Uchumi Supermarkets has filed a notice of appeal against a court decision that allowed its winding up case to proceed to full hearing.

The Kenya-based retail chain which wanted to be granted bankruptcy protection was on Friday wrong footed after High Court Judge Farah Amin ruled that the winding up case should proceed.

The chain through its lawyer Elisha Ongoya wants the Court of Appeal to determine the law that will apply to its winding up case after High Court ruled against it.

“Uchumi Supermarkets being dissatisfied with the ruling of Lady Justice Farah Amin given at the Nairobi High Court, Commercial and Admiralty division intends to appeal against the whole of the said decision,” read the appeal notice filed in court Monday.

Uchumi had sought to have the new Insolvency Act that shields institutions in distress to be applied in the case.

It was banking on the precedent set by the winding up petition of Blue Bird Aviation Ltd where High Court Judge Eric Ogola ruled that the old Companies Act cannot be used to wind up a company until Parliament passes procedures to shut down firms under the Insolvency Act of 2015.

However, High Court Judge Farah Amin, found that the retailer could not rely on that precedence because the creditor, San Giorgio Ltd triggered the winding up process before the law was changed.

Justice Amin said Uchumi was told to pay San Giorgio limited Ksh53 million on October 15 last year through a notice that would expire in 21 days.
The notice that precipitated the case fell due on November 5, just one day before the new companies law came into force.

“The company was deemed by operation of law to be unable to pay its debt on November 5. On November 6, to use a layman’s words, the law changed,” Justice Amin said.

Some of Uchumi’s creditors who filed the winding up petition have already withdrawn from the suit.

Broadways Bakery Ltd, Kenblest Ltd, and Macneel Millers on Friday withdrew from the case.

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Uchumi says it is in discussions with Kapa Oil and Insync who did not appear in court on Friday but are yet to formally pull out from the case.

The suppliers still pursuing the case include San Giorgio, who filed the suit, Radio Africa, Githunguri Diaries and Professional Marketing Services.

Uchumi has agreed with some suppliers who are opposed to the suit to reduce their debt burden by converting their shares into equity.

About 100 suppliers have already agreed to resume stocking its shelves with goods under an arrangement that gives them control over how they get paid.

The group will receive their first cheques from sales since they reached an agreement through an escrow account this week.