Nakumatt says Mall management closed premises despite complying with agreement

Nakumatt Junction

NAIROBI, KENYA: Nakumatt has written to the owners of Junction Mall demanding continued access of its branch after Saturday's closure.

The retail chain accused the landlord of acting in bad faith saying that further delay in opening the premise would lead to legal action.

“We have, in the above circumstances, demanded that Junction Mall immediately provide us with continued access to our premises to enable us to continue to trade and to desist from the predatory behavior,” reads a statement by Nakumatt.

“As this has not happened as at the time of issuing this statement, we are taking urgent action to protect our legal and constitutional rights.”

Nakumatt Junction Mall outlet was closed in the wee hours of Saturday in what it says was breach of existing lease arrangements (including relying on a superseded and terminated surrender).

The company says it was denied access of the premises after a fraudulent and misleading public notice by the directors and managers of Junction Mall.

Nakumatt  says it entered into an agreement with the Junction which provided, amongst other things, that in the event that Nakumatt  pays Sh 20 million to the Junction on or before the surrender date; and demonstrates to the reasonable satisfaction of the Junction that it is taking verifiable steps before the surrender date to restock the premises to previous levels of normal trading by 1 December 2017, the Junction agrees that it shall not enforce the provisions of the surrender and the surrender shall stand terminated and be of no legal effect. 

Nakumatt claims that it has clearly complied with the contents of the Agreement paying Sh 20 million to the Junction, taking verifiable steps to ensure that the premises are adequately restocked by 1 December 2017, including by providing approximately Sh 64 million of stock to the branch.

It says that it has confirmed to the Junction Mall that the surrender had, in accordance with its terms, terminated and demanded its return for destruction as per the terms of the Agreement; and was waiting for the return of the surrender instrument only to surprised by the unexpected turn of events.  

“The Junction Mall’s underhand actions on Saturday night, including locking the branch and publicising a fraudulent and misleading notice claiming that the premises have been surrendered by Nakumatt, are clearly contrary to the terms of the Agreement, illegal and of utmost bad faith.” 

Nakumatt is in the process of finalising a merger deal with rival Tuskys in a bid to contain its cash flow crisis and rescue it from imminent collapse. The retail chain's shares will be owned by a holding company to be formed as part of the merger deal, with each entity retaining its identity.

The two retailers, which control the retail business in the country, are currently reviewing the structure of the two businesses to facilitate the merger process. It is estimated that Nakumatt currently owes suppliers and creditors more than Sh35 billion.