Nakumatt Holdings could face liquidation after the High Court threw out a petition by the retail chain seeking to appoint a receiver manager.
High Court judge Joseph Onguto defied orders by the Court of Appeal to stay his ruling, saying there were two orders and that the seal on them was not the correct one described under Section 21 of the Court of Appeal Organisation and Administrations Act.
Some of the litigants protested that they were not custodians of the seal and that the two notices were as a result of a computer error, which they noticed after filing with the High Court, and had to be changed.
Justice Onguto said Nakumatt had failed to provide enough information to indicate it could be revived, had closed shop in some premises and that its managers lacked openness as they sought to benefit the firm rather than creditors.
“Taking in totality of the evidence, I am not convinced that the administration will achieve the recovery as intended by law,” he said.
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The judge said details of a deal in which rival supermarket chain Tuskys would inject Sh650 million, guarantee Sh3 billion to suppliers and buy a 50 per cent stake, were not enough to reassure the creditors.
He said Nakumatt was not clear on the exact amount of their debt, whether the Tuskys debt would be subordinate or whether the money received from the share sale would go into the company - meaning creditors could not make a decision without full disclosure.
Nakumatt now faces a winding up suit by Africa Cotton Industries and Gold Crown Beverages, putting the deal with Tuskys at stake as one cannot enter into a contract with a company facing liquidation.
The troubled retailer had resorted to a last-minute effort to appoint PKF Consulting’s Peter Kahi as administrator, which would have allowed them to enjoy a moratorium on enforcement against their assets or evictions by landlords.
This came as more suppliers came out to petition the competition watchdog to block the planned merger with Tuskys Supermarkets, in what is set to compound Nakumatt’s problems.
A day after it emerged that the Competition Authority of Kenya (CAK) had asked the shareholders of Tuskys to resolve their differences before it could consider the merger, another supplier came out to oppose the deal on grounds that they had been left out.
Yesterday, Wow Beverages, a supplier of alcoholic drinks, became the latest to protest an unpaid debt.
