KENYA – Troubled Uchumi Supermarkets is in hot soup as UBA Bank, a Nigerian pan-African financial services group operating in Kenya, is seeking to sell the retailer’s prime parcel of land located in Langata to recover a long-standing debt of Ksh172 million (US$1.5m).
In a petition for insolvency before the High Court, UBA says the ailing retail store has failed to implement a Company Voluntary Agreement (CVA) put in place last year between the supermarket and 121 suppliers on how to settle Ksh4.2 billion (US$38.3m) owed to them.
Under the CVA agreement that was initially opposed by UBA Bank, the retailer was to form a committee to ensure the payments are made on time.
“The company has failed to comply with the conditions as set out in the ruling dated 1st July, 2020 and thus the applicant/bank seeks to enforce its security over that property known as Land Reference Number 209/12593 Nairobi,” UBA said through its lawyers Nyaanga and Mugisha advocates.
UBA claimed that Uchumi’s failure to review and meet the terms of the CVA has had a detrimental effect on the bank and its regulators given the negative impact it has on its depositors’ funds.
“The Company’s (Uchumi) failure to review and meet the terms of the CVA has had a detrimental effect on the Applicant/Bank as a secured creditor as it unjustly relieves the Company of its obligation to service the loan facility extended to it,” the application reads.
The moved by UBA Bank is a second attempt after the lender suffered a setback to sell-off Ksh2.8 billion (US$25.5m) Kasarani land was stopped by the High Court after Uchumi argued that the land belongs to a subsidiary of the retailer which is an independent entity.
“The company has failed to comply with the conditions as set out in the ruling dated 1st July, 2020 and thus the applicant/bank seeks to enforce its security over that property known as Land Reference Number 209/12593 Nairobi.”UBA
Other than Uchumi, the bank has in the last couple of years lent money to companies that ended up defaulting or shutting down such as Nakumat, ARM, and Deacons that have left it struggling.
As UBA fights for the parcel of land, the retailer has recently injected life back to the Lang’ata hub under a new market concept allowing businesses to lease out spaces.
Vendors will be allowed to sell their wares during the weekends by renting out spaces inside Uchumi Lang’ata Hyper.
Uchumi expects to derive income from renting out the spaces whose charges range from Ksh. 2,500 (US$22) for smaller spaces to Ksh. 10,000 (US$90) for premium spots.
Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. SUBSCRIBE HERE