Troubled e-commerce company Copia is going into administration

Copia Kenya’s board of directors has placed the troubled e-commerce company in charge of administration as it looks to maintain operations amid recent shocks.

On Friday, the company announced the hiring of Makenzi Muthusi and Julius Ngonga from consulting firm KPMG to lead the administrative process aimed at keeping the company going as a going concern.

Administration means the process by which a receiver is appointed to restructure a company by ensuring its going concern with a view to its recovery or by auctioning 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 terms that are affordable to all existing shareholders, funders and investors. Copia Global is now winding down, leaving Copia Kenya in a new position to raise capital directly,” the company said in a statement on Friday.

“The administration will work with management to raise capital from new investors for operations in Kenya.”

Copia says that under the administrator’s watch, it expects the local management team to implement a plan that includes a lower burn rate (expense), an accelerated path to profitability and a focus on an increasingly digital consumer.

While Copia Kenya says it will try to preserve jobs, the fintech notes that reducing its workforce will likely be necessary to right-size the company.

Its CEO Tim Steel stated in a May 16 layoff letter that the affected employees would leave after one month in accordance with the required notice period.

The threatened layoffs would put Copia on the same list as Twiga Foods and Kune, which previously laid off all or a significant portion of their employees due to 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 households on the continent.

To reach its target market, the company relied on mobile technologies and a network of 30,000 local agents.

The administration replaced a receivership that previously resulted in the immediate liquidation of a company’s assets to pay creditors, without the need to first try to revive the company.

By entering administration, the company has a chance to regain its footing. In Kenya, the administrative process is governed by the Bankruptcy Act 2015.

The company or its directors may commence an administration process before the court or the holder of the qualifying floating charge.

Administrators have the power to convene meetings of shareholders or creditors, remove and appoint a director to office, or distribute the company’s assets among creditors.