High Court rules in favour of cash-strapped Uchumi Supermarkets

by Lawyer Wanz
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The High Court has blocked the auction of some assets of Uchumi Supermarket that were seized last year.

Uchumi supermarket’s assets were confiscated over a rent dispute until and the court has ruled that the case will be not proceed until an application by the retailer challenging the sale is heard and determined.

Justice Margaret Muigai dismissed an objection by United Housing Estate Ltd, saying she must hear all parties and give directions on the matter.

The landlord seized Uchumi’s assets last July through Upstate Kenya Auctioneers over Sh33.7 million rent arrears. The landlord also wanted the retailer thrown out of the premises for breaching the terms of the leases.

Therefore, in the absence of presentation and perusal of the said matter to confirm if it relates or that this application is from that matter, the full determination of the Preliminary Objection cannot be undertaken at this stage,” the judge said.

Uchumi argued that the sale of the assets will affect the interests of all creditors and the public at large and eviction from its business premises is such a draconian step, that would cripple it and all other creditors if allowed by the court.

The supermarket submitted that another judge had stopped the planned sale and all pending debt recovery cases, outstanding loans, and rent claims against Uchumi, in favour of a Company Voluntary Agreement (CVA).

Under the CVA, the retailer and 121 suppliers were to form a committee and agree on how to settle Sh4.2 billion owed to them and ensure the payments are made on time.

But the landlord through Zahid Nanji said Uchumi has continued to breach the terms of the leases after it stopped paying its monthly rent. Nanji told the court that the CVA only affects the mode and quantum of payment of Uchumi’s accrued rent arrears up to March 2020 and arrears accrued from April 2020 to date is governed solely by the terms of the leases.

And since Uchumi has failed to pay the rent, the company instructed the auctioneers to seize the movable assets after issuing notices.

Before the cases against the retailer were put on hold, Uchumi revealed that it was fighting a record 45 legal suits before magistrate’s courts, the High Court, and Tribunals.


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