The board of Copia Kenya has placed the beleaguered e-commerce company into administration as they seek to preserve the business amid the recent turmoil.
The company on Friday announced the appointment of Mackenzie Muthusi and Julius Njonga from consultancy KPMG to lead the administration process with the aim of maintaining the company as a going concern.
Administration refers to the process whereby an insolvency practitioner is appointed to restructure a company by ensuring that it is a going concern with a view to either converting it or carrying out an auction of its assets as a last resort to protect the interests of creditors.
“Copia Global, the parent company of Copia Kenya, has been unable to attract capital on favorable terms for all existing shareholders, financiers and investors. Copia Global is now heading for closure, leaving the Copia Kenya business in a new position to raise capital directly,” the company said in a statement on Friday. .
“The department will work with management to raise capital from new investors for the business in Kenya.”
Under the administrator's direction, Copia says it expects its local management team to implement a plan with a lower burn rate, a fast path to profitability and an increasingly digital consumer focus.
While Copia Kenya says it will seek to preserve jobs, fintech companies point out that downsizing some staff will likely be necessary to correct the size of the company.
CEO Tim Steele said in a May 16 redundancy letter that affected employees would leave after a month in line with the required notice period.
The looming layoffs would put Copia in the same list as Twiga Foods and Kune which previously laid off all or a significant portion of their workforce amid losses and an inability to raise additional capital.
Copia was launched in 2013 with the aim of bringing e-commerce and financial services to middle and low-income families on the continent.
The company relied on mobile technologies and a network of 30,000 local agents to reach the target market.
The administration replaced receivership which had previously led to the immediate liquidation of a company's assets to pay creditors without first seeking to revive the business.
By going into administration, the company has a chance to regain its footing. In Kenya, the administration process is governed by the Insolvency Act 2015.
The company or its directors can initiate the administration process alongside a court of law or an eligible floating charge holder.
Administrators have powers to hold meetings of members or creditors, remove and appoint a director of the office or distribute the company's assets to creditors.