Deacons plans to close stores in recovery plan

Fashion retailer, Deacons East Africa which placed under administration requires about Ksh450 million to finance its short term recovery process.

The joint administration team has recommended downsizing of the firm’s management team and closure of loss-making stores and subsidiaries in Uganda and Rwanda in efforts to reduce operational costs.

Deacons was suspended from the Nairobi Securities Exchange last year in November after going into administration.

The board then appointed Peter Kahi and Atul Shah of PKF Consulting as joint administrators of the company, citing financial turmoil that is facing the company.

Get breaking news on your Mobile as-it-happens. SMS ‘NEWS’ to 22163

Deacons became the second listed firm after ARM Cement to invoke Insolvency Act No.8 of 2015 that gives companies going through financial distress to appoint administrators in order to explore other possibilities of rescuing troubled firms.

The administration team has also proposed profit making stores to remain open even as the company faces financial difficulties, with subsidiaries in Rwanda and Uganda shut as well as downsizing the workforce.

There is also a proposal for creditors to convert their 1.1 billion shillings debt into equity.

Deacons which is valued at 600 million shillings is also scouting for potential buyers as part of its 9 months recovery plan.

However, the joint administrators say they would only consider liquidating the company after exhausting all recovery avenues.

Tell Us What You Think