The directors of Nakumatt Holdings Limited (“Nakumatt”) yesterday applied to the High Court for an administration order in accordance with section 532(1)(b) of the Insolvency Act (2015) (“Act”).
Nakumatt has proposed that Mr Peter Kahi of PKF Consulting Limited be appointed as administrator. Mr Kahi is an experienced business turnaround professional and if the application is granted, Mr Kahi will act as an independent administrator and perform his functions in the interests of Nakumatt’s creditors as a whole.
Hon. Justice Joseph Onguto of the High Court has ordered that the application for administration be heard on 8th November 2017. The Nakumatt directors are optimistic that the Court will make the administration order in relation to Nakumatt as the order will enable Nakumatt achieve a better outcome for its creditors as a whole than would likely be the case if the company were liquidated, principally because:
ü the administration will enable Nakumatt to be maintained as a going concern. Nakumatt shall continue to trade and generate revenue to meet its ongoing financial obligations; and
ü the administration and continued trading of the Company will provide an opportunity for the business to reassess its financial position and options for restructuring and the time to implement a business turnaround. Importantly, pursuant to section 560 of the Act, while a company is under administration, there is a moratorium on certain legal processes, including a moratorium against enforcement of security over the company’s property or the exercise of a right of forfeiture by peaceable re-entry, without the consent of the administrator or the approval of the Court.
The senior lenders are aware of Nakumatt’s financial position and are supportive of Nakumatt’s application for an administration order. Further, Tusker Mattresses Limited has, subject to the Competition Authority of Kenya’s approval, undertaken to forge ahead with its investment in Nakumatt in connection with its proposed merger with Nakumatt.
The decision to apply for an administration order was a difficult and complex one that was carefully considered by Nakumatt and its advisors. Nakumatt is apprehensive that in the absence of an administration order, there is a significant danger of it being wound up with the inevitable consequence that the company, its employees, lenders, landlords and suppliers would suffer significant losses, with a broader impact on thousands of farmers, small businesses and traders whose livelihoods are dependent on the business.
Notwithstanding the current state of the business operations, Nakumatt still believes that it has a strong underlying sustainable core business that is capable of a turnaround with the support of all stakeholders. Nakumatt considers that administration provides it with the best opportunity to effectively restructure its business.
To the extent an administration order is issued by the Court or there are further developments, we commit to provide progress updates as necessary. In the interim, we would like to thank our staff, customers, suppliers and other stakeholders for their patience and continued support.
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