid Act.

“All action taken otherwise will be in contrary to the said law and will be held as contempt of court,” said the notice.

The troubled supermarket chain yesterday suffered an embarrassment when its goods were thrown out of its branch at the Nanyuki Mall due to non-payment of rent.

According to an employee at the supermarket who sought anonymity, the proprietor of Nanyuki Mall arrived at the premises at about 3am and started throwing out the stock.

Passers-by and boda boda operators stationed near the mall scrambled for the goods before police shot in the air to disperse them.

“The supermarket had accumulated unpaid rent of Sh36 million, prompting the mall owner to evict them,” said the employee.

He said over 52 workers had resigned in the last few months because of non-payment of salaries and only 42 were in the payroll by the time of closure.

The eviction came two months after the supermarket was closed down when the owner of the mall hired welders to seal the doors owing to rent arrears.

Temporary closure

Nakumatt had earlier announced a temporary closure of the branch, but the mall owners responded by kicking it out, saying a new supermarket wanted to let the premises.

Sources at Nakumatt said the proprietor intends to rent the space to rival retailer Choppies, a South African brand that took over Ukwala Supermarkets.