•The auto maker has been grappling with debt after efforts to rescue the company for nearly one year failed.
•Liquidation involves bringing a business to an end and distributing its assets to claimants. It occurs when a company is insolvent – when it cannot pay its debts.
Kenyan automobile assembly company Mobius Motors has appointed a new liquidator signalling an end for the country’s first locally manufactured vehicle.
The automaker has been grappling with debt after efforts to rescue the company for nearly one year failed.
Mobius has been struggling to settle suppliers and pay salaries as debts from its operations rise with the incentives towards local automobile assembly doing little to salvage the situation.
Mobius’s Director Nicolas Guibert issued a creditors’ voluntary insolvency notice on Monday evening, saying the decision followed a stakeholder meeting earlier in the day.
Liquidation involves bringing a business to an end and distributing its assets to claimants. It occurs when a company is insolvent – when it cannot pay its debts.
Guibert said KVSK Sastry has been appointed to oversee the liquidation process.
“At a meeting of the shareholders held on 5-Aug-2024, it was resolved to place the company under liquidation as per Section 393 of the Insolvency Act and to appoint KVSK Sastry as the liquidator to wind up the company,” read the notice.
Kenya’s Insolvency Act 2015 allows companies to wind up if the board resolves “by special resolution that it be liquidated voluntarily.”
The notice adds that that a list of creditors and proxy forms will be released for inspection on Friday, August 9, at Mobius’s head office at the Sameer Business Park in Nairobi.
During liquidation, the remaining company assets are used to pay creditors and shareholders based on the priority of their claims.
British businessman Joel Jackson founded Mobius Motors in 2010 and its first car was unveiled in 2014.
Mobius, which raised $56 million (Sh7.3billion) across five rounds, manufactured low-priced SUVs targeting SMEs in infrastructure, agribusiness and supplies operating in remote areas, and needed vehicles that could withstand rough terrains.
The compact SUV, Mobius, was met with mixed reactions from Kenyans, with some criticising its stripped-down look despite its Sh1.3 million price tag then.
The automaker has since followed it up with Mobius II and Mobius III models, which are spruced-up but still rugged SUVs priced at Sh.1.5 million and Sh3.9 million respectively as of 2022.
Over the years, it has also received funding from Chandaria Industries, the U.S. International Development Finance Corporation and PanAfrican Investment, a private investment firm.
Kenya’s car market is dominated by used imports from Japan and the government has been striving to boost local vehicle assembly, attracting investments from global automakers such as Volkswagen.
Even so, the sale of new vehicles in Kenya dipped 15 per cent last year.
Data from the Kenya Motor Industry Association last month showed that individuals and businesses bought 11,370 units in 2023, down from 13,352 units sold in 2022.
Dealers attributed the drop to high inflation and the depreciating shilling, which shot up the prices of products as well as production costs.