Tuskys accused of delaying the ‘inevitable’ by abusing court processes
Troubled retailer Tuskys has been accused of deliberately blocking the hearing of a liquidation petition against it in a means to defeat creditors’ efforts to recover debt.
In its reply to an application by the retailer filed on Tuesday, Hotpoint Appliances Limited which initiated the petition to wind up Tuskys in August last year wants the courts to reject and squash orders sort by the supermarket chain.
According to the firm represented by Macharia-Mwangi & Njeru advocates, Tuskys turnaround plan has failed the test of credibility to include ‘wishful thinking’ on future sales and vague references to a Mauritian strategic investor.
“In its numerous affidavits filed herein, the company has made vague references to an investor. This has been the talk for a period of nine months now. The company has availed absolutely no evidence of alleged funding support. It has also not disclosed the financier, the amount expected or the terms of financing,” read part of the filings.
“The issue of financing is vague, ambiguous, and totally lacks credibility.”
Further, Tuskys has been accused of partially liquidating its assets through disposal without the guidance of the courts in spite of the retailer facing an active liquidation petition.
Moreover, the petitioner says the supermarket chain has neither disclosed all its assets nor given a clear position of its current financial position.
Tuskys has sought to sell off part of its non-core assets as part of its recovery including holdings in 19 former outlets including Nanyuki Mall, Eldocenter, Mtwapa Mall, Mega Mall, Pioneer and Karen CrossRoads whose value is estimated at Ksh.911.5 million.
However, Hotpoint Appliances argues that the retailer has not given any indication as to how it intends to apply proceeds from the sale having already earned Ksh.276 million from the sale of assets at Mtwapa Mall, Ananas Mall, Nanyuki and Mega Mall.
The indebted company now wants the court to dismiss dual applications by Tuskys and set the liquidation petition down for hearing.
Under the pair of applications, Tuskys is technically seeking an extension of life including a 12-month adjournment of the liquidation petition.
Further, Tuskys is seeking orders to restrain any execution proceedings against its assets for a one-year period including attachment, seizure, repossession, eviction, or forfeiture by any landlord.
In his sworn supplementary affidavit to the court, Tuskys Acting Chief Executive Officer Chadwick Okumu says the orders sought will allow the applicant (Tuskys) time to turn around its business to the benefit of its creditors.
“The applicant’s recovery plan is structured to offer the applicant’s creditors a full settlement of their debts over a period of time with no haircut whatsoever. This is in contrast with a liquidation of the applicant, which would present no immediate or tangible reprieve to any of the creditors on record in this cause,” he said in the filings made on April 16.
Tuskys argues only Ksh.6.7 billion or about 34 per cent of outstanding arrears to unsecured creditors as of June 2020 would be available for distribution should the courts send the retailer down the wind up path.
The admission by the retailer indicates Tuskys could be in a deeper hole than previously disclosed with the retailer owing much more significant amounts to its secured creditors.
For instance, the estimates of arrears to unsecured creditors total to about Ksh.19.7 billion.
Presently, Tuskys is operating a mere nine branches with plans to re-open the tenth outlet this month against a sizable 64 branch footprint at the start of last year.
On May 21, the High Court commercial and tax division is expected to issue new directions regarding the hearing of the liquidation petition alongside prayers sought by Tuskys.
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