Nyama Mama: Restaurant's rise, legal battles and uncertain future

Nyama Mama, the popular local restaurant chain. [Elvis Ogina, Standard] The story of Nyama Mama, the popular local restaurant chain, is one marked by rapid growth, high-octane legal drama and now, an uncertain future. Over the last three years, the restaurant chain, owned by The Good Earth Group (TGEG), faced a series of challenges that left it reeling, from the impact of the Covid-19 pandemic to a legal dispute. The dispute over allegations that the directors took a Sh520 million loan using fictitious documents as collateral spooked investors, who may have saved it from the throes of Covid-19 and even offered a firm footing as it sought to expand to the region. The future of Nyama Mama, which appeared bright at some point, is now in doubt. The company's directors, Ninaa and Jayesh Shanghavi have since 2021 had to contend with in and out of court battles as well as arrest by the Directorate of Criminal Investigations (DCI) as the sleuths investigated claims of fraud. However, the Chief magistrate's court at Milimani, Nairobi on July 11 this year dismissed the case against company and its directors after the Office of Director of Public Prosecution (ODPP) said the evidence pointed to a civil matter rather than a criminal proceeding. TGEG had on two occasions got investors willing to pump in funds that would enable the company to clear some of its debts and avoid the worst of Covid-19. Squabbles with the bank however made the investors flee. "The company managed to get an investor who was willing to pay $4.5 million (Sh585 million) as full and final settlement to the Victoria Commercial Bank," said the directors in a letter to the ODPP protesting the charges, adding that they went to the bank with the offer but it was rejected. The bank only offered to release one of the securities against the payment of the Sh585 million, the letter said. "The potential investor was uncomfortable with the VCB position and hence withdrew the offer." It turned out the same for a second investor who had offered to pay Sh400 million, which was in addition to the couple pledging their shareholding in the bank, which had a combined value of Sh220 million. Nyama Mama started out in 2015 with two outlets, quickly expanding to eight restaurants by 2020. The chain, known for its contemporary twist on traditional Kenyan cuisine, became a household name. Alongside Nyama Mama, TGEG introduced two other brands, Yao and Blue Door, making it one of the success stories in the local hospitality scene. At its peak in early 2020, the three brands employed 350 people, and there were ambitious plans to expand into other parts of Africa. With Covid-19 pandemic, their revenues dipped and the toll of servicing debts as well as keeping up with payments to suppliers and landlords started affecting the business. Among the debts that perhaps had the heaviest toll on Nyama Mama were loans taken from Victoria Commercial Bank. The company had taken loans amounting to Sh975 million between 2018 and 2020, which were paid down to Sh860 million as of February 2020 when Covid-19 struck. As security for the loans, the couple had provided the bank with various assets as security that included a plot on General Mathenge Drive, Nairobi valued at Sh250 million, a family residence also on General Mathenge Drive (Sh76 million) and Sh6.5 million worth of I&M Bank shares. They had also given personal guarantees of TGEG directors, a debenture on TGEG , Sh70 million worth of shares at Victoria Commercial Bank and also offered a $174,000 personal account as security. The Good Earth Group directors Jayesh and Ninaa Shanghavi. [Elvis Ogina, Standard] When Covid-19 hit TGEG, managed to get a moratorium on loan repayment between March 2020 and March 2021 when the situation was expected to have improved. Without revenues owing to the Covid-19 lockdown and facing an uncertain future, TGEG started searching for potential investors in the course of 2020. The directors noted that this would "raise funds to rescue the company and pay for the VCB facility". The process would however be muddied when the bank claimed that one of the securities that TGEG provided for a Sh520 million loan was fraudulent. In May 2021, the bank filed a complaint at the DCI that TGEG directors Ninaa and Jayesh had obtained a Sh520 million loan from the bank using alleged fictitious documents. However, the court last month agreed with the Director of Public Prosecution that the case would be best resolved through civil proceedings as opposed to criminal proceedings. "I see no prejudice being visited to the complainant, ODPP has the power to institute, sustain and withdraw criminal cases as per Act 157 Constitution of Kenya 2010," said Senior Resident Magistrate Wandia Nyamu in her ruling. "The reason given by the ODPP to withdraw are plausible, I see no need for counsel watching brief to address the court on any other issue, the matter is hereby withdrawn under section 87(a) Criminal procedure Code." Earlier, in a letter dated March 2022, TGEG had pleaded with ODPP to drop the criminal investigations, saying it had provided the required documentation, adding that they were "at a loss" that the matter had become criminal in nature and that "this matter is of civil nature and we have continuously held discussions with the bank". While the withdrawal of the case on July 11 might give the Nyama Mama couple relief, TGEG is still deep in debts and with all its restaurants now closed, it will be a tall order getting any of the brands back on track. The directors in the plea to the ODPP said the case had had a huge toll on them as well as the business. "During the period of Covid-19 lockdown in 2020, TGEG searched for potential investors for the restaurant business in order to raise funds to rescue the company and pay the VCB facility," said the couple in the letter to DCI. After securing commitments from at least two investors on different occasions to save the restaurant, the bank declined to proceed with the rescue plan despite a signed agreement, the directors said.

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