Fashion retailer Deacons East Africa has sunk into administration, forcing capital markets regulator to suspend its shares from trading on Nairobi bourse.
The board of the cash-strapped retailer said it has appointed Peter Kahi and Atul Shah of PKF Consulting as joint administrators of the company, citing financial turmoil that is facing the company.
“...the board of directors of the company have resolved that as a result of the financial difficulties being faced by the company, it is in the best interest of the company and its creditors for the directors to place the company into administration,” said Deacons CEO Muchiri Wahome.
Deacons becomes 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 primary objective of placing the company under administration is to enable it achieve a better outcome for the creditors than would likely to be the case if the company were to be liquidated," said Mr Wahome in a statement.
The Capital Markets Authority has already granted Deacons’ board the request and moved to suspend its shares from trading. Nairobi Securities Exchange notified traders on Monday before the opening of trading.
“The suspension in trading of the company’s shares takes effect from today, November 19, 2018 and shall remain in force for a period of 40 working days,” said NSE.