Tuskys given 45 days to pay creditors or risk liquidation
By Wainaina Wambu and Kamau Muthoni | September 30th 2020
The battle to wind up Tuskys has intensified after the High Court gave the troubled retailer 45 days to pay millions owed to creditors.
This is after 12 creditors including Brookside, Greenspan Mall, Kenblest and Vitafoam on Wednesday supported a petition by electronics dealer Hotpoint asking the court to liquidate Tuskys over the inability to pay a Sh248 million debt.
Liquidation is the process of selling the assets of a company and using the proceeds to pay creditors.
The creditors were pushing for a month but Tuskys pleaded with the court saying it has 100 secured and unsecured creditors and was about to complete a transaction where a financier was injecting Sh2 billion.
Tuskys argued that it needed between 45 to 60 days to reach out to creditors on a reasonable debt payment plan.
“Shareholders have been meeting to approve the injection of capital to rescue the business. The same was voted on and what follows was finalizing the debt transaction that was meant to turn around biz and pay both secured and unsecured creditors,” said Tuskys in court.
The other creditors supporting the winding-up petition include Standard Group Plc, United Millers, Rentco Africa, Textplus Industries, Delight Limited and two individual creditors named as John Maina, and Eliud Mburu.
Justice Francis Tuiyott directed Tuskys to report within 45 days saying that creditors needed a “quick closure” on the matter with the creditors saying that Tuskys had not approached any of them for a payment plan and said that previous promises hadn't been honoured.
“You’ve heard the concern of the creditors, they need a quick closure of the matter and you need to share information with them. I will require you to report to the court within 45 days and if you’ll not disclose the information this court will frown upon it,” said the judge.
The case will come for mention on November 17.
The family-owned retailer is in the weakest financial position of all the country’s supermarkets, reeling from debt running into billions of shillings owed to suppliers, staff and landlords.
Some of the 1,000 retrenched Tusky workers have been holding street demos, demanding their salary arrears and terminal dues.
The protests continued today in parts of the country as some of the employees owed up to six months arrears highlighted their plight.
Last week, the Employment and Labour Relations court stopped Tuskys from laying off more unionised workers as the supermarket continues a restructuring plan intended to keep it afloat.
Recently, the supermarket said it had received Sh500 million as part of the first tranche of a Sh2 billion credit facility it recently secured from an unnamed Mauritius fund.
Chief Executive Dan Githua said the money would partially pay landlords, staff and suppliers.
Tuskys, which boasted of a store network of over 60 branches across the region and 6,000 workers, was until recently Kenya's biggest supermarket chain.
It has closed over three stores this year and at least five others have been temporarily shut by landlords over rent arrears.
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