High Court has cleared Equity Bank #ticker:EQTY to auction a five-storey building in Nairobi’s city centre belonging to Tuskys Supermarket, dimming chances of a revival for the once giant retailer.
The sale of the prime property on Tom Mboya Street was temporarily suspended last month after the retailer petitioned the court to stop the lender, arguing that the building was worth more than what Equity was seeking.
The property, which hosts one of the retailer’s six remaining outlets, was used as security for a Sh650 million debt.
This is the first major auction of properties linked to Tusker Mattresses Limited, the owner of the Tuskys brand, which has so far only lost merchandise to auctioneers for rent default.
The move to auction the building is the latest signal of the retailer’s continuing financial distress and could trigger multiple creditors to seize and forcibly sell its assets estimated at Sh6.67 billion.
Justice David Majanja dismissed Tusky’s petition, saying Equity is a secured creditor and entitled to recover its money.
“Since the company (Tuskys) only seeks an injunction pending the determination of the application, the orders cannot be granted. This would mean that the bank would be prevented from exercising its legal right for no reason other than pending insolvency proceedings, to which it is not subject,” the Judge said.
The sale of the property will also likely see the Tuskys Imara supermarket closed unless the new owner chooses to retain the retailer as a tenant.
“They took a bank loan from Equity Bank that dates back to 2014 and they defaulted on payment,” said a representative of Antique Auctions—which is leading the forced sale.
Tuskys rushed to court arguing that there was a ruling delivered in November last year, suspending all proceedings and actions against it, pending the determination of an insolvency case.
The court heard that there is no evidence that the property has been valued and there is risk of undervaluation, especially in instances where the value of the property outweighs the debt.Tuskys pleaded with the court arguing that the property forms the cornerstone of its recovery plan and its recovery plans is pegged on trading and generating sufficient profit margin which would enable it supplement its investor’s funding.A further reduction of the branches, the court heard, will hit its revenue generation. Tuskys was until recently Kenya’s top retailer with 53 stores.Equity opposed Tuskys’ petition, saying the suspension of proceedings against Tuskys only affected unsecured creditors.The lender told […]
