Copia Kenya's board has placed the struggling e-commerce company into administration as it seeks to save the business amid recent turmoil.
The company announced on Friday that it had hired Makenzi Muthusi and Julius Ngonga of consulting firm KPMG to lead an administration process aimed at keeping the company as a going concern.
Administration refers to the process whereby an insolvency trustee is appointed to restructure a business by ensuring it continues to operate, with a view to turning the business around or, as a last resort, conducting an auction of assets to protect the interests of creditors.
“Copia Kenya's parent company, Copia Global, was unable to raise capital on terms acceptable to all existing shareholders, financiers and investors. Copia Global is now winding down its operations and the Copia Kenya business will raise capital directly in its new capacity,” the company said in a statement on Friday.
“My administration will work with management to raise capital from new investors for the Kenya operations.”
Copia said it expects local management, under the administrators' oversight, to execute on plans to reduce burn rate, accelerate to profitability and focus on an increasingly digital consumer.
Copia Kenya says it will try to preserve jobs, but the fintech firm said it will likely have to lay off some staff to right-size the company.
In a termination letter dated May 16, CEO Tim Steele said the affected employees would leave in one month, following the required notice period.
The impending job cuts put Copia on the same list as Twiga Foods and Khune, which have laid off all or most of their staff due to losses and an inability to raise additional capital.
Copia was founded in 2013 with the goal of bringing e-commerce and financial services to low- and middle-income households on the African continent.
The company leverages mobile technology and a network of 30,000 local agents to reach its target markets.
The receivership replaces the bankruptcy regime, which previously resulted in the immediate liquidation of a company's assets to pay creditors without any attempt to rehabilitate the business.
Entering into insolvency proceedings gives a business another chance to get back on its feet. In Kenya, the insolvency process is governed by the Insolvency Act 2015.
The company or its directors can commence administration proceedings with the court or with the holders of eligible floating charges.
Administrators have the power to convene meetings of members or creditors, remove and appoint directors, and distribute the company's assets to creditors.
