Tuskys earns reprieve as court moots sporadic auctions
Published on: October 22, 2020 10:10 (EAT)
Besieged retailer Tuskys has earned reprieve from High Court’s commercial and admiralty court following a ruling stopping sporadic auctions by its agitated creditors. In a ruling delivered on Wednesday, Justice Francis Tuiyott has invoked an order on the stay of any attachment, sequestration, distress or execution against the property of the company pending directions to be issued on October 27. The new directives have been timely in stopping planned auctions at the retailers’ outlets at Komarock Mall, Tuskys Embakasi and North Airport Road which were scheduled this week. Further, the ruling follows an application in urgency by Tuskys which lobbied for the protection of the supermarket’s assets from unlawful distress and execution. In its court filing presented by High Court Advocate Patrick Onyango Ogola, Tuskys stated sporadic auctions have no legal basis as the retailer is the subject of an ongoing liquidation petition by the Hot Point Appliances Limited. In addition to planned auctions, Tuskys has faced twin sequestration orders against its bank accounts to the tune of Ksh.34.6 million over pending arrears to creditors. The supermarket has indicated it would suffer irreparable losses which would dampen efforts to turnaround the retailer’s fortunes and settle debt owned to its trade partners. “The mentioned acts of attachment will have a devastating effect on the applicants’ ability to service its debt in line with settlement agreements it has already entered with over 300 creditors and will also collapse the arrangements for capital injection in the amount of Ksh.2.1 billion that are in the last stage of finalization” Tuskys noted. Tuksys landlords have in recent weeks acted on threats to send the supermarket to an early grave having slammed the auctioneers hammer on the supermarket’s stocks and tools of trade in view of recovering overdue arrears. For instance, Tuskys has been locked of of its premises at the Juja City Mall, Bofa Road in Kilifi and the Oasis Mall in Malindi in spite of court orders retraining the eviction in line with provisions in the Distress for Rent Act. Further, Tuskys has received 30 day eviction notices on its operations at the Juja City Mall and Pioneer House in Nairobi’s Central Business District (CBD). Tuskys has fought back against the action which it has termed as predatory and a ‘free season for its assets’ in addition to fingering inflated, disputed and fictitious claims represented in part by 29 active court cases. Additionally, the supermarket says the irregular auctions have caught up third part assets including CCTV systems, shopping trolleys and power generators. Tuskys argues the preservation of assets will be crucial in keeping the business afloat to meet its obligations to its entire list of creditors. The supermarket has appealed for a stay of orders barring any creditor from attaching to its assets for a period of up to 12 months as it works out a debt restructure and payment plan to honour all areas. In a previous ruling made on September 30, Tuskys was granted 45 days to from which to kickstart the drafting, review and negotiations of transaction documents of the facility “The preservation of assets is in the best interest of the entire body of creditors many of whom may not receive any payments if the applicant’s assets are stripped through the illegal and imminent acts of attachment, execution, sequestration and distress” Tuskys added. At the heart of Tuskys turnaround plan is the capture of a fresh Ksh.2.1 billion credit facility from a Mauritius based private fund which will make available working capital to stabilize operations. The retailer has told the court the process is in high gear having since received a first tranche injection of Ksh.500.9 million. The funds have been applied towards immediate capital requirements including Ksh.119.7 million towards rent arrears, Ksh.112.8 million in supplier payments, Ksh.219.8 million in old debt and Ksh.48.6 million salary payments. Tuskys says it is currently operating 53 branches with a staff base of 2600 employees. Further, the retailer says it has engaged 90 per cent of its creditors by value and that it has since reached 219 debt restructuring and settlement agreements with suppliers.