A High Court judge has temporarily stopped the sale of Tuskys assets by its creditors to pay mounting rent arrears, offering a sigh of relief to the struggling retailer.
Justice Francis Tuiyott in a ruling delivered Wednesday temporarily froze the planned auction of the company’s property by creditors pending directions to be issued on October 27.
Tuskys’ landlords in recent weeks have been slamming the auctioneers’ hammer on the supermarket’s stocks to recover rent arrears.
Tuskys has been locked out of its premises such as Juja City Mall and at the Oasis Mall in Malindi in spite of court orders restraining the evictions.
The new directives will however stop the planned auctions at the retailers’ outlets at Komarock Mall, Tuskys Embakasi and North Airport Road which were scheduled for this week.
Notice had been given that Tuskys supermarket’s Southfield mall outlet is set to be auctioned next week.
In a notice in the media, Makuri Auctioneers indicated that the auction was a matter between the landlords and Tusker Mattresses Limited.
“Having read the affidavit of Patrick Ogola sworn on 16th October 2020, I hereby order a stay of any attachment, sequestration, distress or execution against the property of the company pending directions that are to be issued on October 27,” said Justice Tuiyott.
“However, this order does not affect Greenspan Limited.”
The ruling that comes as a temporary relief to the struggling retailer that owes suppliers close to Sh6 billion comes barely a few weeks after the retailer sworn an affidavit in court, seeking the protection of the supermarkets assets from unlawful distress.
In its court filing presented by High Court Advocate Patrick Onyango Ogola, Tuskys stated that sporadic auctions have no legal basis as the retailer is the subject of an ongoing liquidation petition by the Hot Point Appliances Limited.
Hotpoint wants Tuskys liquidated over a ksh248 million debt.
Tuskys also argues that if the planned auctions are effected, it will suffer irreparable losses which would dampen efforts to turnaround its fortunes and settle debt owed to suppliers.
“That it is in the best interest of the applicant and creditors on record that the ongoing efforts towards the refinancing of the applicant are allowed room to proceed without the threats and distractions of liquidation, distress or execution,” says Tuskys in court documents.
Tuskys has been on search for potential investors to whom the supermarket retailer can sell a majority stake as part of efforts to raise cash to pay suppliers and win back confidence.
As the cash flow crisis at the retail chain deepened, the financially troubled Tuskys supermarkets sacked tens of workers and shut down at least four more branches in Kenya.
The retailer, which at its peak operated 63 branches in Kenya and Uganda, has been quietly shrinking its geographical spread owing to disputes with landlords over rent arrears.
Tuskys, once Kenya’s largest supermarket chain by footprint, has been struggling with debts owed to suppliers amounting to slightly over six billion shillings.
Earlier this month, the troubled retail chain had three of its outlets also going under the hammer as landlords seek to recover outstanding rent.
Garam Investment Auctioneers put a notice in the local dailies and listed three properties of the retailer’s stores for public auction.
The three were Tuskys outlets along the North Airport Road’s Kencor Petrol Station, Embakasi (Tuskys Embakasi) and Tuskys Komarock Mall (K-Mall).
UJA House, Bombo Rd,
Keti Falawo Zone, Kawempe Division
Kampala – Uganda