Debt Drama: Twiga Foods Makes Last-Ditch Effort To Avoid Liquidation
Twiga Foods, an agritech company among the leading names in Kenya’s tech scene, faces mounting challenges as it grapples with a liquidation notice from technology company Incentro Africa Limited, which is pursuing the recovery of over USD 250 K in unpaid debts. The situation compounds the ongoing financial strain on Twiga Foods, a company co-founded by Peter Njonjo and erstwhile CEO Grant Brooke, as it struggles to maintain its operations.
Incentro Africa has taken legal action, Nation reports, asserting in court documents that it has initiated insolvency proceedings against Twiga Foods due to the latter’s failure to settle a debt amounting to USD 261,878.75 (~KES 39 M). This debt is linked to services provided under the Google Partners Funding Programme, including Google Cloud Services and Partner Service Funds. The liquidation notice warns that the failure to settle this amount may lead to Incentro Africa Limited seeking a court-ordered liquidation.
In response to the impending threat of liquidation, Twiga Foods mounted a legal response on September 25, filing an urgent application to halt the liquidation process. The company contends that the statutory demand is not only premature but also motivated by ulterior motives, alleging that it is an attempt to force payment for a disputed debt.
In its court documents, Twiga Foods stated, “The company vehemently opposes the statutory demands as it has been presented prematurely, given that the company is currently in discussions with Google Ireland Limited, the ultimate provider of the Google Cloud Services. The company disputes the debt amount of $261,878.75 as indicated in the statutory demand, asserting that it is made in bad faith and has an ulterior motive, particularly an attempt to compel the company to settle a disputed debt. Twiga Foods maintains that it is solvent and operational.”
Amid these financial difficulties, Twiga Foods has taken measures to reduce costs, including a significant workforce reduction, resulting in the termination of 267 employees, as well as adjustments to staff allowances. These actions were taken in response to financial challenges, including reports of some suppliers withholding their produce due to outstanding debts running into millions.
Twiga Foods’ current CEO, Peter Njonjo, disclosed that the company had successfully secured Sh23.2 billion in investor funding between 2017 and 2021. However, he noted that funding opportunities had become scarce in recent times. Moreover, during the launch of Twiga Foods’ distribution centre in Kiambu County last year, President William Ruto announced a USD 300 M Hustler Fund grant intended to benefit Twiga Foods for lending to its suppliers and customers. However, Njonjo stated in a recent media roundtable that these funds are yet to materialise.
As the seemingly embattled enterprise goes through a bumpy period, its leadership maintains an air of confidence. “The company is not closing down, it is transforming its operations in Nairobi, Thika, and Machakos for the last mile distribution and transitioning to a wholesale model for Western Kenya and Uganda,” Njonjo said in August.
Local publications have reported that the court is expected to issue a ruling today, determining whether Incentro Africa should proceed with the liquidation process, in spite of Twiga Foods’ legal intervention.
Featured Image Credits: IBM Research