Ukwala Supermarkets has applied to the court for the permanent closure of its business, revealing that it is unable to pay its debts that have accumulated to nearly Sh1 billion.
The struggling retailer owes the Kenya Revenue Authority (KRA) Sh840 million, making the taxman the biggest loser out of the more than 300 suppliers and institutions that have lodged claims against what was once counted among Kenya’s top supermarket chains.
Ukwala Supermarket in November filed for liquidation, informing the court that it had found it impossible to remain afloat. Total creditor claims against Ukwala amount to Sh930 million, yet the firm’s assets are valued at a paltry Sh19.3 million.
“The company is applying to be liquidated because of its indebtedness and inability to meet its financial obligations to creditors, suppliers, employees and the liabilities far outweigh the assets both fixed and movable,” says Ukwala director Vijay Jayantilal Dodhia in court filings.
Justice Mary Kasango is expected to render her judgment on the application on March 14. The firm has invited creditors who want to support or oppose the application to appear during the hearing of the suit. No creditor has so far filed any application in support or opposition of the intended liquidation.
The liquidation, if allowed by the court, will draw the curtain on the retailer that was registered in April 1995 and grew to one of the leading supermarket brands in the country. Mr Dodhia in court documents blames the fate facing the firm on “heavy losses occasioned by hard economic times and unfair business competition from other players”.
But even as the firm’s directors seek to liquidate it, the question remains how KRA became the most exposed institution of all the creditors. The taxman in April 2018 froze Ukwala Supermarkets’ bank accounts at Diamond Trust Bank, claiming Sh280 million Pay as You Earn and VAT arrears from the company.
Separately, KRA has been seeking Sh560 million from Ukwala, which the retailer has disputed in a suit pending before the tax appeals tribunal.On October 28, last year, two directors of the company, Mr Dodhia and Mr Rohit Shah, held a meeting and decided to seek for liquidation. They described the company as insolvent.