Tuskys gets reprieve from auction block
Tuesday November 03 2020
People outside closed Tuskys Magic Stores in Nakuru Town, in Kenya's Rift Valley, on October 31, 2020. PHOTO | CHEBOITE KIGEN | NATION MEDIA GROUP
The High Court in Nairobi has temporarily stopped creditors from attaching the properties of Tuskys Supermarket pending the hearing and determination of an insolvency petition on November 17, giving a reprieve to the firm.
The orders of stay against attachment of the retailer’s properties were issued by Justice Francis Tuiyott at the Nairobi Commercial Court on October 21 and later extended on October 27.
As a result of the ruling, Tuskys, which is operated by Tusker Mattresses Ltd, issued a public notice on Friday scheduling meetings with its creditors including labour union representatives with a view of reaching an agreement on how to settle the outstanding debts.
The meetings run November 4 to November 12.
SHUTDOWNS AND LAYOFFS
Through court papers Tuskys argued that it had executed terms of agreement with a Mauritian based firm for the provision of a Ksh2.1 billion ($21 million) financing facility whereby on September 18, 2020 the retailer received Ksh500.85 million, being the first tranche of the funding as a show of commitment to the transaction by the investors.
This initial tranche of the funding, according to the retailer, was used to pay off part of rent arrears (Ksh119.65 million, $1.19 million), consignment suppliers (Ksh112.78 million, $1.12 million), salaries (Ksh48.58 million, $485,800) and settlement of old debt (Ksh219.82 million, $2.19 million).
In August this year the retailer issued a statement to the effect that it had signed an over Ksh2 billion ($20 million) financing agreement with a Mauritian fund subject to ease its working capital constraints and smoothen operations.
However, it emerged that the funds are yet to be released and that the funding plans could be derailed after two minority shareholders controlling 27.5 per cent stake rejected the idea and preferred to dispose of their shares instead.
But despite the reprieve, the retailer has continued to shut down branches amid shrinking cash flows and reduced sales after several suppliers opted to holdback deliveries for non-payment.
The latest branches to be closed are Pioneer on Moi Avenue and Adams Arcade.