In August 2018, ARM Cement was placed under the administration of PricewaterhouseCoopers (PwC) to give it a chance to settle its debts and recover by defending its assets from creditors.
PwC has a riddled history in managing firms under receivership and although the administration is a different concept, the giant audit firm can’t escape the scrutiny it’s now facing at ARM -partly due to the portfolio of investors involved including UK’s CDC Group.
Back in 2014, Karuturi Ltd, one of Kenya’s main flower farms, was placed under receivership over debts owed to lenders including 400 million shillings loan owed to CFC Stanbic Bank. Kieran Day and Ian Small of the Business Advisory Group were appointed as the receivers of the troubled company but eventually quit for political reasons. PwC was appointed the new receiver managers but soon after, it stepped down as the liquidators and invited creditors to appoint a new replacement once again confirming that the laws of receivership are unfriendly.
The decision came after the company, Karuturi Ltd filed a suit challenging the qualifications of PwC as a liquidator. According to the company, PwC mismanaged the business and further drove it into more problems.
Part of the documents filed by Karuturi read “neither Thoithi Muniu nor Kuria Muchiru of PwC had applied or has ever applied to the official receiver for an authorization to act as an insolvency practitioner, nor has the official receiver issued any license to them.” PwC was also accused of mismanaging the liquidation process.
The fate of Spencon, a construction firm that was placed under the administration of PwC in 2017 remains unknown. Clearly, the company will hardly ever resuscitate its operations just like the Kinangop Wind Park limited (KWP), which has found itself entangled in land tussles before the project died under PwC.
That said, placing a company under administration is the way to go, but according to experts, the move doesn’t guarantee a company’s future survival. Firms falling victims of such management remain in a limbo, particularly if the laws governing can help and protect the company to stabilize and find a solution.
This is one of the reasons why PwC’s administration role at ARM Cement will remain under the spotlight in the days to come.