How Judge Majanja executed Tuskys

“Tuskys must now be put to death to stop the suffering of unsecured creditors. It must now be liquidated”.

Judge David Majanja of the High Court said this to put the final nail in the coffin of Tuskys Supermarket, a chain of 53 stores that once employed up to 2,600 people nationwide.

In his ruling rejecting the retailer’s request for additional time to restructure and turn around the supermarket, Justice Majanja writes that “no meaningful purpose will be served if it is indulged or accommodated further by the court.”

The court appointed Kolluri Venkata Subbaraya Kamasastry as Tusker Mattresses Ltd.’s provisional liquidator.

When the sibling shareholders of Tuskys Supermarkets disagreed over the direction of the retail chain, problems began to arise in 2011.

Tuskys was harmed by poor management, rapid growth, and a bitter family feud, which allowed rival Naivas and foreign chains like France’s Carrefour to take market share away from the retailer.

Due to a Sh248 million debt, Hotpoint Appliances filed a lawsuit in 2020 to liquidate the supermarket chain. Rositalia Ltd. and Syndicate Agencies Ltd. soon joined Hotpoint in the petition, seeking to liquidate the former retail behemoth for Sh11.2 million and Sh30.8 million, respectively.

Yusuf Mugweru even tried to shut down the retailer while blaming family members for poor management. Three of Mugweru’s siblings, John, Stephen, and George, each accused the other of trying to take over the family through a back door.

Later, the number of creditors increased to 42, totalling Sh4.5 billion in debt. Suppliers like Brookside Dairy Ltd ($127,000,000), Rentco Africa ($500,000,000), LG Harris EA ($22,000,000), Jeff Hamilton (K$10.5,000,000), and Premier Foods Industries ($27.8,000,000) were among them.

The petition to liquidate the company was supported by every creditor who joined the cases. They all claimed that they had supplied the retailer but had not been paid despite making demands.

Justice Majanja noted in the ruling that while the supermarket chain did not dispute its debt, it requested more time to find funding to turn around the business.

The supermarket informed the court that it had completed seven sales agreements for specific collateral charged to Equity Bank in order to settle the debt owed to that institution.

The court heard that Tuskys had developed a business strategy and turnaround plan that has been producing Sh55 million per month in total, allowing the company to continue as a going concern. Tuskys was also in the final stages of agreeing to a settlement with the bank to ensure a full and final settlement of the debt.

The retail chain claimed that its profits would allow it to strategically pay off its debts and finance its growth and expansion plan.

Additionally, the owners informed the court that the retailer had found a way to raise money that would not be realized if it were to be liquidated.