Uchumi supermarket case of bankruptcy in new twist
What you need to know:
Kick off. The supermarket started operations in the country in May 2001.
Kampala. The hearing of Uchumi’s bankruptcy petition filed at High Court on Wednesday flopped following a request by Bidco company to be given time to reply to the petition.
Bidco, which is one of the companies demanding millions of Uganda Shillings from Uchumi, was given up to April 14 by the presiding Judge Lydia Mugambe to file their reply.
Uchumi owes more than a dozen creditors including Crown Bottlers, Century Bottling Co. Ltd, Nateete Shopping Centre, Samona Products, Dembe Trading, hundreds of employees that were rendered jobless and a number of landlords seeking their dues.
Kenya-based supermarket Uchumi closed operations in its Uganda and Tanzania subsidiaries last year and later filed a bankruptcy petition seeking to wind up business so as to safeguard its remaining assets from creditors.
In an affidavit before court, Uchumi’s company secretary John K. Wambugu said the company has had working capital constraints that have resulted in delayed payments to suppliers. As of July 31, 2015, the supermarket had outstanding payables amounting to $2.62m (Shs8.8b).
The High Court invited all interested creditors to reply to Uchumi’s petition within 15 days from December 10, 2015 the date they were notified through a court directive.
Uchumi’s operations are projected to have a negative cash position of $7.1m (Shs23.8b) by end of December 2015, up from $3.78m (Shs12.7b) in September, the same year. Documents filed in court show that the company had incurred a net loss of $3.062m (Shs10.3b) as of June 30, 2014. Between January and June 2015, losses registered $87,713 (Shs295.6m).
The company opened shop in Uganda with a nominal capital of $1.6m (Shs5.296b) in May 2001 with the main branch at Garden City.
Other branches were opened in the city suburbs of Kabalagala and Nateete, as well as the upcountry towns of Mbale and Gulu. A move to expand to Mbarara failed due to the losses the operations of the Uganda subsidiary was making.
“Uchumi’s net asset position declined from $32,000 (Shs107m) as of June 2012 to negative $5.78m (Shs19.4b) as of June 2014. “The decline was due to losses in the financial years 2012, 2013, 2014,” said Mr Wambugu in his affidavit.
If the petition succeeds, Uchumi’s assets will be placed in custody of the Attorney General as the official receiver.
As of September 2014, Uchumi, headquartered in Kenya, was one of a number of Kenyan supermarket chains serving the EAC region.
In June 2014, the company’s assets were about $78.8 million (Shs265.6b), with shareholder equity of approximately $38.4 million (Shs129.4b).
The company was founded in 1975, as a public limited liability company, by three Kenyan parastatal companies: Industrial and Commercial Development Corporation, Kenya Wine Agencies Limited, and Kenya National Trading Corporation. The shares of the company stock were listed on the Nairobi Stock Exchange (NSE) in 1992.
Uchumi closed down, albeit temporarily, and was placed in receivership during June 2006 after 30 years of business. It was simultaneously de-listed from the NSE. At the time, its closure was described as “one of the greatest corporate disasters in independent Kenyan history.
By January 2011, the retail chain had returned to profitability and applied to the Kenya Capital Markets Authority to re-list its shares on the NSE.
Uchumi Supermarket is a Kenyan based retail chain outlet which had operations in other East African markets including Uganda and Tanzania. However, due to growing logistical and financial challenges, it closed shop in both countries last year.