Household goods company Tropikal Brands Afrika has sued Uchumi Supermarkets #ticker:UCHM for Sh35 million unpaid supplies, almost a year after the firm revealed it had taken struggling retailer Nakumatt to court.
The firm says Uchumi has failed to settle the debts, some dating back five years, despite the credit period within which the arrears were to be settled as per the contract being 90 days from the date of supply.
The new case signals deepening woes facing the retail chain, which has struggled to raise new capital to fund its operations, even as it fights the closure of branches, frequent stock-outs and faces difficulties paying staff on time.
“For the period between July 17, 2014, and May 3, 2018, the plaintiff did supply to defendant goods and as at May 3, 2018, the defendant’s account had arrears and an outstanding balance of Sh35,890,544.
“The defendant has failed to pay,” says Tropikal Brands in papers filed in court.
The firm, through its advocate, on May 11 wrote to Uchumi giving the retail chain seven days to settle the debt.
The retailer is yet to respond to the suit filed on July 24.
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Tropikal Brands — whose chairman is former Nation Media Group #ticker:NMG CEO Linus Gitahi — is a leading manufacturer of household, personal care, food and baby products.Mr Gitahi was also seeking to recover Sh56.3 million from another troubled retailer, Nakumatt Supermarkets, which went into administration in January.Uchumi has been struggling under the weight of debts and a cash crunch that affected its ability to pay staff salaries.The retail workers’ union previously said non-payment of salaries, which began in December, affected 1,355 employees.Uchumi has posted losses in the past three years and struggles to recover since it first went into receivership in mid-2006.The retailer came out of receivership in January 2008, riding on a Sh675 million bailout loan from its principal shareholder, the government.