Debts don’t die and death cannot wipe away footprints of debts. Bank debts, at least. If there were ever any doubts, the soul of Uchumi supermarket must be a writhing testimony as Barclays Bank has got one on them. Court has ordered Uchumi to pay the bank Shs1 billion it owes even if it died years ago. In October 2015, Uchumi Supermarkets announced closure of its operations in Uganda and Tanzania as it sought to stop further financial hemorrhage. In effect, the parent company of the retail store chain took the subsidiaries under receivership and now will have to clean up their mess.
Uchumi supermarket has been ordered to pay Barclays Shs710 million with interest to clear outstanding loan the retail store owes the bank.
Judge David Wangutusi, of the Commercial Division of the High Court, on Tuesday ordered the defunct supermarket, through its parent company, to clear the loan with 25% annual interest from November 6, 2015, till the date of final fulfillment of the debt.
Uchumi Supermarket, not long ago an epitome of supermarket operations in the country, was closed in October 2015 after the parent company in Kenya took drastic decision to stop further financial bleeding by closing its subsidiaries in Uganda and Tanzania.
The Ugandan retail store was located in Garden City, one of the first modern one-stop leisure, hospitality and shopping malls in Kampala. Uchumi Uganda went into receivership of Uchumi Supermarkets Ltd.
However, that the retail store folded its damp Ugandan wing is one thing, that it must clear a loan it owes a bank is another altogether. That is how Judge Wangutusi has decided it should be.
Barclays Bank, through their lawyers Sebalu & Lule Co Advocates, sued Uchumi Supermarkets Ltd for a credit facility of Shs500,000,000 secured by a guarantee of Shs1 billion that was extended to Uchumi (U) Ltd.
Absa, ENS Africa, A&O Shearman and Nomura Advise Asahi Holdings on USD 2.3bn Acquisition of 65% Stake in EABLThe bank told the court that Uchumi started defaulting on the payments, prompting various meetings and correspondences between the parties to settle the loan.
On August 11, 2016, Barclays Bank issued a demand to the defendant on the guarantee for Shs710,471631 in response to which Uchumi requested for a stay on the recovery with a view to provide a settlement plan. Furnished with email correspondence between the two parties, Judge Wangutusi defeated Uchumi’s claim that they were not indebted to Barclays.
In their defence, Uchumi, through their lawyers SO Kagere Advocates, argued that the debt wasn’t due against them as it had been acquired by Uchumi (U) Ltd as the principle borrowers and had subsequently gone under receivership by Uchumi supermarkets, a Kenyan-based enterprise, before full payment of the loan.
The Kenyan retailers claimed that any loss that Barclays Bank may have suffered as a result of extending funds to their subsidiary company could have been mitigated by more proactive action on Barclays’ part.
But Judge Wangutusi held that Barclays Bank had proved Uchumi’s indebtedness to the required standards. He hence ordered Uchumi Supermarkets Ltd to pay Shs710,471,631 with an interest of 25 per annum from November 6, 2015, till the date of final fulfillment of debt payment in addition to the costs of the suit.
