The Ugandan subsidiary of Uchumi Supermarkets has applied for bankruptcy from the country’s High Court to protect its remaining assets from creditors.
Concerns are emerging over how Uchumi will settle its obligations with more than a dozen creditors including Crown Bottlers, Century Bottling Co. Ltd, Nateete Shopping Centre, Samona Products, Dembe Trading and landlords seeking their dues.
The employees have also included the rest of the shareholders in their lawsuit, plus CEO Julius Kipng’etich.
Uchumi in October declared its Uganda and Tanzania operations insolvent and the retailer has been unable to service its debts because its liabilities have exceeded assets.
Uchumi has previously announced that it plans to return to both Uganda and Tanzania in one year’s time.
Those seeking to recover their dues from Uchumi include suppliers, landlords and 900 employees seeking terminal dues after they were rendered jobless.
Julius Kipng’etich – who was hired in August as Uchumi CEO to turn around the fortunes of the struggling retailer – defended the bankruptcy route, saying it does not prejudice the retailer’s future return to the regional market.
“No. We have done everything legally,” said Mr Kipng’etich.
“By law it is illegal to run an insolvent company. These operations were in negative position and there is no indication they have any future,” he said.
The retailer disclosed it was pumping Ksh200 million a month into its five Ugandan branches and six Tanzanian branches “to help them meet their financial obligations,” but the efforts had proved futile.
