Nakumatt Rwanda has been put under provisional administration following several months of cash flow difficulties that threatened the supermarket’s loan repayment capacity.
The Nyarugenge Commercial Court delivered its verdict on April 10, in an application filed by Nakumatt’s board of directors. The court appointed Kayiranga Sebakara Gaspard as the provisional administrator, a development that comes just months after received accolades from the taxman.
“The court orders the current management of Nakumatt Rwanda Ltd to hand over all company books to the provisional administrator, to provide him with all necessary information and assist him in an implementation of this order,” reads the court decision.
It ordered all creditors of Nakumatt to proceed with registering their claims with the provisional administrator.
The provisional administrator will be reporting to the court and the registrar general of companies on the plan to rescue the company every three months.
Atulkumar Maganlal Shah, a director who filed the request on behalf of the board of directors said: “Nakumatt can no longer pay for its due debts and it appears that it will not be able to pay its other outstanding debts as they fall due.”
Application for insolvency
The applicant submitted to the court that the application for insolvency was suggested by a board meeting of January 8, after analysing the audit reports of two financial year — 2015 and 2016.” The report indicated that the company was experiencing cash flow problems.
The case was filed on January 8, and was first heard on March 21 and a second hearing was held on April 3.
In their application, Nakumatt’s board listed only two creditors — Hotpoint Rwanda Ltd, a distributor and sellers of electronic appliances and Shoppers Distributors Ltd with claim of Rwf 167.4 million ($193,347) and Rwf19. 1 million ($22,060) respectively.
The list of creditors sparked outcry from other companies, among them I&M Bank Rwanda Ltd, which claimed it is owed Rwf1 billion ($1.1 million).
“I&M Bank was surprised to hear that Nakumatt filed for insolvency, only four days after signing a loan agreement of more than a billion,” Rubasha Herbert, I&M Bank’s lawyer.
The loan, according to papers submitted to the court by I&M Bank, include an overdraft limit of Rwf500 million ($577,500), restructured stock loan of Rwf417 million ($481,635) and another loan facility of Rwf59 million ($68,145).
Mr Rubasha said Nakumatt no longer channels its payment through I&M bank and the bank raised the matter but the bank is yet to get a response.
He further requested the court to order Nakumatt to resume channelling its payment through I&M Bank.
Other Voluntary Intervening Parties include two coffer suppliers, Pearl Enterprise Ltd and COOPAC Ltd, who presented Rwf20 million ($23,100) and Rwf14 million ($16,170) unpaid invoices respectively.
Nakumatt’s current assets are valued at more than Rwf2 billion ($2.3 miilion), Jean Claude Kabera, Nakumatt’s lawyer, told the court.
According to the pleadings, the supermarket started experiencing financial difficulties in 2015.
“In 2015, the company made a loss of Rwf 152.99 million and in 2016 the loss went up to Rwf 554.83 million,” the pleadings read.
Nakumatt Rwanda’s woes follow those of sister companies in the region and especially the Mother company in Kenya.
The supermarket started operations in 2008. It has two shareholders — Nakumatt Holdings Ltd and Atulkumar.