Mombasa firm wants court to wind up Uchumi Supermarkets over Sh53m debt

Lapsset Director General Sylvester Kasuku takes through Energy CS Charles Keter (2nd left) and his Ugandan counterpart Irene Muloni (centre) on the progress of the Lamu Port where the proposed Kenya-Uganda pipeline will terminate. Ugandan and Kenya energy officials will be carrying out a review of both the port of Lamu and Mombasa before presenting a joint report in Kampala in two weeks

KENYA: A Mombasa-based alcoholic beverages dealer has moved to court seeking to close Uchumi Supermarkets over an outstanding debt worth Sh53 million.

Ceccagnoli Italiano, a director of petitioner, has asked the Milimani Commercial Court to attach the retailer’s assets since Uchumi is either insolvent or unable to settle debts.

“Your petitioner therefore humbly prays that Uchumi Supermarkets Limited be wound up by the Court Under the provisions of the Companies Act,” reads a petition entered by Mr Italiano on behalf of his firm, San Giorgio.

Uchumi’s response

But in a response filed this week, the retailer has questioned the validity of San Giorgio’s claims relating to the actual amounts owed, if any.

Uchumi’s chief finance officer Vincent Opiyo says in a replying affidavit that the claimant had ‘not demonstrated that it is owed the sums alleged in the petition’.

“That to call upon this court to order the winding up of the respondent company is such a drastic measure that should only be resorted to if the petitioner demonstrates, first, the existence if the debt and second, that the respondent company is totally incapable of paying the same,” Opiyo says.

The winding-up suit was filed last month by San Giorgio, described as a foods, wines and spirits importer, following months of negotiations with Uchumi over the debt. A hearing date has been set for April 22.

A demand letter done by Mr Italiano in October last year, and is now part of the petition, indicates that San Giorgio had threatened the listed retailer with winding up action.

“Unless we receive payment of the said sum of Sh53106754.12 within three weeks of the date of this notice you will be deemed to be unable to pay your debts... and we will petition to the High Court of Kenya for a winding up order without further notice to you,” read Italiano’s demand letter in part.

It is however not clear, at least from the court documents what goods or services San Giorgio had delivered to the retailer.

There seems to have been deliberate negotiation efforts made by the two firms to strike an agreement on settlement of the debt, in talks that turned out to be in vain.

Italiano now says in court papers that the retailer is yet to settle the debt, even after the expiry of the 21-day notice period in circumstances that warrants its winding-up plea.
Uchumi, Mr Opiyo avers, has an asset base that far surpasses the debt in the question and that it would be unreasonable to wind the retailer up ‘because of such a debt as is alleged by the petitioner’.

The retailer is also based its argument on a recently enforced law relating to insolvency which seeks to legally protect struggling firms from creditors.

“I am advised that the petition runs against the spirit of the Insolvency Act whose net effect is to give struggling companies another chance so that they can be able to settle their debts as going concerns and not to terminate their lives abruptly,” the retailer pleads.