Uchumi Supermarkets Plc has today received a boost in its recovery efforts after the Commercial Tax Division of the High Court approved the Company’s Voluntary arrangement (CVA) to offset some of its debts. The ruling was passed at the creditors meeting on March 2 2020.
The High Court’s ruling that was delivered on July 1, 2020, gives Uchumi the go-ahead to implement the CVA which will see the retailer offset some debt, pay off part of the remainder in phases and write off a portion of payables. The payment plan will be implemented over a number of years as per the CVA filed in Court by the retailer.
“The decision gives us a chance to implement our recovery plan. We are very much aware of the challenges in the retail sector which have been worsened by the COVID-19 pandemic but management is engaging with all stakeholders with a view of supporting the industry,” said Uchumi Supermarkets Plc CEO Mr Mohamed Mohamed in a statement.
The CVA will, however, be subject to a periodic review through a creditors’ meeting every six months where creditors and other stakeholders will appraise the implementation of the CVA and the financial wellbeing of the retailer.
As part of the CVA Uchumi will now look into new business models that include implementing digital strategies, and also moving into the convenient store model and adopting cost leadership strategies.
Mr Owen Koimburi has been appointed as the legal insolvency practitioner, and he will be responsible for implementing the CVA.
While the CVA is a boost for the retailer, it will continue to search for strategic partners and other potential investors to help it find its roots back to recovery,” added Mr Mohammed