HIGH Court’s Commercial Division has dismissed with costs Nakumatt Tanzania Limited’s petition, seeking for orders to place it under administration due to heavy business losses of over 14bn/-.
Judge Patricia Fikirini ruled in favour of the respondents, Kenya Commercial Bank (KCB), JW Ladwa (1997) Limited and Tanzania Revenue Authority (TRA), noting that the petitioner had not furnished any information as to how he would be able to turn around the business.
“Examining the petition in its totality, I find the petition is without merit as the petitioner has failed to satisfy the conditions as stipulated under section 247 (3) ( a) and ( c) of the Company Act. The petition is thus dismissed with costs,” the judge ruled.
She noted that amongst the condition was for the petitioner to show that the order by the Court would be more advantageous in realisation of company’s assets than it would be on winding up and that there is likelihood of the company’s either as a whole or part of it being considered as “going concern.”
Pursuant to section 247 (2) of the Company Act, the judge said, the company or business once placed under administration, it forces the affairs, business and property of the company to be managed by an administrator appointed for the purpose by the Court.
“The petitioner’s financial report as furnished has admitted loss of more than 14bn/-from 2017 and the loss is still accruing this is certainly due to existing bank loans, overdrafts and other amounts payable to creditors, including failure to pay secured creditors like Kenya Commercial Bank (KCB),” the judge said.
She observed that KCB has not been paid for almost two years while JW Ladwa (1997) Limited was claiming almost 2,867, 233.89 US dollars and 3,584,191.073/39 while TRA though not a secured creditor but has priority over all other debts to be paid and the taxes amount to be paid is almost 2bn/-.
This vividly shows that the petitioner has no funds not only to pay debts but even run the business to generate income, leading to assumption that Nakumatt Tanzania under administration could continue to exist long enough to carry out its objectives and commitments and will not liquidate in future.
“Without serious financial bailout, which I contemplate would be hard to come by, the petitioner cannot be able to buy new stocks and without new stocks there will be nothing to sell. This is concluded based on the fact that the alleged (whereabouts of) available stock (has not been disclosed),” the judge said.
According to her, the petitioner, under the situation would definitely need a new stock which entail additional capital or financing, and of course new market strategy to bring itself to the business platform after going underground, the undertaking which would not necessarily work in his favour.
She was of the views that considering that the petitioner has no immovable properties in Tanzania and the fact the majority shareholder is under liquidation, it is obvious the chances of the petitioner getting boosted is farfetched.
“In view of that even the appointed administrator will have no assets to administer or business to turn around. But even if the petitioner had immovable properties, it was not definite that it would have sufficed to sort out the debts it owes its secured and unsecured creditors,” she said.
Under the circumstances, the judge pointed out, the best option could, have been granting liquidation but since neither the petitioner nor the respondents have sought for that this Court cannot on its own proceed to order so.