Is this the end for Nakumatt Uganda?
Tuesday November 28 2017
The sealed Nakumatt Oasis branch in Kampala. The troubled company had provided indemnity — which is a requirement — and even paid a certificate fee, but the process got complex when the URSB demanded that the it make a declaration of solvency first. PHOTO | MORGAN MBABAZI | NMG
Nakumatt Uganda Ltd has secured a High Court order that enables it to start liquidation after an attempt to liquidate administratively by deregistering with the Uganda Registration Services Bureau (URSB) failed over legal issues.
Deregistering offers a shortcut to bankruptcy and winding up of a company.
The troubled company had provided indemnity — which is a requirement — and even paid a certificate fee, but the process got complex when the URSB demanded that the it make a declaration of solvency first.
But the company could not file a declaration of solvency, because it did not have enough assets to settle its huge debts.
“If you are insolvent but you declare solvency, you could be penalised,” said a source who is familiar with the procedures.
A solvency declaration would mean that the petitioner has enough assets to pay its debts. Once a resolution of its directors had been filed at the companies registry, which was duly done, liquidation would have begun.
Inability to settle debts
But Nakumatt had to go to court because, “it has not been given a lawful reason why the liquidation could not proceed,” according to Kimuya Macharia Vincent, the retailer’s acting country manager, who swore an affidavit filed at the High Court.
Nakumatt filed the liquidation petition on September 14, following a unanimous resolution by the directors reached on September 5.
It told the court that it could not continue with the business because of its inability to settle debts.
On October 19, the High Court’s Civil Division allowed the shareholders to appoint an official receiver.
The order bars creditors from taking action against the company until the liquidation process has been concluded.
Several businesses have obtained execution orders while a number of cases are pending before different courts. The accusations against Nakumatt range from non-payment to suppliers to overdue rent and breach of employment contracts.
But the court has ordered that the assets, equipment and stock of Nakumatt Uganda Ltd seized, distressed and attached by creditors, landlords and any other person and entity since commencement of liquidation on September 5 to be immediately handed over to the official receiver.
The receiver is currently identifying the firm’s assets before starting receiving claims from creditors and verifying them. The receiver held a shareholders’ meeting on November 24, and has scheduled a creditors meeting for December 5, when creditors are expected to submit proof of their claims.
Among the claimants is the Uganda Revenue Authority, which recently shut down the chain’s main store at Oasis Mall in the heart of Kampala and two others, over unpaid taxes.
The closure effectively halted the retailer’s operations in the country, as those were the remaining shops after the others closed earlier for various reasons, but mainly unpaid rent over the past two years. The URA is demanding $86,000.
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