Insolvency Act

LAWS OF KENYA
THE INSOLVENCY ACT
CAP. 53
Revised and published by the National Council for Law Reporting
with the authority of the Attorney-General as gazetted by the Government Printer
www.kenyalaw.org

Kenya
Insolvency Act
Cap. 53
Legislation as at 31 December 2022
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Share widely and freely.

Insolvency Act (Cap. 53)
Contents
Part I – PRELIMINARY PROVISIONS ............................................................................................................................................................. 1
1. Short title and commencement .......................................................................................................................................................... 1
2. Interpretation ............................................................................................................................................................................................. 1
3. Objects and application of this Act .................................................................................................................................................. 6
Part II – INSOLVENCY PRACTITIONERS ....................................................................................................................................................... 7
4. Circumstances in which person acts as insolvency practitioner ............................................................................................ 7
5.

nces in which person acts as insolvency practitioner ............................................................................................ 7
5.

Consequences of acting without authorisation ............................................................................................................................ 8
6. Qualifications for person to act as insolvency practitioners .................................................................................................... 8
7. Duty of Cabinet Secretary to declare certain bodies to be recognised as professional bodies for the purposes
of this Act ......................................................................................................................................................................................................... 8
8. Application to act as insolvency practitioner ................................................................................................................................ 9
9. Grant or refusal of authorisation ....................................................................................................................................................... 9
10.

................................................................................................................................................ 9
10.

Power of Official Receiver to revoke authorisation ................................................................................................................ 10
11. Right to appeal against decisions of Official Receiver ......................................................................................................... 10
Part III – BANKRUPTCY OF NATURAL PERSONS ................................................................................................................................... 11
12. Interpretation: Part III ....................................................................................................................................................................... 11
13. Nature of bankruptcy ......................................................................................................................................................................... 11
14. Alternatives to bankruptcy .............................................................................................................................................................. 11
15.

............................................................................................................................................... 11
15.

Who is entitled to make a bankruptcy application ................................................................................................................ 12
16. Proceedings on a bankruptcy application .................................................................................................................................. 12
17. Creditor may apply for bankruptcy order in respect of debtor ........................................................................................... 12
18. When court can make bankruptcy order on application by secured creditor ................................................................ 13
19. Expedited creditor's application .................................................................................................................................................... 14
20. Proceedings on creditor's application ......................................................................................................................................... 14
21. Creditor's execution process not to be issued or continued ............................................................................................... 14
22.

execution process not to be issued or continued ............................................................................................... 14
22.

Power of relevant court to stay execution processes by other creditors or allow them on terms ......................... 15
23. Execution process issued by other court ................................................................................................................................... 15
24. No restriction on execution process if bankruptcy application withdrawn or dismissed .......................................... 15
25. When court may adjudge debtor bankrupt ............................................................................................................................... 15
26. When the Court may stay application ........................................................................................................................................ 15
27. Orders if more than one application ........................................................................................................................................... 15
28. Orders if there is more than one order ...................................................................................................................................... 16
29.

ne order ...................................................................................................................................... 16
29.

Power of the Court to make order staying bankruptcy application, etc. ........................................................................ 16
30. Court may stay application while underlying debt is determined .................................................................................... 16

Court may stay application while underlying debt is determined .................................................................................... 16

31. Court may allow one creditor to be substituted for another .............................................................................................. 16
32. When debtor may make application for bankruptcy order .................................................................................................. 17
33. Appointment of insolvency practitioner by the Court ........................................................................................................... 17
34. Action on report of insolvency practitioner .............................................................................................................................. 18
35. Joint application can be made by two or more debtors ....................................................................................................... 18
36. Appointment of interim trustee of debtor's property on application of creditor ......................................................... 18
37. Additional orders after appointment of interim trustee ....................................................................................................... 19
38.

rs after appointment of interim trustee ....................................................................................................... 19
38.

Notice of appointment of interim trustee to be published ................................................................................................. 19
39. Execution process not to be issued after notice of appointment of trustee is published ......................................... 19
40. Effect of staying execution .............................................................................................................................................................. 19
41. Bankruptcy commences on making of bankruptcy order ..................................................................................................... 19
42. Date and time of bankruptcy order to be recorded ............................................................................................................... 20
43. Registrar of the Court to notify trustee of bankruptcy order .............................................................................................. 20
44. Official Receiver to nominate bankruptcy trustee ................................................................................................................... 20
45.

nominate bankruptcy trustee ................................................................................................................... 20
45.

Presumption that act was done, or transaction was entered into or made, after bankruptcy ................................. 20
46. Bankruptcy order to be binding on all persons ....................................................................................................................... 20
47. Official Receiver to maintain public register of undischarged and discharged bankrupts ........................................ 20
48. What happens or is to happen on and after bankruptcy commences ............................................................................. 20
49. Official Receiver to serve notice on bankrupt requiring the bankrupt to lodge statement of the bankrupt's
financial position ........................................................................................................................................................................................ 21
50. Bankrupt to lodge statement of financial position with bankruptcy trustee ................................................................ 21
51. Creditors entitled to inspect and take copies of statement of bankrupt's financial position ................................... 22
52.

........ 21
51. Creditors entitled to inspect and take copies of statement of bankrupt's financial position ................................... 22
52.

Official Receiver to convene first meeting of creditors ......................................................................................................... 22
53. Circumstances in which Official Receiver may decide not to convene first meeting of creditors .......................... 22
54. Documents to be sent with notice of meeting ........................................................................................................................ 23
55. Power of creditors to requisition meeting ................................................................................................................................. 23
56. Execution process not to be begin or continue after bankruptcy order advertised .................................................... 23
57. Effect of bankrupt's death after bankruptcy order .................................................................................................................. 24
58. Creditors' role at creditors' meetings .......................................................................................................................................... 24
59.

ings .......................................................................................................................................... 24
59.

Power to appoint bankruptcy trustee .......................................................................................................................................... 24
60. Consequences of failure of creditors' meeting to appoint bankruptcy trustee ............................................................. 24
61. Power of Official Receiver acting as bankruptcy trustee to appoint another person to act instead ...................... 25
62. Special case in which the Court may appoint bankruptcy trustee ................................................................................... 25
63. Powers of bankruptcy trustee ......................................................................................................................................................... 25
64. Bankruptcy trustee not to sell bankrupt's property before first creditors' meeting .................................................... 26

.... 25
64. Bankruptcy trustee not to sell bankrupt's property before first creditors' meeting .................................................... 26

65. Title of purchaser from bankruptcy trustee .............................................................................................................................. 26
66. Bankruptcy trustee to bank money and power to invest surplus ...................................................................................... 26
67. Bankruptcy trustee may assign right to sue under this Act ................................................................................................. 27
68. Proceedings by bankruptcy trustee when bankrupt is partner in business partnership ............................................ 27
69. Discharge or transfer of indenture of apprenticeship or articles of agreement on bankruptcy of employer ...... 27
70. Bankruptcy trustee may apply for directions by the Court .................................................................................................. 28
71. Application to the Court to reverse or modify bankruptcy trustee's decision ............................................................... 28
72.

71. Application to the Court to reverse or modify bankruptcy trustee's decision ............................................................... 28
72.

Bankruptcy trustee to keep proper accounting records ........................................................................................................ 28
73. Bankruptcy trustee’s final statement of receipts and payments ........................................................................................ 29
74. Audit of bankruptcy trustee's accounts ....................................................................................................................................... 29
75. Removal of bankruptcy trustee and vacation of office ......................................................................................................... 29
76. When Official Receiver is released from obligations as bankruptcy trustee ................................................................. 30
77. When bankruptcy trustee, not being the Official Receiver, is released from obligation ............................................ 30
78. Vacancy in office of bankruptcy trustee ..................................................................................................................................... 31
79.

y trustee ..................................................................................................................................... 31
79.

General control of bankrupt trustee by the Court .................................................................................................................. 31
80. Liability of bankruptcy trustee for misapplication of money, etc. ..................................................................................... 31
81. Kinds of creditors' meetings ........................................................................................................................................................... 32
82. Subsequent meetings of creditors ................................................................................................................................................ 32
83. Meeting and resolution not defective for lack of notice ...................................................................................................... 33
84. Appointment of Chairperson to conduct creditor’s' meetings ............................................................................................ 33
85. Power of Chairperson to adjourn creditors' meeting ............................................................................................................. 33
86.

son to adjourn creditors' meeting ............................................................................................................. 33
86.

Bankruptcy trustee to report to creditors' meeting ............................................................................................................... 33
87. Who can attend creditors' meeting .............................................................................................................................................. 33
88. Bankrupt may be required to attend creditors' meeting and be questioned ................................................................ 33
89. Attendance at creditors' meeting by non-creditors ................................................................................................................ 34
90. Minutes and record of creditors' meeting ................................................................................................................................. 34
91. Number of persons required for creditors' meeting to be valid ........................................................................................ 34
92. Who can represent creditors and bankrupt at creditors' meeting .................................................................................... 34
93.

can represent creditors and bankrupt at creditors' meeting .................................................................................... 34
93.

Passing of resolutions at creditors' meetings .......................................................................................................................... 35
94. What votes can be counted for passing of resolutions at creditors' meeting ............................................................... 35
95. Who may vote at creditors' meeting ........................................................................................................................................... 36
96. When secured creditor may vote at creditors' meeting ........................................................................................................ 36
97. When creditor under bill of exchange or promissory note may vote at creditors' meeting ..................................... 36
98. Person disqualified from voting at creditor's meeting through preferential effect ..................................................... 36
99. Entitlement of partner's creditor to prove debt at creditors' meeting ............................................................................ 36

Entitlement of partner's creditor to prove debt at creditors' meeting ............................................................................ 36

100. Creditors may appoint expert or committee to assist bankruptcy trustee ................................................................... 37
101. Creditors' right to inspect documents ...................................................................................................................................... 37
102. Committee of creditors may be established ........................................................................................................................... 37
103. Exercise by Cabinet Secretary of functions of creditor's committee .............................................................................. 37
104. Status of property acquired during bankruptcy .................................................................................................................... 37
105. Property vests in replacement bankruptcy trustee .............................................................................................................. 38
106. Property held in trust by bankrupt ............................................................................................................................................ 38
107.

t ............................................................................................................................................ 38
107.

Court may order money due to bankrupt to be assigned to bankruptcy trustee ....................................................... 38
108. Certain payments to be applied in accordance with the Second Schedule ................................................................ 38
109. When execution creditor may retain execution proceeds ................................................................................................. 38
110. Effect of notice to judicial enforcement officer of bankruptcy ........................................................................................ 39
111. Judicial enforcement officer to retain proceeds of execution for fourteen days after sale .................................... 39
112. Purchaser under sale by judicial enforcement officer acquires good title ................................................................... 40
113. Court may set aside rights conferred on bankruptcy trustee ........................................................................................... 40
114. Transaction in good faith and for value after bankruptcy .................................................................................................

saction in good faith and for value after bankruptcy .................................................................................................

40
115. Executions and attachments in good faith ............................................................................................................................. 40
116. When execution or attachment completed for purposes of sections 109 and 115 .................................................. 41
117. Bankruptcy trustee's interest in property passes to transferee ........................................................................................ 41
118. Bankruptcy trustee may disclaim onerous property ............................................................................................................ 41
119. Effect of disclaimer .......................................................................................................................................................................... 41
120. Position of person who suffers loss as result of disclaimer ............................................................................................. 41
121. Bankruptcy trustee may be required to elect whether to disclaim ................................................................................ 42
122.

nkruptcy trustee may be required to elect whether to disclaim ................................................................................ 42
122.

Liability for rentcharge on bankrupt's land after disclaimer ............................................................................................ 42
123. Transmission of interest in land ................................................................................................................................................. 42
124. Bankruptcy trustee cannot claim interest in land if bankrupt remains in possession until discharge ............... 42
125. Bankruptcy trustee may transfer shares and other securities .......................................................................................... 43
126. Bankruptcy trustee may disclaim liability under shares .................................................................................................... 43
127. Bankruptcy trustee may disclaim liability under shares ..................................................................................................... 43
128. Bankruptcy trustee may be required to elect whether to disclaim liability under shares ...................................... 44
129.

........ 43
128. Bankruptcy trustee may be required to elect whether to disclaim liability under shares ...................................... 44
129.

Transfer of shares after disclaimer ............................................................................................................................................ 44
130. Company may prove for unpaid calls ....................................................................................................................................... 44
131. Interpretation: Division 11 ............................................................................................................................................................ 45
132. Restrictions on creditor dealing with goods .......................................................................................................................... 45
133. Bankruptcy trustee's powers in relation to goods that are subject to a credit purchase transaction ................. 45

...................... 45
133. Bankruptcy trustee's powers in relation to goods that are subject to a credit purchase transaction ................. 45

134. Creditor in possession of goods may prove in bankruptcy if bankruptcy trustee has not exercised powers
............................................................................................................................................................................................................................. 46
135. Creditor may assign goods to bankruptcy trustee ............................................................................................................... 46
136. Status of bankrupt's property on second bankruptcy ......................................................................................................... 46
137. Effect of notice to bankruptcy trustee of application for bankruptcy ............................................................................ 47
138. Separate accounts to be kept for each bankrupt ................................................................................................................. 47
139. How joint and separate estates are to be applied .............................................................................................................. 47
140.

arate estates are to be applied .............................................................................................................. 47
140.

General duty of bankrupt .............................................................................................................................................................. 47
141. Bankrupt to disclose property acquired before discharge ................................................................................................ 47
142. Bankrupt to deliver property to bankruptcy trustee on demand .................................................................................... 48
143. Court may impose charge on bankrupt's property ............................................................................................................... 48
144. Bankrupt to give bankruptcy trustee accounting records and other documents ....................................................... 49
145. Bankrupt to give bankruptcy trustee information relating to property ........................................................................ 49
146. Bankrupt to give bankruptcy trustee information relating to income and expenditure .......................................... 49
147.

........ 49
146. Bankrupt to give bankruptcy trustee information relating to income and expenditure .......................................... 49
147.

Bankrupt to notify bankruptcy trustee of change in personal information ................................................................. 49
148. Bankrupt to give bankruptcy trustee financial information .............................................................................................. 50
148A. Principles of Data Protection .................................................................................................................................................... 50
149. Interpretation: Division 15 ............................................................................................................................................................ 50
150. Bankrupt can be required to contribute to payment of debts ......................................................................................... 51
151. Onus of proof if bankrupt defaults in making payment .................................................................................................... 51
152. Prohibition of bankrupt entering business ............................................................................................................................. 51
153.

ntering business ............................................................................................................................. 51
153.

Warrant to search for and seize bankrupt's property .......................................................................................................... 51
154. Seizure of bankrupt's property .................................................................................................................................................... 52
155. Bankrupt to vacate land or buildings if required to do so ............................................................................................... 52
156. Bankrupt's right to inspect documents .................................................................................................................................... 53
157. Restrictions on bankrupt dealing with property ................................................................................................................... 53
158. Bankrupt prohibited from taking steps to defeat beneficial interests of others in bankrupt's property ............ 53
159. Responsibility of bank to notify bankruptcy trustee of bankrupt's account ................................................................ 53
160.

59. Responsibility of bank to notify bankruptcy trustee of bankrupt's account ................................................................ 53
160.

Official Receiver entitled to require bank to search records relating to bankrupt's account ................................. 54
161. Bankrupt entitled to retain certain assets .............................................................................................................................. 54
162. Bankrupt may retain certain assets with consent of creditors ........................................................................................ 55
163. Retention of assets not to affect rights under charge or credit purchase transaction ............................................ 55
164. Retention provisions not to confer rights to other assets ................................................................................................. 55
165. Relative or dependant entitled to exercise bankrupt's right to retain assets ............................................................. 55
166. Bankruptcy trustee may make allowance to bankrupt ....................................................................................................... 55

ptcy trustee may make allowance to bankrupt ....................................................................................................... 55

167. Bankruptcy trustee may allow bankrupt to retain money ................................................................................................. 55
168. Bankruptcy trustee may summon bankrupt and others to be examined ..................................................................... 56
169. Conduct of examination of person summoned by bankruptcy trustee ......................................................................... 56
170. Expenses of person summoned by bankruptcy trustee or the Court ............................................................................. 57
171. Entitlement of examinee to be represented .......................................................................................................................... 57
172. Creditor may inspect record of examination .......................................................................................................................... 57
173. Report of examination not to be published without court's consent ............................................................................ 57
174.

Report of examination not to be published without court's consent ............................................................................ 57
174.

Examination provisions also apply when bankruptcy trustee appointed interim trustee in respect of
debtor's property ......................................................................................................................................................................................... 57
175. No lien over bankrupt's documents and other records ...................................................................................................... 57
176. Offences relating to conduct of examinations by bankruptcy trustee .......................................................................... 58
177. Court to hold public examination if bankruptcy trustee or creditors require ............................................................. 58
178. Bankruptcy trustee to serve notice of examination on bankrupt ................................................................................... 59
179. Bankruptcy trustee to lodge report with the Court before start of examination ...................................................... 59
180.

. 59
179. Bankruptcy trustee to lodge report with the Court before start of examination ...................................................... 59
180.

Conduct of public examination before the Court ................................................................................................................. 59
181. Bankruptcy trustee to ensure record of examination is kept ........................................................................................... 60
182. When examination ends ................................................................................................................................................................ 60
183. Consequence of bankrupt's failing to attend examination ................................................................................................ 60
184. Bankrupt entitled to be paid expenses for attending examination ............................................................................... 60
185. Power to extend examination companies controlled by bankrupt and bankrupt's associates .............................. 60
186.

................ 60
185. Power to extend examination companies controlled by bankrupt and bankrupt's associates .............................. 60
186.

No privilege against self-incrimination, but statements not generally admissible in criminal proceedings
against their maker .................................................................................................................................................................................... 61
187. Offences relating to examinations of bankrupts ................................................................................................................... 61
188. Entitlement of examinee to be represented .......................................................................................................................... 62
189. Bankruptcy trustee may continue or disclaim bankrupt's contracts entered into before bankruptcy
commenced ................................................................................................................................................................................................... 62
190. Contract terminated by other contracting party ................................................................................................................... 62
191.

by other contracting party ................................................................................................................... 62
191.

Transaction with bankrupt made in ignorance of bankruptcy ......................................................................................... 62
192. Bankrupt's co-contractor may sue and be sued if there is a joint contractual liability ........................................... 63
193. Bankruptcy trustee may recover advocate's costs ................................................................................................................ 63
194. Application of Division 19 ............................................................................................................................................................ 63
195. Power to extend certain periods specified in this Division .............................................................................................. 63
196. Insolvent transactions may be cancelled by bankruptcy trustee .................................................................................... 63
197. Meaning of insolvent transaction for purposes of sections 196 ..................................................................................... 64
198.

ng of insolvent transaction for purposes of sections 196 ..................................................................................... 64
198.

Insolvent transaction presumed .................................................................................................................................................. 64
199. When series of transactions are to be regarded as single transaction ......................................................................... 64

199. When series of transactions are to be regarded as single transaction ......................................................................... 64

200. Insolvent charges can be cancelled on bankruptcy trustee's initiative ........................................................................ 64
201. Charge for new consideration or replacement charge not affected .............................................................................. 65
202. Presumption that bankrupt unable to pay due debts ......................................................................................................... 65
203. Charge for unpaid purchase price given after sale of property ...................................................................................... 65
204. Appropriation of payments by bankrupt to secured creditor ........................................................................................... 65
205. Charge agreed before specified period not to be cancelled ............................................................................................ 66
206. Cancellation of gifts made within two years before bankruptcy .................................................................................... 66
207.

ellation of gifts made within two years before bankruptcy .................................................................................... 66
207.

Cancellation of gifts made by bankrupt made within five and two years before bankruptcy ................................ 66
208. Procedure for cancelling irregular transactions .................................................................................................................... 66
209. Court may order retransfer of property or payment of an equivalent value .............................................................. 67
210. Limits on what can be recovered ............................................................................................................................................... 67
211. Bankruptcy trustee may recover difference in value if transaction is found to be under value ........................... 68
212. Court may order recipient of bankrupt's contribution to property of another to pay value to bankruptcy
trustee ............................................................................................................................................................................................................. 68
213.

.............................................................................................................................................. 68
213.

Court's powers in relation to bankrupt's contribution to recipient's property ............................................................ 69
214. How bankruptcy trustee is to use repayment of bankrupt's contribution to property ............................................. 69
215. Interpretation: Division 20 ............................................................................................................................................................ 70
216. What debts are provable debts ................................................................................................................................................... 70
217. Procedure for proving debt: creditor to submit claim form .............................................................................................. 70
218. Bankruptcy trustee required to examine creditor's claim .................................................................................................. 70
219. Bankruptcy trustee to give creditor notice of grounds of rejection ............................................................................... 71
220.

ruptcy trustee to give creditor notice of grounds of rejection ............................................................................... 71
220.

Bankruptcy trustee's power to obtain evidence of debt ..................................................................................................... 71
221. Notice by bankrupt or creditor to bankruptcy trustee to allow or reject creditor's claim ....................................... 71
222. Court may cancel creditor's claim .............................................................................................................................................. 71
223. Power of court to quash or vary bankruptcy trustee's decision rejecting creditor's claim ...................................... 71
224. Parties to proceedings relating to creditor's claim .............................................................................................................. 72
225. Court may make order as to costs ............................................................................................................................................. 72
226. Secured creditor’s options in relation to property that is subject to a charge ........................................................... 72
227.

26. Secured creditor’s options in relation to property that is subject to a charge ........................................................... 72
227.

Power of Court to order disposal of property that is subject to a charge .................................................................... 73
228. Realisation of property that is subject to a security ........................................................................................................... 73
229. Valuation of charge held by creditor and claim for balance due ................................................................................... 73
230. Offence for secured creditor to make false claim ................................................................................................................ 74
231. Bankruptcy trustee's powers when secured creditor values property subject to charge and proves for
balance ............................................................................................................................................................................................................ 74
232.

.............................................................................................................................................. 74
232.

Secured creditor who surrenders charge may with approval of the Court withdraw claim or submit a new
claim ................................................................................................................................................................................................................ 75

................................................................................................................................................... 75

233. Bankruptcy trustee may estimate amount of uncertain creditor's claim ...................................................................... 75
234. Application to the Court to determine amount of uncertain creditor's claim ............................................................ 75
235. Creditor's claim payable six months or more after commencement of bankruptcy ................................................. 75
236. Bankruptcy trustee's duty when mutual dealings have occurred between the bankrupt and other persons
............................................................................................................................................................................................................................. 75
237. Creditor may claim pre-bankruptcy interest ........................................................................................................................... 76
238. Post-bankruptcy interest payable at prescribed rate if surplus remains ...................................................................... 76
239.

Post-bankruptcy interest payable at prescribed rate if surplus remains ...................................................................... 76
239.

Additional post-bankruptcy interest on contract or judgment debt if surplus remains .......................................... 76
240. Meaning of prescribed rate for purposes of sections 238 and 239 ............................................................................... 77
241. Creditor required to deduct trade discounts .......................................................................................................................... 77
242. Secured creditor can prove as unsecured creditor if security is void or partly void ................................................ 77
243. Judgment creditor may prove for costs .................................................................................................................................... 77
244. Company may prove for unpaid calls ....................................................................................................................................... 77
245. When guarantor for bankrupt may prove claim .................................................................................................................... 77
246.

bankrupt may prove claim .................................................................................................................... 77
246.

Interpretation: Division 21 ............................................................................................................................................................ 78
247. Preferential debts: priority of debts ........................................................................................................................................... 78
248. Priority ranking of debts owed to bankrupt's spouse ......................................................................................................... 78
249. Person who makes payment on account of preferential creditor to be subrogated to the rights of that
creditor ............................................................................................................................................................................................................ 78
250. Priority given to landlord or other person who distrains on goods and effects of bankrupt ................................ 79
251. Creditors to have priority over creditors of joint bankrupt ............................................................................................... 79
252.

have priority over creditors of joint bankrupt ............................................................................................... 79
252.

Final distribution of bankrupt's estate ..................................................................................................................................... 79
253. Final meeting of creditors ............................................................................................................................................................ 79
254. Automatic discharge three years after bankrupt lodges statement of financial position ....................................... 80
255. Effect of automatic discharge ...................................................................................................................................................... 80
256. Right of creditor to object to automatic discharge ............................................................................................................. 80
257. Objection can be withdrawn ........................................................................................................................................................ 81
258.

.............................................................................................................................................. 81
258.

Bankrupt may apply for early discharge .................................................................................................................................. 81
259. When bankrupt is to be publicly examined before the Court concerning discharge ............................................... 81
260. Bankruptcy trustee to lodge report with the Court in specified circumstances ......................................................... 81
261. When creditor required to give notice of opposition to discharge ................................................................................ 82
262. Power of the Court to grant or refuse discharge ................................................................................................................. 82
263. Court may restrict bankrupt from engaging in business after discharge ..................................................................... 82
264. Court may quash order discharging bankrupt ....................................................................................................................... 83
265.

r discharging bankrupt ....................................................................................................................... 83
265.

Effect of quashing order discharging bankrupt from bankruptcy ................................................................................... 83
266. Bankrupt may apply for absolute discharge on ground that conditions of discharge are too onerous .............. 83

........................... 83
266. Bankrupt may apply for absolute discharge on ground that conditions of discharge are too onerous .............. 83

267. Debts from which bankrupt is released on discharge ........................................................................................................ 84
268. Discharge to be conclusive evidence of bankruptcy and the validity of bankruptcy proceedings ....................... 84
269. Discharge not to release partners of bankrupt and others ............................................................................................... 84
270. Discharged bankrupt to assist bankruptcy trustee ............................................................................................................... 84
271. Official Receiver to record in public register decision of the Court refusing to discharge bankrupt, etc. .......... 84
272. Court may annul bankruptcy order in certain circumstance ............................................................................................ 85
273. When Official Receiver may annul bankruptcy order .......................................................................................................... 85
274.

Receiver may annul bankruptcy order .......................................................................................................... 85
274.

Effect of annulment of bankruptcy order ................................................................................................................................ 86
275. Interpretation: Division 24 ............................................................................................................................................................ 86
276. Creditors may accept composition by passing preliminary resolution .......................................................................... 86
277. Composition not effective unless approved by confirming resolution .......................................................................... 86
278. Compositions with members of partnership .......................................................................................................................... 87
279. Composition not binding unless approved by the Court ................................................................................................... 87
280. Procedure for court approval of composition ........................................................................................................................ 87
281.

proval of composition ........................................................................................................................ 87
281.

Deed of composition to be executed ........................................................................................................................................ 88
282. Effect of deed of composition ..................................................................................................................................................... 88
283. Bankrupt remains liable for unpaid balances of certain debts ....................................................................................... 88
284. Deadlines for steps to approve composition and execute deed ..................................................................................... 88
285. Procedure following approval of composition by the Court ............................................................................................. 89
286. How composition may be enforced ........................................................................................................................................... 89
287. Jurisdiction of the Court in relation to composition and deed of composition .......................................................... 89
288.

9
287. Jurisdiction of the Court in relation to composition and deed of composition .......................................................... 89
288.

Law and practice in bankruptcy to apply to deed of composition ................................................................................. 89
289. Offences in relation to debts ....................................................................................................................................................... 90
290. Offences in relation to property ................................................................................................................................................. 90
291. Offence in relation to written statement to creditor, etc. ................................................................................................. 90
292. Offence in relation to documents, etc. ..................................................................................................................................... 91
293. Offence in relation to fictitious losses or expenses ............................................................................................................ 91
294.

to fictitious losses or expenses ............................................................................................................ 91
294.

Offences in relation to credit, etc .............................................................................................................................................. 91
295. Offences in relation to obtaining consent of creditors ...................................................................................................... 92
296. Offence for bankrupt to leave Kenya without consent ...................................................................................................... 92
297. General penalties for bankruptcy offences .............................................................................................................................. 92
298. Failure to keep and preserve proper record of transactions ............................................................................................ 92
299. Failure to keep proper records with intent to conceal ....................................................................................................... 92
300. When bankrupt presumed not to have kept or preserved proper records ................................................................... 93
301.

2
300. When bankrupt presumed not to have kept or preserved proper records ................................................................... 93
301.

Offence by bankrupt in relation to management of companies ..................................................................................... 93

Offence by bankrupt in relation to management of companies ..................................................................................... 93

302. Other bankruptcy offences ............................................................................................................................................................ 93
Part IV – ALTERNATIVES TO BANKRUPTCY: NATURAL PERSONS ................................................................................................... 94
303. Interpretation: Division 1 .............................................................................................................................................................. 94
304. When application for interim order can be made ................................................................................................................ 94
305. Effect of application for interim order ..................................................................................................................................... 95
306. Power of the Court to make interim order ............................................................................................................................. 95
307.

ke interim order ............................................................................................................................. 95
307.

Provisional supervisor to report on debtor's proposal ........................................................................................................ 96
308. Debtor's proposal and provisional supervisor's report ....................................................................................................... 97
309. When provisional supervisor is to convene creditors' meeting to consider debtor's proposal ............................. 98
310. Conduct of creditors' meeting: consideration of debtor's proposal ................................................................................ 98
311. Approval of debtor's proposal ...................................................................................................................................................... 99
312. Effect of approval of debtor's proposal by meeting of creditors or by the Court ................................................... 100
313. Additional effect on undischarged bankrupt ....................................................................................................................... 101
314.

undischarged bankrupt ....................................................................................................................... 101
314.

Right to challenge decision taken at creditors’ meeting ................................................................................................ 101
315. Implementation and supervision of voluntary arrangement ......................................................................................... 102
316. Expedited voluntary arrangement procedure: availability .............................................................................................. 103
317. Duty of Official Receiver to report result to the Court ..................................................................................................... 104
318. Approval of expedited voluntary arrangement ................................................................................................................... 104
319. Power of Official Receiver to make application for annulment of bankruptcy order where debtor is an
undischarged bankrupt ........................................................................................................................................................................... 104
320.

............................................................................................................................................. 104
320.

Revocation of expedited voluntary arrangement ............................................................................................................... 105
321. Offence for debtor to make false representation for purpose of obtaining creditors' approval ........................ 105
322. Prosecution of delinquent debtors .......................................................................................................................................... 106
323. What is a summary instalment order? ................................................................................................................................... 106
324. Who can apply for summary instalment order ................................................................................................................... 106
325. Requirements for applications made by debtors ............................................................................................................... 107
326. Official Receiver may make summary instalment order .................................................................................................. 107
327.

Receiver may make summary instalment order .................................................................................................. 107
327.

Power of Official Receiver to make additional orders ...................................................................................................... 108
328. Appointment of supervisors ....................................................................................................................................................... 108
329. Role of supervisors ........................................................................................................................................................................ 108
330. Power of Official Receiver to require supervisor or past supervisor to provide documents ................................ 108
331. Termination of supervisor's appointment for failure to supervise adequately ......................................................... 109
332. Period for payment of instalments ......................................................................................................................................... 109
333. Variation or discharge of summary instalment orders ..................................................................................................... 109
334.

discharge of summary instalment orders ..................................................................................................... 109
334.

Effect of summary instalment orders ..................................................................................................................................... 109

lment orders ..................................................................................................................................... 109

335. Restrictions on bringing proceedings against debtors while summary instalment order has effect ................ 109
336. Supervisor to give notice of summary instalment order to creditors ......................................................................... 110
337. Public register of debtors subject to current summary instalment order .................................................................. 110
338. When summary instalment order ceases to be current ................................................................................................... 110
339. Claims of creditors when summary instalment has effect ............................................................................................. 110
340. Payment of debtor's earnings to supervisor ........................................................................................................................ 110
341. Consequences of default by debtor to pay amount due under summary instalment order ................................. 111
342. Offence for debtor to obtain credit while summary instalment order has effect ................................................... 111
343.

.. 111
342. Offence for debtor to obtain credit while summary instalment order has effect ................................................... 111
343.

Division 3: introduction ............................................................................................................................................................... 112
344. Application for entry to no-asset procedure ........................................................................................................................ 112
345. Criteria for entry to no-asset procedure ................................................................................................................................ 112
346. Debtor disqualified from entry to no-asset procedure in certain cases ..................................................................... 112
347. Official Receiver to notify creditors ......................................................................................................................................... 113
348. Restrictions on debtor obtaining credit after application made ................................................................................... 113
349. When debtor admitted to no-asset procedure ....................................................................................................................

or admitted to no-asset procedure ....................................................................................................................

113
350. Public register of persons admitted to no-asset procedure ........................................................................................... 113
351. Creditors may not enforce debts of debtor admitted to no-asset procedure ........................................................... 113
352. Debtor's duties after entry to no-asset procedure ............................................................................................................. 114
353. Offence for person admitted to no-asset procedure to obtain credit ......................................................................... 114
354. How debtor's participation in the no-asset procedure is terminated ......................................................................... 114
355. When Official Receiver may terminate no-asset procedure ........................................................................................... 115
356. Official Receiver may apply for preservation order on ground of debtor's misconduct ........................................ 115
357.

....... 115
356. Official Receiver may apply for preservation order on ground of debtor's misconduct ........................................ 115
357.

Effect of termination of debtor's participation in no-asset procedure ........................................................................ 115
358. Creditor may apply to Official Receiver for termination of debtor's participation in no-asset procedure ....... 115
359. Discharge of debtor's participation in no-asset procedure ............................................................................................. 115
360. Effect of discharge of debtor's participation in no-asset procedure ........................................................................... 116
361. Discharge does not release debtor's business partners and others ............................................................................ 116
Part V – ADMINISTRATION OF INSOLVENT DECEASEDS' ESTATES ............................................................................................. 116
362. Interpretation: Part V .................................................................................................................................................................... 116
363.

............................................................................................................................................. 116
363.

Court may order that estate be administered under this Part ...................................................................................... 117
364. Application by executor or administrator, etc ..................................................................................................................... 117
365. Application by creditor or beneficiary for order under this Part .................................................................................. 118
366. Notice of application by creditor or beneficiary ................................................................................................................. 118
367. Court may order administration by Official Receiver or the Public Trustee instead of executor or
administrator .............................................................................................................................................................................................. 119

.................................................................................................................................................. 119

368. Certificate lodged by the Public Trustee has effect as application and order .......................................................... 119
369. Estate vests in trustee ................................................................................................................................................................. 119
370. Trustee to realise, administer and distribute estate ......................................................................................................... 119
371. Entitlement of surviving spouse to household furniture and effects ......................................................................... 119
372. Trustee may make allowance to surviving spouse ............................................................................................................ 120
373. Application of Division 3 ............................................................................................................................................................ 120
374. Trustee's functions and powers in respect of insolvent deceased's estate ................................................................ 120
375.

74. Trustee's functions and powers in respect of insolvent deceased's estate ................................................................ 120
375.

Distribution of insolvent deceased's estate ......................................................................................................................... 120
376. How any surplus is to be paid .................................................................................................................................................. 120
377. Creditor's notice to executor or administrator ..................................................................................................................... 121
378. Power of trustee to act in relation to deceased's irregular transactions ................................................................... 121
379. Trustee may cancel execution against insolvent deceased debtor's estate .............................................................. 121
380. Certain acts of executor or administrator valid if done in good faith ........................................................................ 121
Part VI – LIQUIDATION OF COMPANIES ................................................................................................................................................ 121
381.

............................................................................................................................................. 121
381.

Scheme of Part VI .......................................................................................................................................................................... 122
382. Distinction between "members" and "creditors" voluntary liquidation ....................................................................... 122
383. Interpretation: Part VI .................................................................................................................................................................. 122
384. The circumstances in which a company is unable to pay its debts ............................................................................ 122
385. Liability as contributories of present and former members ........................................................................................... 123
386. Liability of past directors and shareholders ........................................................................................................................ 123
387. Position of limited companies that were formerly unlimited ........................................................................................ 124
388.

on of limited companies that were formerly unlimited ........................................................................................ 124
388.

Position of unlimited companies that were formerly limited ........................................................................................ 124
389. Nature of contributory's liability .............................................................................................................................................. 124
390. Death of contributories not to affect their liability .......................................................................................................... 125
391. Liability of contributories who are adjudged bankrupt ................................................................................................... 125
392. Liability of contributories to contribute to debts of company registered but not formed under Companies
Act .................................................................................................................................................................................................................. 125
393. Circumstances in which company may be liquidated voluntarily ................................................................................ 126
394.

Circumstances in which company may be liquidated voluntarily ................................................................................ 126
394.

Notice of resolution to liquidate .............................................................................................................................................. 126
395. When liquidation commences ................................................................................................................................................... 127
396. Consequences of resolution to liquidate ............................................................................................................................... 127
397. Share transfers and attempts to alter member's status after liquidation resolution to be void ......................... 127
398. Making and effect of declaration of solvency by directors of company .................................................................... 127
399. Appointment of liquidator in members' voluntary liquidation ..................................................................................... 128
400. Power to fill vacancy in office of liquidator ......................................................................................................................... 128

in office of liquidator ......................................................................................................................... 128

401. General company meeting at each year's end .................................................................................................................... 128
402. Final meeting prior to dissolution: members' voluntary liquidation ........................................................................... 129
403. Effect of company’s insolvency ................................................................................................................................................. 129
404. Conversion to creditors' voluntary liquidation .................................................................................................................... 130
405. Application of Division 4 ............................................................................................................................................................ 131
406. Meeting of creditors to be convened by company ............................................................................................................ 131
407. Directors to lay statement of financial position before creditors ................................................................................. 132
408.

ors to lay statement of financial position before creditors ................................................................................. 132
408.

Creditors' voluntary liquidation: appointment of liquidator .......................................................................................... 132
409. Creditors may appoint liquidation committee .................................................................................................................... 133
410. Creditors' meeting if liquidation converted under section 404 .................................................................................... 133
411. Cessation of directors' powers .................................................................................................................................................. 133
412. Vacancy in office of liquidator: creditors' voluntary liquidation ................................................................................... 133
413. Meetings of company and company's creditors to be held every twelve months .................................................. 133
414. Final meeting prior to dissolution: creditors' voluntary liquidation ........................................................................... 134
415.

al meeting prior to dissolution: creditors' voluntary liquidation ........................................................................... 134
415.

Property of company to be distributed among members after satisfaction of liabilities ..................................... 134
416. Appointment or removal of liquidator by the Court ......................................................................................................... 135
417. Notice of appointment to be published by liquidator ...................................................................................................... 135
418. Power of liquidator to accept shares or membership rights as consideration for sale of company's property
.......................................................................................................................................................................................................................... 135
419. Dissenting member may require liquidator to refrain from giving effect to arrangement under section 418
or to purchase member's shares ........................................................................................................................................................ 136
420.

............................................................................................................................................. 136
420.

Questions relating to liquidation may be referred to the Court for determination ............................................... 137
421. Restrictions on directors' powers to appoint or nominate liquidator of company in voluntary liquidation ... 137
422. Saving for certain rights ............................................................................................................................................................. 137
423. Jurisdiction of High Court to supervise liquidation of companies ............................................................................... 138
424. Circumstances in which company may be liquidated by the Court ............................................................................. 138
425. Applications to the Court for liquidation of companies .................................................................................................. 138
426. Application for liquidation of company on grounds of public interest ...................................................................... 139
427.

. Application for liquidation of company on grounds of public interest ...................................................................... 139
427.

Powers of Court on hearing of liquidation application .................................................................................................... 139
428. Power to stay or restrain proceedings against company when liquidation application has been made ......... 140
429. Dispositions of property by company after commencement of liquidation to be void unless the Court
otherwise orders ....................................................................................................................................................................................... 140
430. Attachments and other forms of execution against company in liquidation to be void ....................................... 140
431. When liquidation of company by the Court commences ................................................................................................ 141
432. Consequences of liquidation order .......................................................................................................................................... 141
433. Official Receiver may require certain persons to submit statement relating to company's affairs ................... 141

..................... 141
433. Official Receiver may require certain persons to submit statement relating to company's affairs ................... 141

434. Duty of Official Receiver to conduct investigation into failure of company ............................................................. 142
435. Public examination of officers and former officers of company ................................................................................... 142
436. Consequences of failure to attend public examination ................................................................................................... 143
437. Appointment and powers of provisional liquidator ........................................................................................................... 143
438. Functions and powers of Official Receiver in relation to office of liquidator ........................................................... 144
439. Power of Official Receiver to appoint liquidator in certain cases ................................................................................ 144
440. Creditors' choice to prevail if meetings of creditors and contributors nominate different liquidators ............ 145
441. Appointment of liquidator by the Court following administration or voluntary arrangement ........................... 145
442.

rs ............ 145
441. Appointment of liquidator by the Court following administration or voluntary arrangement ........................... 145
442.

Creditors' meeting may appoint liquidation committee .................................................................................................. 145
443. General functions of liquidator when company is liquidated by the Court .............................................................. 146
444. Liquidator to assume control of company's property when liquidation order made ............................................. 147
445. Company's property to vest in liquidator .............................................................................................................................. 147
446. Duty of liquidator to convene final general meeting of company's creditors .......................................................... 147
447. Power of the Court to stay liquidation .................................................................................................................................. 147
448. Settlement of list of contributories and application of assets ...................................................................................... 148
449.

nt of list of contributories and application of assets ...................................................................................... 148
449.

Recovery of debts due from contributory to company ..................................................................................................... 148
450. Power of the Court to make calls from contributories .................................................................................................... 148
451. Power of the Court to order money due to company to be paid into Central Bank ............................................... 149
452. Order made by the Court against contributory to be conclusive evidence that money ordered to be paid
is due ............................................................................................................................................................................................................ 149
453. Power of the Court to fix deadlines for proving claims .................................................................................................. 149
454. Court to adjust rights of contributories ................................................................................................................................. 149
455.

tributories ................................................................................................................................. 149
455.

Power of the Court to make orders enabling creditors and contributories to inspect company's records ...... 149
456. Payment of expenses of liquidation ....................................................................................................................................... 149
457. Power to arrest absconding contributory .............................................................................................................................. 150
458. Powers of the Court to be cumulative ................................................................................................................................... 150
459. Power of the Court to delegate its powers to liquidator ................................................................................................ 150
460. Style and title of liquidators ..................................................................................................................................................... 150
461. Offence to make corrupt inducement affecting appointment of liquidator .............................................................. 151
462.

50
461. Offence to make corrupt inducement affecting appointment of liquidator .............................................................. 151
462.

Liquidator's functions: voluntary liquidation ....................................................................................................................... 151
463. Liquidator's functions: creditors' voluntary liquidation .................................................................................................... 151
464. Liquidator's functions: liquidation by the Court ................................................................................................................. 152
465. Liquidator's functions: supplementary powers .................................................................................................................... 153
466. Enforcement of liquidator's duties to lodge, deliver and make returns, accounts and other documents ........ 153
467. Circumstances in which liquidator may be removed from office in the case of a voluntary liquidation ......... 154

nd other documents ........ 153
467. Circumstances in which liquidator may be removed from office in the case of a voluntary liquidation ......... 154

468. Liquidator may be removed only by the Court or by general meeting of creditors in the case of company
being liquidated by the Court ............................................................................................................................................................. 155
469. Release of liquidator in the case of company liquidated voluntarily ......................................................................... 155
470. Release of liquidator in the case of company liquidated by the Court ...................................................................... 156
471. Preferential debts (general provision) .................................................................................................................................... 157
472. Preferential charge on property of company distrained within three months before making of liquidation
order .............................................................................................................................................................................................................. 157
473.

............................................................................................................................................. 157
473.

Expenses of liquidation to have priority over claims under floating charge ........................................................... 158
474. Share of assets to be made available for unsecured creditors where floating charge relates to company's
property ........................................................................................................................................................................................................ 158
475. Power of the Court to appoint special manager of company's business or property when company is in
liquidation or provisional liquidator appointed ............................................................................................................................ 159
476. Power of liquidator to disclaim onerous property ............................................................................................................. 160
477. Special provisions relating to disclaimer of leaseholds ................................................................................................... 160
478.

ions relating to disclaimer of leaseholds ................................................................................................... 160
478.

Effect of disclaimer in relation to land subject to rentcharge ...................................................................................... 161
479. General powers of the Court in respect of disclaimed property .................................................................................. 161
480. Powers of the Court in respect of leaseholds held by company in liquidation ....................................................... 161
481. Creditor not entitled to retain benefit of execution or attachment against liquidator unless creditor
completes execution or attachment before commencement of liquidation ....................................................................... 162
482. Duties of judicial enforcement officers charged with execution of writs and other processes involving
companies in liquidation ....................................................................................................................................................................... 162
483. Power of the Court to rescind contracts entered into by company in liquidation .................................................. 163
484.

.. 162
483. Power of the Court to rescind contracts entered into by company in liquidation .................................................. 163
484.

Power of liquidator to transfer assets of company to its employees .......................................................................... 163
485. Company in liquidation required to state that it is in liquidation in all invoices, letters and other
communications ........................................................................................................................................................................................ 164
486. Interest on debts to be paid if surplus permits ................................................................................................................. 164
487. Certain documents relating to company in liquidation to be exempt from stamp duty ....................................... 164
488. Records of company in liquidation to be evidence ........................................................................................................... 165
489.

any in liquidation to be evidence ........................................................................................................... 165
489.

Liquidator to lodge periodic statements with Registrar of Companies with respect to current position of
liquidation ................................................................................................................................................................................................... 165
490. Effect of resolutions passed at adjourned meetings of company's creditors and contributories ....................... 165
491. Court may order meetings to be held to ascertain wishes of creditors or contributories .................................... 165
492. Judicial notice to be taken of documents of the Court ................................................................................................... 166
493. Affidavits required to be sworn for purposes of this Part ............................................................................................... 166
494. Dissolution (voluntary liquidation) .......................................................................................................................................... 166
495.

n) .......................................................................................................................................... 166
495.

Early dissolution of company .................................................................................................................................................... 166
496. Consequence of notice given under section 495(3) .......................................................................................................... 167
497. Dissolution otherwise than under sections 494 - 496 ..................................................................................................... 168

tion otherwise than under sections 494 - 496 ..................................................................................................... 168

498. Offence involving commission of fraudulent acts in anticipation of liquidation .................................................... 168
499. Offence involving misconduct committed in course of liquidation of company ..................................................... 169
500. Offences involving transactions to defraud creditors of company in liquidation ................................................... 170
501. Offence to falsify documents in relation to company in liquidation .......................................................................... 170
502. Offence to make material omission from statement relating to financial position of company in liquidation
.......................................................................................................................................................................................................................... 171
503. Offence to make false representations to creditors of company in liquidation ...................................................... 171
504. Power of the Court to make orders against delinquent directors, liquidators, etc. ................................................ 171
505.

. 171
504. Power of the Court to make orders against delinquent directors, liquidators, etc. ................................................ 171
505.

Power of the Court to make orders against officers of company and others found to have participated in
fraudulent trading by company in liquidation .............................................................................................................................. 172
506. Power of the Court to make orders against officers of company engaging in wrongful trading ....................... 173
507. Supplementary provisions relating to proceedings under sections 505 and 506 ................................................... 174
508. Director of company in insolvent liquidation prohibited from being director of, or being involved with, any
other company that is known by a prohibited name ................................................................................................................. 174
509. Circumstances in which persons are personally liable for debts of company ......................................................... 175
510. Prosecution of delinquent officers and members of company in liquidation ........................................................... 176
511.

175
510. Prosecution of delinquent officers and members of company in liquidation ........................................................... 176
511.

Obligations arising under section 510 .................................................................................................................................. 177
Part VII – LIQUIDATION OF UNREGISTERED COMPANIES .............................................................................................................. 178
512. Meaning of "unregistered company" for purposes of this Part ...................................................................................... 178
513. Liquidation of unregistered companies ................................................................................................................................. 178
514. Circumstances in which unregistered company can be liquidated .............................................................................. 178
515. Company incorporated outside Kenya may be liquidated though dissolved ............................................................ 179
516. Contributories in liquidation of unregistered company ................................................................................................... 179
517.

es in liquidation of unregistered company ................................................................................................... 179
517.

Power of the Court to stay or restrain proceedings .......................................................................................................... 179
518. Actions stayed on liquidation order ........................................................................................................................................ 179
519. Provisions of this Part to be cumulative ............................................................................................................................... 179
Part VIII – ADMINISTRATION OF INSOLVENT COMPANIES ............................................................................................................. 180
520. Interpretation: Part VIII ................................................................................................................................................................ 180
521. What is administration? ............................................................................................................................................................... 180
522.

............................................................................................................................................. 180
522.

The objectives of administration ............................................................................................................................................. 180
523. Who can appoint an administrator? ....................................................................................................................................... 181
524. Duty of administrator ................................................................................................................................................................... 181
525. Status of administrator ................................................................................................................................................................ 181
526. Qualification for appointment of administrators ................................................................................................................ 181
527. Administrator not to be appointed if company is already under administration .................................................... 181
528.

.. 181
527. Administrator not to be appointed if company is already under administration .................................................... 181
528.

Administrator not to be appointed if company is in liquidation .................................................................................. 181

Administrator not to be appointed if company is in liquidation .................................................................................. 181

529. Administrator not to be appointed in respect of banking, finance and insurance companies ............................ 182
530. What is an administration order? ............................................................................................................................................ 182
531. Conditions for making administration orders ...................................................................................................................... 182
532. Who may make an application to the Court to for an administration order in respect of company ................. 182
533. Powers of the Court on hearing application for administration order ....................................................................... 182
534. Holder of floating charge may appoint administrator ..................................................................................................... 183
535. Restrictions on the power of holder of floating charge to appoint administrator ................................................. 183
536. Administrator not to be appointed if relevant floating charge is not enforceable ................................................ 184
537.

.. 183
536. Administrator not to be appointed if relevant floating charge is not enforceable ................................................ 184
537.

Holder of relevant floating charge to notify the Court on appointing administrator ............................................ 184
538. When administrator's appointment takes effect ................................................................................................................. 184
539. Duty of holder of relevant floating charge to notify appointment to administrator and other persons ......... 184
540. Power of the Court to order person invalidly appointed to be indemnified against liability .............................. 185
541. Administrator may be appointed by company or by its directors ................................................................................ 185
542. Restrictions on power of company or its directors to appoint administrator ........................................................... 185
543. Other restrictions on power of company or its directors to appoint administrator ............................................... 185
544. Circumstances in which company or its directors may not appoint administrator ................................................ 185
545.

..... 185
544. Circumstances in which company or its directors may not appoint administrator ................................................ 185
545.

Notice to be given of intention to appoint administrator .............................................................................................. 186
546. Person giving notice of intention to appoint administrator to lodge certain documents with the Court ....... 186
547. Further restrictions on making appointments under section 541 ................................................................................ 186
548. Person appointing administrator under section 541 to lodge certain documents with the Court .................... 187
549. What happens if no one is entitled to notice of intention to appoint administrator ............................................ 187
550. When appointment of administrator under this Division takes effect ....................................................................... 187
551. Person making appointment to notify appointment to administrator and others .................................................. 188
552. Appointment under section 541 not to take effect in certain cases ........................................................................... 188
553.

Appointment under section 541 not to take effect in certain cases ........................................................................... 188
553.

Power of the Court to order person invalidly appointed to be indemnified against liability .............................. 188
554. Power of the Court to make administration order in respect of company on application made by holder of
qualifying floating charge even if company may be able to pay its debts ......................................................................... 188
555. Holder of qualifying floating charge may intervene in application made by person who is not the holder
of such a charge ....................................................................................................................................................................................... 189
556. Other circumstance in which holder of qualifying floating charge may make application for administration
order .............................................................................................................................................................................................................. 189
557. Power of liquidator of company to make an application for its administration ...................................................... 189
558.

189
557. Power of liquidator of company to make an application for its administration ...................................................... 189
558.

Administration order in respect of company prevents making of application for liquidation order and
suspends pending applications for liquidation order ................................................................................................................. 190
559. Moratorium on insolvency proceedings while administration order has effect ...................................................... 190
560. Moratorium on other legal process while administration order has effect .............................................................. 190
560A. Considerations to take into account on applications for approval to lift moratorium ....................................... 190

............ 190
560A. Considerations to take into account on applications for approval to lift moratorium ....................................... 190

561. Interim moratorium when application for administration order has been made ................................................... 191
562. Company's business documents to state that company's affairs are under administration ................................. 192
563. Announcement of administrator's appointment ................................................................................................................. 192
564. Relevant persons to provide administrator with statement of company's affairs ................................................... 193
565. Deadline for submitting statement of affairs ...................................................................................................................... 194
566. Administrator to make statement setting out administrator's proposals for achieving the purpose of the
administration ............................................................................................................................................................................................ 194
567.

............................................................................................................................................. 194
567.

Conduct of creditors' meetings ................................................................................................................................................. 195
568. Requirement to convene initial creditors' meeting ........................................................................................................... 195
569. When administrator is not required to convene meeting ............................................................................................... 195
570. Business to be conducted at initial creditors' meeting and obligation of administrator to report outcome
to the Court and others ......................................................................................................................................................................... 196
571. Administrator's proposals can be revised ............................................................................................................................. 196
572. Consequences of failure to obtain approval of administrator's proposals ................................................................ 197
573.

572. Consequences of failure to obtain approval of administrator's proposals ................................................................ 197
573.

Power of administrator to convene further creditors' meetings ................................................................................... 198
574. Creditors' meeting may establish creditors' committee .................................................................................................. 198
575. Creditors' meeting can be conducted by correspondence .............................................................................................. 198
576. Specific functions of administrator ......................................................................................................................................... 199
577. Power of administrator to remove and appoint directors of company ....................................................................... 199
578. Power of administrator to convene meetings of members and creditors of company .......................................... 199
579. Power of administrator to seek directions from the Court ............................................................................................. 199
580.

administrator to seek directions from the Court ............................................................................................. 199
580.

General powers of administrator ............................................................................................................................................. 199
581. Company under administration not to perform management functions without administrator's consent ..... 199
582. Power of administrator to distribute company's assets to creditors ........................................................................... 199
583. Power of administrators to make special payments in certain cases ......................................................................... 200
584. Duty of administrator to assume control of property of company .............................................................................. 200
585. Duty of administrator to manage affairs and property of company ............................................................................ 200
586. Administrator is agent of company ......................................................................................................................................... 200
587. Power of administrator to dispose of, and deal with, charged property: floating charge ....................................

................. 200
587. Power of administrator to dispose of, and deal with, charged property: floating charge ....................................

200
588. Power of administrator to dispose of, and deal with, charged property: non-floating charge ........................... 201
589. Power of administrator to dispose of goods that are subject to credit purchase transaction ............................ 201
590. Protection for secured and preferential creditors .............................................................................................................. 202
591. Administrator's conduct of administration can be challenged ...................................................................................... 202
592. Power of the Court to examine conduct of administrator's administration of the company ............................... 203
593. Automatic end of administration ............................................................................................................................................. 204
594. Circumstances in which administrator's term of office can be extended .................................................................. 204

204
594. Circumstances in which administrator's term of office can be extended .................................................................. 204

595. Court may terminate administration on application of administrator ........................................................................ 205
596. Termination of administration when objective achieved ................................................................................................ 205
597. Court may terminate administrator's appointment on application of creditor ......................................................... 206
598. Court to terminate administrator's appointment on making of public interest liquidation order ..................... 207
599. Procedure for moving from administration to creditors' voluntary liquidation ....................................................... 207
600. Moving from administration to dissolution ......................................................................................................................... 208
601. Discharge of administration order if administrator's appointment is terminated .................................................. 208
602.

.. 208
601. Discharge of administration order if administrator's appointment is terminated .................................................. 208
602.

Administrator to lodge copy of order of the Court terminating appointment with Registrar of Companies
.......................................................................................................................................................................................................................... 208
603. Resignation of administrator ..................................................................................................................................................... 209
604. Court may remove administrator from office ...................................................................................................................... 209
605. Administrator to vacate office on ceasing to be qualified .............................................................................................. 209
606. Filling vacancy in office of administrator ............................................................................................................................. 210
607. Power of the Court to replace administrator ....................................................................................................................... 210
608.

replace administrator ....................................................................................................................... 210
608.

Power of holder of floating charge to appoint replacement administrator appointed under section 534 ..... 210
609. Power of company to appoint replacement administrator appointed under section 541(1) ............................... 210
610. Power of directors of company to appoint replacement administrator appointed under section 541(2) ........ 211
611. Power of the Court to replace administrator in certain other circumstances .......................................................... 211
612. Court may replace administrator when there is a competing floating charge-holder .......................................... 211
613. Creditors' meeting may replace administrator appointed by company or directors .............................................. 211
614. Discharge from liability on administrator's vacating office ............................................................................................ 212
615.

rom liability on administrator's vacating office ............................................................................................ 212
615.

Former administrator's remuneration and expenses payable of company's property and to have priority
over holders of floating charges ........................................................................................................................................................ 212
616. Joint and concurrent administrators ....................................................................................................................................... 213
617. Offences committed by joint administrators ........................................................................................................................ 213
618. Administrators acting concurrently ......................................................................................................................................... 214
619. Power to appoint administrators to act concurrently ....................................................................................................... 214
620. Presumption of validity of acts of administrator ............................................................................................................... 215
621.

dity of acts of administrator ............................................................................................................... 215
621.

Majority decision of directors .................................................................................................................................................... 215
622. Power to extend time limits ...................................................................................................................................................... 215
623. Certain specified period can be varied by consent ........................................................................................................... 215
Part IX – COMPANY VOLUNTARY ARRANGEMENTS .......................................................................................................................... 216
624. Interpretation: Division 1 ............................................................................................................................................................ 216
625. Proposal for voluntary arrangement ....................................................................................................................................... 216
626.

ement ....................................................................................................................................... 216
626.

Procedure if provisional supervisor is not the liquidator or administrator ............................................................... 216
627. Provisional supervisor to convene meetings of company and of its creditors ......................................................... 217

.... 216
627. Provisional supervisor to convene meetings of company and of its creditors ......................................................... 217

628. Conduct of meetings of company and its creditors .......................................................................................................... 217
629. Approval of proposal for voluntary arrangement .............................................................................................................. 218
630. Approved proposal to take effect as voluntary arrangement and to be binding on company and its
creditors ....................................................................................................................................................................................................... 219
631. Certain persons may challenge decisions relating to approved voluntary arrangement by making
application to the Court ........................................................................................................................................................................ 220
632. Offences involving false representations and fraudulent acts by company officers .............................................. 221
633.

.... 220
632. Offences involving false representations and fraudulent acts by company officers .............................................. 221
633.

Implementation of approved voluntary arrangement ...................................................................................................... 221
634. Prosecution of delinquent officers of company .................................................................................................................. 222
635. When voluntary arrangement comes to an end prematurely ........................................................................................ 223
636. Interpretation: Part 2 .................................................................................................................................................................... 223
637. Application of Part 2 ..................................................................................................................................................................... 224
638. Eligible companies ........................................................................................................................................................................ 224
639.

............................................................................................................................................. 224
639.

Banking and insurance companies ineligible to obtain moratorium .......................................................................... 224
640. Companies under administration, etc., ineligible to obtain moratorium ................................................................... 224
641. Certain projects companies ineligible .................................................................................................................................... 225
642. [Repealed by Act No. 1 of 2021, s. 17] ................................................................................................................................. 226
643. What steps company's directors have to take to obtain a moratorium ...................................................................... 226
644. What directors have to do to obtain moratorium .............................................................................................................. 227
645. Duration of moratorium ............................................................................................................................................................... 227
646.

............................................................................................................................................. 227
646.

What happens when moratorium takes effect .................................................................................................................... 227
647. Duty of monitor to publish and give notice that moratorium has taken effect ....................................................... 228
648. Notification of end of moratorium to be given by monitor ........................................................................................... 228
649. Effect of moratorium on creditors and others .................................................................................................................... 229
650. [Deleted by Act No. 13 of 2017, Sch.] .................................................................................................................................... 230
651. Security not to be enforced unless it would benefit the company .............................................................................. 230
652. Application of sections 653 to 657 to company in respect of which a moratorium has effect .......................... 230
653.

............... 230
652. Application of sections 653 to 657 to company in respect of which a moratorium has effect .......................... 230
653.

Company invoices and other documents to state monitor's name and that moratorium has effect ................. 230
654. Restrictions on company obtaining credit during moratorium ..................................................................................... 230
655. Restrictions on disposal of property and making payments by company ................................................................. 231
656. Restriction on company paying debts and other liabilities ............................................................................................ 231
657. Circumstances in which company may dispose of property and goods that are subject to a security or held
under credit purchase transaction ..................................................................................................................................................... 232
658. Monitor's to monitor activities of company during moratorium ................................................................................... 233
659. Withdrawal of monitor's consent to act ................................................................................................................................

itor's consent to act ................................................................................................................................

233
660. Creditors and others may challenge monitor's conduct during moratorium by application made to the
Court .............................................................................................................................................................................................................. 234

.................................................................................................................................................. 234

661. Creditor may pursue claim against monitor for loss ........................................................................................................ 234
662. Replacement of monitor by the Court ................................................................................................................................... 235
663. [Repealed by Act No. 1 of 2021, s. 39.] ................................................................................................................................ 235
664. [Repealed by Act No. 1 of 2021, s. 40.] ................................................................................................................................ 235
665. [Repealed by Act No. 1 of 2021, s. 41.] ................................................................................................................................ 235
666. [Repealed by Act No. 1 of 2021, s. 42.] ................................................................................................................................ 235
667. [Repealed by Act No. 1 of 2021, s.

.......................................................................................................... 235
667. [Repealed by Act No. 1 of 2021, s.

43.] ................................................................................................................................. 235
668. [Repealed by Act No. 1 of 2021, s. 44.] ................................................................................................................................ 235
669. Extension of moratorium ............................................................................................................................................................ 236
670. Conditions for extension of moratorium ............................................................................................................................... 236
671. Decisions to extend or further extend moratorium .......................................................................................................... 236
672. [Repealed by Act No. 1 of 2021, s. 49.] ................................................................................................................................ 236
673. [Repealed by Act No. 1 of 2021, s. 51.] ................................................................................................................................

o. 1 of 2021, s. 51.] ................................................................................................................................

236
674. Member or creditor of company may challenge actions of directors ......................................................................... 236
675. Offences under this Division ..................................................................................................................................................... 237
676. [Deleted by Act No. 13 of 2017, Sch.] .................................................................................................................................... 238
Part X – PROVISIONS APPLICABLE TO COMPANIES THAT ARE EITHER IN LIQUIDATION OR UNDER
ADMINISTRATION ............................................................................................................................................................................................ 239
677. Interpretation: Part X .................................................................................................................................................................... 239
678. Realising property of company that is in liquidation or under administration ....................................................... 239
679.

239
678. Realising property of company that is in liquidation or under administration ....................................................... 239
679.

Duty of certain persons to co-operate with relevant office-holder ............................................................................. 239
680. Power of the Court to conduct inquiry into insolvent company's dealings, etc., on application made by
relevant office-holder ............................................................................................................................................................................. 240
681. Court's enforcement powers under section 680 ................................................................................................................. 241
682. Power of the Court to set aside transaction that is under value ................................................................................. 241
683. Power of the Court to void certain preferences ................................................................................................................. 241
684. What "relevant time" means in sections 682 and 683 ..................................................................................................... 242
685.

ant time" means in sections 682 and 683 ..................................................................................................... 242
685.

Orders under sections 682 and 683: ancillary provisions ............................................................................................... 243
686. Power of the Court to set aside certain extortionate credit transactions ................................................................. 245
687. Circumstances in which floating charge on company's undertaking or property to be invalid .......................... 246
688. Lien in respect of company's documents unenforceable if it would deny their possession to relevant
office-holder ............................................................................................................................................................................................... 247
689. Supply of utility services to companies in liquidation or under administration ..................................................... 247
690. Appointment of administrative receiver in respect of company prohibited ............................................................. 248
Part XI – LEGAL PROCEEDINGS UNDER THIS ACT ............................................................................................................................

ROCEEDINGS UNDER THIS ACT ............................................................................................................................

248
691. Enforcement of company's obligations to lodge documents with, or give notice to, the Registrar of
Companies ................................................................................................................................................................................................... 248

.................................................................................................................................................. 248

692. Power of the Court to grant injunctions in certain cases ............................................................................................... 249
693. Liability of officer who are in default .................................................................................................................................... 250
694. Offences by bodies corporate .................................................................................................................................................... 250
695. Admissibility in evidence of statement prepared for purpose of provision of this Act or the insolvency
regulations .................................................................................................................................................................................................. 251
696. Legal proceeding under this Act not to be invalidated or set because of a defect unless person
detrimentally affected ............................................................................................................................................................................ 251
697.

............................................................................................................................................. 251
697.

Power to make insolvency procedure rules .......................................................................................................................... 251
698. Power of the Court to review, rescind or vary order made under this Act ................................................................ 252
699. Right of appeal to Court of Appeal ........................................................................................................................................ 252
700. Suspension of bankruptcy, liquidation or administration pending determination of appeal .............................. 252
Part XII – ADMINISTRATION OF THIS ACT ........................................................................................................................................... 253
701. Appointment of Official Receiver and others ...................................................................................................................... 253
702. Deputy Official Receiver may act on behalf of Official Receiver .................................................................................. 254
703.

y Official Receiver may act on behalf of Official Receiver .................................................................................. 254
703.

Incorporation of Official Receiver as a corporation sole ................................................................................................. 254
704. Vacation of office by Official Receiver and Deputy Official Receiver .......................................................................... 254
705. Protection of Official Receiver and Deputy Official Receivers from liability ............................................................. 255
706. Official Receiver and Deputy Official Receivers may charge fees ................................................................................ 255
707. Rates of Official Receiver's fees ................................................................................................................................................ 255
708. Insolvency Services Account to be established and maintained .................................................................................. 255
709.

solvency Services Account to be established and maintained .................................................................................. 255
709.

Official Receiver to pay certain unclaimed dividends and undistributed balances into Insolvency Services
Account ......................................................................................................................................................................................................... 256
710. Application of Division 2 ............................................................................................................................................................ 256
711. Official Receiver to ensure access to public registers ...................................................................................................... 256
712. Purposes of public registers ...................................................................................................................................................... 256
713. General information to be included in public registers .................................................................................................. 257
714. Information kept indefinitely on public register after multiple insolvency events ................................................ 258
715.

. 257
714. Information kept indefinitely on public register after multiple insolvency events ................................................ 258
715.

Restricted information that may be included in public register relating to bankruptcies ................................... 259
716. When Official Receiver may omit, remove, restrict access to, or amend, information contained in a public
register .......................................................................................................................................................................................................... 259
717. Right of members of public to inspect registers ................................................................................................................ 259
718. Information contained in public registers may be used for statistical or research purposes ............................. 260
719. Government and Official Receiver not liable for certain acts and omissions ........................................................... 260
Part XIII – SUPPLEMENTARY PROVISIONS ........................................................................................................................................... 260
720.

S ........................................................................................................................................... 260
720.

Cross border insolvency ............................................................................................................................................................... 260
721. Representation of bodies corporate at meetings ............................................................................................................... 260
722. Courts, Official Receiver and others to publish orders and notices on their respective websites ..................... 261

................... 260
722. Courts, Official Receiver and others to publish orders and notices on their respective websites ..................... 261

723. Official Receiver, bankruptcy trustees, liquidators and administrators to notify creditors of prescribed steps
in the insolvency process ...................................................................................................................................................................... 261
723A. Information by insolvency practitioner ............................................................................................................................... 262
724. Certain transactions relating to bankrupt's estate exempt from stamp duty ........................................................... 262
725. Re-direction of bankrupt's correspondence .......................................................................................................................... 262
726. Supply of utility services to bankrupts and others ........................................................................................................... 262
727. Order for production of documents by Kenya Revenue Authority ................................................................................ 263
728.

Order for production of documents by Kenya Revenue Authority ................................................................................ 263
728.

Cabinet Secretary to prepare annual report ........................................................................................................................ 264
729. Service of documents, etc., for the purposes of this Act ................................................................................................ 264
730. Power of Cabinet Secretary to make insolvency regulations for the purposes of this Act ................................... 264
731. Act to bind the Government ...................................................................................................................................................... 266
732. Repeal of Bankruptcy Act and revocation of subsidiary legislation (Cap. 53, sub. leg) ......................................... 266
733. Transitional provisions: insolvency of natural persons .................................................................................................... 266
734. Transitional provisions: Winding up and insolvency of companies ............................................................................. 267
735.

Transitional provisions: Winding up and insolvency of companies ............................................................................. 267
735.

Power of Cabinet Secretary to make savings and transitional regulations ............................................................... 267
FIRST SCHEDULE [s. 63, 65] ....................................................................................................................................................................... 268
SECOND SCHEDULE [ss. 108, 175, 246, 247, 279, 374 & 471] ..................................................................................................... 269
THIRD SCHEDULE [s. 462, 464] ................................................................................................................................................................ 272
FOURTH SCHEDULE [s. 576, 583] ............................................................................................................................................................ 273
FIFTH SCHEDULE [s. 720] ............................................................................................................................................................................ 275

.................................................................................................................................................. 275

Insolvency Act (Cap. 53) Kenya
INSOLVENCY ACT
CAP. 53
Published in Kenya Gazette Vol. CXVII—No. 101 on 18 September 2015
Assented to on 11 September 2015
Commenced
Note: 30th November 2015— Parts I, III, V, 1st Schedule, 2nd Schedule; 18th January 2016—Parts II, VI, VII,
VIII, IX, X, XI, XII, 3rd Schedule, 4th Schedule; 4th March 2016—Part XIII; 27th June 2016—Section 720
[Amended by Movable Property Security Rights Act (Cap. 499A) on 16 May 2016]
[Amended by Statute Law (Miscellaneous Amendments) Act, 2019 (Act No. 12 of 2019) on 23 July 2019]
[Amended by Data Protection Act (Cap. 411C) on 25 November 2019]
[Amended by Business Laws (Amendment) Act, 2020 (Act No. 1 of 2020) on 18 March 2020]
[Amended by Finance Act, 2020 (Act No. 8 of 2020) on 30 June 2020]
[Amended by Business Laws (Amendment) (No. 2) Act, 2021 (Act No.

on 18 March 2020]
[Amended by Finance Act, 2020 (Act No. 8 of 2020) on 30 June 2020]
[Amended by Business Laws (Amendment) (No. 2) Act, 2021 (Act No.

1 of 2021) on 30 March 2021]
[Revised by 24th Annual Supplement (Legal Notice 221 of 2023) on 31 December 2022]
An Act of Parliament to amend and consolidate the law relating to the insolvency of natural persons
and incorporated and unincorporated bodies; to provide for and to regulate the bankruptcy of natural
persons; to provide alternative procedures to bankruptcy that will enable the affairs of insolvent natural
persons to be managed for the benefit of their creditors; to provide for the liquidation of incorporated
and unincorporated bodies (including ones that may be solvent); to provide as an alternative to
liquidation procedures that will enable the affairs of such of those bodies as become insolvent to be
administered for the benefit of their creditors; and to provide for related and incidental matters. Part I – PRELIMINARY PROVISIONS
1. Short title and commencement
(1) This Act may be cited as the Insolvency Act. (2) The provisions of this Act shall come into operation on such date as the Cabinet Secretary may, by
notice in the Gazette, appoint and different dates may be appointed for different provisions.

operation on such date as the Cabinet Secretary may, by
notice in the Gazette, appoint and different dates may be appointed for different provisions.

(3) Notwithstanding subsection (2), any provision that has not been brought into force within nine
months after the publication of this Act shall come into force on the expiry of that period. 2. Interpretation
(1) In this Act, unless the context otherwise requires—
"affairs" in relation to a natural person or company, includes a business carried on by the person or
company and any dealings conducted in the course of the business;
"amount" means an amount of money;
"apply to" includes apply in relation to;
"associate"—
(a) in relation to a company, means—
(i) its holding company or its subsidiary;
(ii) a subsidiary of its holding company;
(iii) a holding company of its subsidiary;
1

to a company, means—
(i) its holding company or its subsidiary;
(ii) a subsidiary of its holding company;
(iii) a holding company of its subsidiary;
1

Insolvency Act (Cap. 53) Kenya
(iv) a person who controls the company (whether alone or with the person's associates or
with other associates of the company);
(v) any other company in which a director of the company is also a director; or
(vi) a natural person who is employed by the company;
(b) in relation to a partner of a partnership, means—
(i) any other partner of the partnership;
(ii) a member of the partner's family or of the family of another partner of the
partnership;
(iii) a natural person who is employed by the partnership; or
(c) in relation to a natural person, means—
(i) a member of the person's family;
(ii) a company controlled directly or indirectly, by the person whether alone or with
associates;
(iii) an associate of the person's associates; or
(iv) any person (including a company) who employs the person or by whom the person is
employed;
"authorised insolvency practitioner" means a person who holds an authorisation granted under
section 9;
"bank" means a bank to which the Banking Act (Cap.

horised insolvency practitioner" means a person who holds an authorisation granted under
section 9;
"bank" means a bank to which the Banking Act (Cap.

488) applies;
"bankrupt" means a debtor who has been adjudged bankrupt under Part III and has not been
discharged from bankruptcy;
"the Bankruptcy Act" means—
(a) the Bankruptcy Act (Cap. 53) repealed by this Act; and
(b) the rules made under that Act;
"bankruptcy trustee", in relation to a bankrupt or a bankruptcy, means the trustee of the bankrupt's
estate;
"business" includes trade and profession;
"business records", in relation to a bankrupt, includes accounting records, receipts, bills, invoices
and any other documents relating to the bankrupt's business;
"company" means a company or foreign company registered under the Companies Act (Cap. 486),
and includes—
(a) a building society within the meaning of the Building Societies Act (Cap. 389);
(b) a limited liability partnership within the meaning of the Limited Liability Partnerships Act
(Cap.

aning of the Building Societies Act (Cap. 389);
(b) a limited liability partnership within the meaning of the Limited Liability Partnerships Act
(Cap.

30); and
(c) a body (whether incorporated or not) of a class prescribed by the insolvency regulations for
the purposes of this definition;
"conditional sale agreement" means an agreement for the sale of goods under which payment of
the whole or a part of the purchase price is deferred and a security right in the goods is created or
provided for in order to secure the payment of the whole or a part of the purchase price;
"connected with", in relation to a company, has the meaning given by subsection (4);
2

ecure the payment of the whole or a part of the purchase price;
"connected with", in relation to a company, has the meaning given by subsection (4);
2

Insolvency Act (Cap.

Insolvency Act (Cap.

53) Kenya
"control of" or "control over", in relation to documents or other property, includes having
possession of, or custody over, the documents or property;
"correspondence" includes correspondence by electronic means;
"the Court" means the High Court, and if there is an insolvency division of that Court, means that
division;
"creditor" includes a person entitled to enforce a final judgment or final order;
"credit purchase transaction" means a hire-purchase agreement, a conditional sale agreement, a
chattel leasing agreement or a retention of title agreement;
"debt" means an obligation or liability of a person to pay money or money's worth to another
person; and includes (except when the context otherwise provides)—
(a) a liability under a written law;
(b) a liability for a breach of trust;
(c) a liability under a contract or bailment or in tort; and
(d) a liability arising from an obligation to make restitution;
"debtor" means a person who owes a debt;
"document" means information recorded in any form; and in particular includes a summons, notice,
order or other legal process and a register (whether in hard copy or electronic form);
"electronic form" in relation to a document or information, means the storage or keeping of the
document or information in the form of data, text or images by means of guided or unguided
electromagnetic energy, or both;
"execution process" means any of the following—
(a) issuing or proceeding with any of the following orders or warrants under a judgment or order
obtained against the debtor in any court in its civil jurisdictions—
(i) an order or warrant for the possession, seizure, or sale of any property;
(ii) an order of attachment;
(b) obtaining a garnishee order in favour of a judgment creditor under the Civil Procedure Rules
(Cap.

e of any property;
(ii) an order of attachment;
(b) obtaining a garnishee order in favour of a judgment creditor under the Civil Procedure Rules
(Cap.

21, subleg);
(c) obtaining an order that a judgment creditor may sue a sub-debtor under the Civil Procedures
Rules;
(d) having a charging order nisi made absolute under the Civil Procedure Rules;
(e) beginning or continuing proceedings in any court for the appointment of a receiver of
property, except an application for the appointment of a person as interim trustee under
section 36;
(f) exercising a power of re-entry under a lease, or a power terminating a lease;
(g) seizing or selling property by levying distress for rent;
"execution process" means any of the following:
(a) issuing or proceeding with any of the following orders or warrants under a judgment or order
obtained against the debtor in any court in its civil jurisdictions—
(i) an order or warrant for the possession, seizure, or sale of any property;
(ii) an order of attachment;
3

in any court in its civil jurisdictions—
(i) an order or warrant for the possession, seizure, or sale of any property;
(ii) an order of attachment;
3

Insolvency Act (Cap. 53) Kenya
(b) obtaining a garnishee order in favour of a judgment creditor under the Civil Procedure Rules;
(c) obtaining an order that a judgment creditor may sue a sub-debtor under the Civil Procedures
Rules;
(d) having a charging order nisi made absolute under the Civil Procedure Rules;
(e) beginning or continuing proceedings in any court for the appointment of a receiver of
property, except an application for the appointment of a person as interim trustee under
section 36;
(f) exercising a power of re-entry under a lease, or a power terminating a lease;
(g) seizing or selling property by levying distress for rent;
"functions" includes duties and responsibilities;
"goods" includes all chattels personal other than things in action and money, and all emblements,
industrial growing crops and things attached to or forming part of the land which are agreed to be
severed before sale or under the contract of sale;
"hire-purchase agreement" means a hire-purchase agreement as defined in section 2(1) of the Hire
Purchase Act (Cap.

ale or under the contract of sale;
"hire-purchase agreement" means a hire-purchase agreement as defined in section 2(1) of the Hire
Purchase Act (Cap.

507);
"insolvency regulations" means regulations made under this Act and in force;
“Judicial enforcement officer" means a bailiff or other officer of a court who is charged with carrying
out a process involving the execution or enforcement of an order or judgement of the court;
"landlord", in relation to a letting of premises, includes any person to whom rent or other money is
payable in respect of the occupation or use of the premises;
"liquidation application", in relation to a company, means an application to the Court for a
liquidation order in respect of the company;
"liquidation order", in relation to a company, means an order of the Court for the liquidation of the
company by the Court;
"member", in relation to a company, includes a person who is not a member of a company but to
whom shares in the company have been transferred, or transmitted by operation of law;
"notice" means notice in writing;
"officer", in relation to a company, means the chief executive officer, or any director, manager or
secretary, of the company;
"partnership" means a partnership within the meaning of the Partnership Act;
"person" includes a partnership, an unincorporated association, a corporation, a co-operative
society or an organization, the successors of a partnership, association, corporation, society or
organization, and heirs, executors, liquidators of the succession, administrators or other legal
representative of a person;
"powers" includes rights and authorities;
"preferential creditor" means a person to whom a preferential debt is owed;
"preferential debts", in relation to a natural person or a company, means the debts listed in the
Second Schedule;
"property" includes money, goods, choses in action, land and every description of property, whether
real or personal, legal or equitable, and whether located in Kenya or elsewhere, and includes
obligations, easements and every description of estate, interest and profit, present or future, vested
or contingent in, arising out of or incidental to property;
4

asements and every description of estate, interest and profit, present or future, vested
or contingent in, arising out of or incidental to property;
4

Insolvency Act (Cap.

Insolvency Act (Cap.

53) Kenya
"prescribed bankruptcy level" has the meaning given by subsection (5);
"property" includes things in action;
"provable claim", in relation to a bankrupt, means a claim that is provable by a creditor in
proceedings under Part III;
"purchaser", in relation to a credit purchase transaction, means the person to whom goods are
disposed of under the transaction, and, if the rights of that person are transferred by assignment or
by operation of law, includes the person for the time being entitled to those rights;
"records" means information stored in documents or in an electronic database or by electronic
means;
"the Registrar" (except when used in reference to the Court) means the Registrar of Companies;
"register", "registered" and "registration", in relation to a notice or other document required or
permitted to be lodged with, or sent or notified to, the Registrar under this Act, means respectively
register, registered and registration in the Register of Companies in relation to the company to
which the notice or other document relates;
"relative", in relation to a person, means—
(a) the parents, spouse, child, brother, or sister of that person;
(b) the parents, child, brother or sister of the spouse of that person; or
(c) a nominee or trustee for any of the persons specified in paragraph (a) and (b);
"relevant court", in relation to a matter other than one that is specifically entrusted to the High
Court by a provision of this Act, means the court exercising or having responsibility for exercising
jurisdiction in respect of that matter;
"the repealed Companies Act" means—
(a) the Companies Act repealed by the Companies Act (Cap.

y for exercising
jurisdiction in respect of that matter;
"the repealed Companies Act" means—
(a) the Companies Act repealed by the Companies Act (Cap.

486); and
(b) the rules or regulations made under that Act;
"retention of title agreement" means an agreement for the sale of goods to a company, being an
agreement that does not constitute a charge on the goods; but under which, if the seller is not paid
and the company is wound up, the seller will have priority over all other creditors of the company
with respect to the goods or any property representing the goods as long as it has satisfied the
applicable requirements for third-party effectiveness under the Movable Property Security Rights
Act (Cap. 499A);
"secured creditor" means—
(a) a person holding a security on or against the property of the debtor or (any part of it) to
secure a debt due or accruing due to the person from the debtor; or
5

lding a security on or against the property of the debtor or (any part of it) to
secure a debt due or accruing due to the person from the debtor; or
5

Insolvency Act (Cap. 53) Kenya
(b) a person whose claim is based on, or secured by, a negotiable instrument held as collateral
security and on which the debtor is only indirectly or secondarily liable;
"security" means any mortgage, charge, lien or other security;
"security agreement" means an agreement under which property becomes subject to a security for
the payment of an obligation;
"service provider" means any entity or person who supplies fuel, water, electricity,
telecommunications, or such other services as may be prescribed;
"shares" include stocks;
"special resolution" means a resolution of creditors passed in accordance with this Act;
"terms" includes conditions;
"transfer" includes conveyance, assignment and surrender;
"under administration", in relation to a company, has the meaning given by section 521;
"unsecured creditor", in relation to a natural person or a company, means a creditor of the person or
company who is not a secured creditor;
"written" or "in writing" includes respectively "written in electronic form" and "in electronic form".

erson or
company who is not a secured creditor;
"written" or "in writing" includes respectively "written in electronic form" and "in electronic form".

(2) For the purposes of the application of this Act to a debt, it does not matter—
(a) whether the debt is present or future;
(b) whether it is certain or contingent; or
(c) whether its amount is fixed or liquidated, or is capable of being ascertained by fixed rules or
as a matter of opinion. (3) For the purposes of this Act, a person is a member of the family of a natural person if the person
is the parent, spouse, brother, sister, child, uncle, aunt, nephew, niece, stepfather, stepmother,
stepchild, or adopted child of the person concerned and, in case of an adopted child, the child's
adopted parents. (4) For the purposes of this Act, a person is connected with a company if the person—
(a) is an officer of the company or an associate of such an officer; or
(b) is an associate of the company. (5) For the purposes of this Act, the prescribed bankruptcy level is the amount for the time being
specified in the Insolvency Regulations. [Act No. 13 of 2017, Sch.]
3.

s of this Act, the prescribed bankruptcy level is the amount for the time being
specified in the Insolvency Regulations. [Act No. 13 of 2017, Sch.]
3.

Objects and application of this Act
(1) The objects of this Act are—
(a) to establish and provide for the operation of a framework for the efficient and equitable
administration of the estates of insolvent natural persons and unincorporated entities
comprising natural persons, and the assets of insolvent companies and other bodies
corporate, that maintains a fair balance between the interests of those persons, entities,
companies and bodies and those of their creditors;
6

bodies
corporate, that maintains a fair balance between the interests of those persons, entities,
companies and bodies and those of their creditors;
6

Insolvency Act (Cap.

Insolvency Act (Cap.

53) Kenya
(b) in the case of insolvent natural persons and unincorporated entities comprising natural
persons, and insolvent companies and other bodies corporate whose financial position is
redeemable—
(i) to enable those persons and entities to continue to operate as going concerns so that
ultimately they may be able to meet their financial obligations to their creditors in full
or at least to the satisfaction of those creditors; and
(ii) to achieve a better outcome for the creditors as a whole than would likely to be the
case if those persons and entities were adjudged bankrupt;
(c) in the case of insolvent companies and other bodies corporate whose financial position is
redeemable—
(i) to enable those companies and bodies to continue to operate as going concerns so
that ultimately they may be able to meet their financial obligations to their creditors
in full or at least to the satisfaction of those creditors; and
(ii) to achieve a better outcome for the creditors as a whole than would likely to be the
case if those companies and bodies were liquidated; and
(d) in the case of insolvent natural persons and unincorporated entities comprising natural
persons, and insolvent companies and other bodies corporate whose financial position is
irredeemable—to provide an orderly system for adjudging those persons bankrupt and for the
efficient and optimal administration and distribution of their estates for the benefit of their
creditors;
(e) in the case of insolvent companies and other bodies corporate whose financial position is
irredeemable—to provide an orderly system for liquidating the affairs of those companies
and bodies and for the efficient and optimal administration and distribution of their assets
for the benefit of their creditors.

rs of those companies
and bodies and for the efficient and optimal administration and distribution of their assets
for the benefit of their creditors.

(2) This Act applies to natural persons, partnerships, limited liability partnership, companies and other
corporate bodies established by any written law. Part II – INSOLVENCY PRACTITIONERS
4. Circumstances in which person acts as insolvency practitioner
(1) A person acts as an insolvency practitioner in relation to a natural person if the person acts—
(a) as the bankruptcy trustee or interim trustee in respect of the person's property or as
permanent or interim trustee in the sequestration of the person's estate;
(b) as a trustee under a deed that is—
(i) a deed of composition made for the benefit of the person's creditors; or
(ii) a trust deed for the creditors of the person; or
(c) as supervisor of a voluntary arrangement approved under Division I of Part IV. (2) A person acts as an insolvency practitioner in relation to a company if the person acts as—
(a) the liquidator, provisional liquidator, administrator of the company;
(b) a supervisor of a voluntary arrangement approved under Part VIII; or
(c) a supervisor of a voluntary arrangement approved under Part IX.

company;
(b) a supervisor of a voluntary arrangement approved under Part VIII; or
(c) a supervisor of a voluntary arrangement approved under Part IX.

(3) A reference in this section to a natural person includes, except in so far as the context otherwise
requires, a reference to a partnership other than a limited liability partnership. 7

atural person includes, except in so far as the context otherwise
requires, a reference to a partnership other than a limited liability partnership. 7

Insolvency Act (Cap. 53) Kenya
5. Consequences of acting without authorisation
(1) A person who, not being the holder of an authorisation, purports to act as an insolvency
practitioner in relation to a company or a natural person commits an offence and is on conviction
liable to a fine not exceeding five million shillings. (2) This section does not apply to the Official Receiver. 6. Qualifications for person to act as insolvency practitioners
(1) Subject to subsection (2) and (3), a person is qualified to act as an insolvency practitioner only if the
person—
(a) satisfies the requirements of the insolvency regulations with respect to education, practical
training and experience;
(b) is a member of a professional body recognised under section 7; and
(c) satisfies the requirements (if any) of the rules governing the body.

ience;
(b) is a member of a professional body recognised under section 7; and
(c) satisfies the requirements (if any) of the rules governing the body.

(2) A natural person is disqualified from being or acting as an insolvency practitioner if the person—
(a) has been adjudged bankrupt, or the person's estate has been sequestrated and, in either case,
the person has not been discharged;
(b) is subject to a disqualification order made under the law relating to companies; or
(c) is unable to perform the functions of an insolvency practitioner because of physical or
mental infirmity. (3) A body corporate is not eligible to be an insolvency practitioner, but this subsection does not
extend to an employee of a body corporate. (4) A natural person who, during the two years immediately preceding the commencement of this Part,
was carrying on any of the activities referred to in section 4(1) or (2) is, unless disqualified under
subsection (2), taken to be qualified to be and to act as an insolvency practitioner on and after that
commencement, but ceases to be so qualified unless the person has, within the twelve months after
that commencement, complied with the requirements of subsection (1). 7.

eases to be so qualified unless the person has, within the twelve months after
that commencement, complied with the requirements of subsection (1). 7.

Duty of Cabinet Secretary to declare certain bodies to be recognised as professional
bodies for the purposes of this Act
(1) The Cabinet Secretary shall, by notice published in the Gazette, declare one or more professional
bodies to be recognised professional bodies for the purposes of this Act. (2) The Cabinet Secretary may declare a professional body to be a recognised professional body only if
it—
(a) regulates the practice of a profession; and
(b) maintains and enforces rules authorizing its members to act as insolvency practitioners to
ensure that members—
(i) are fit and proper persons to act as insolvency practitioners; and
(ii) meet acceptable requirements relating to education practical training and experience. (3) A reference to the members of a recognised professional body includes a reference to persons who
are, whether members of that body or not, governed by its rules in the practice of the relevant
profession. 8

body includes a reference to persons who
are, whether members of that body or not, governed by its rules in the practice of the relevant
profession. 8

Insolvency Act (Cap. 53) Kenya
(4) The Cabinet Secretary may revoke a notice made under subsection (1) if it appears to the Cabinet
Secretary that the professional body no longer meets the requirements of subsection (2). (5) A notice made by the Cabinet Secretary under this section takes effect from the date of the notice or
such other date as is specified in it. (6) The Cabinet Secretary may, in revoking a notice made under subsection (1), exempt a specified
member, or a specified class of members, of the professional body concerned from the effect of
the revocation and to authorise the member, or the members of that class, to continue acting as
an insolvency practitioner or as insolvency practitioner for such period as the Cabinet Secretary
determines and notifies in writing to the member or members concerned. (7) In this section, "profession" means a profession involving carrying on any of the activities referred
to in section 4(1) or (2). 8. Application to act as insolvency practitioner
(1) A person who wishes to act as an insolvency practitioner may apply to the Official Receiver for an
authorisation to act as an insolvency practitioner for the purposes of this Act.

an insolvency practitioner may apply to the Official Receiver for an
authorisation to act as an insolvency practitioner for the purposes of this Act.

(2) The Official Receiver shall refuse an application under subsection (1) that—
(a) is not made in the manner prescribed by the insolvency regulations;
(b) does not contain or be accompanied by such information as the Official Receiver may
reasonably require for purposes of determining the application; or
(c) does not comply with subsection (3); or
(d) is not accompanied by the fee so prescribed. (3) The applicant shall include in, or attach to, the application evidence—
(a) that the applicant is qualified to act as an insolvency practitioner; and
(b) that the applicant—
(i) has a professional indemnity insurance policy or has provided security for the proper
performance of the functions of an insolvency practitioner; and
(ii) that policy or security meets the requirements prescribed by the insolvency
regulations with respect to acting as a practitioner; and
(c) that the applicant is a fit and proper person to act as an insolvency practitioner. (4) The Official Receiver may direct that notice of the application be published in the Gazette or in such
other publication as the Official Receiver specifies.

ficial Receiver may direct that notice of the application be published in the Gazette or in such
other publication as the Official Receiver specifies.

(5) Information to be provided to the Official Receiver under this section is, if the Official Receiver so
requires, to be in such form or verified in such manner as the Official Receiver may specify. (6) An application made under subsection (1) may be withdrawn at any time before it is granted or
refused. 9. Grant or refusal of authorisation
(1) As soon as practicable after receiving an application made under section 8, the Official shall either
grant or refuse the application. (2) The Official Receiver shall grant an application made under section 8 if satisfied that—
(a) the application complies with the requirements of that section; and
9

Receiver shall grant an application made under section 8 if satisfied that—
(a) the application complies with the requirements of that section; and
9

Insolvency Act (Cap. 53) Kenya
(b) that the applicant is qualified to act as an insolvency practitioner and is a fit and proper
person to act as such. (3) The Official Receiver may not refuse an application for an authorisation without having given the
applicant an opportunity to be heard. (4) On granting an authorisation under this section, the Official Receiver shall notify the applicant in
writing of the authorisation and specify the date on which the authorisation is to take effect. (5) An authorisation granted under this section continues in force for such period, and subject to such
reasonable conditions, as are specified in the authorisation. 10.

n granted under this section continues in force for such period, and subject to such
reasonable conditions, as are specified in the authorisation. 10.

Power of Official Receiver to revoke authorisation
(1) The Official Receiver may revoke an authorisation granted under subsection (1) if satisfied that the
holder of the authorisation—
(a) is no longer qualified to act as an insolvency practitioner;
(b) is no longer a fit and proper person to act as an insolvency practitioner;
(c) has been found guilty of an offence under this Act, or of an offence under any other Act
involving fraud, dishonesty or breach of trust;
(d) has contravened or failed to comply with, or is contravening or failing to comply with, a
condition of the authorisation; or
(e) in making the application for an authorisation, has provided the Official Receiver with false
or misleading information. (2) An authorisation granted under this section may be revoked by the Official Receiver at the request,
or with the consent, of the holder of the authorisation. (3) The Official Receiver may not revoke an authorisation (otherwise than at the request or with the
consent of its holder) without having given its holder an opportunity to be heard.

revoke an authorisation (otherwise than at the request or with the
consent of its holder) without having given its holder an opportunity to be heard.

(4) A revocation of an authorisation does not take effect until the period within which an appeal
within which the holder of the authorisation can appeal against the revocation has expired or, if
within that period, the holder lodges such an appeal, until the appeal is finally determined or is
withdrawn, whichever first occurs. 11. Right to appeal against decisions of Official Receiver
(1) A person whose application for an authorisation to act as an insolvency practitioner is refused may
appeal to the Court against the refusal. (2) A person whose authorisation to act as insolvency practitioner is revoked otherwise than at the
person's request or with the person's consent may appeal to the Court against the refusal. (3) Such an appeal may be entertained only if—
(a) it is lodged with the Court within thirty days after the decision of the Official Receiver
refusing the application or revoking the authorisation is notified to the applicant or holder of
the authorisation, or within such extended period as the Court may allow; and
(b) is in the form, and complies with any other requirements, prescribed by the insolvency
regulations for the purposes of this section.

ay allow; and
(b) is in the form, and complies with any other requirements, prescribed by the insolvency
regulations for the purposes of this section.

(4) The Official Receiver is entitled to be served with a copy of the appeal and to appear at the hearing
of the appeal as respondent. (5) On the hearing of an appeal lodged in accordance with this section, the Court shall, if it considers
that the refusal of the appellant's application, or the revocation of the appellant's authorisation,
10

this section, the Court shall, if it considers
that the refusal of the appellant's application, or the revocation of the appellant's authorisation,
10

Insolvency Act (Cap. 53) Kenya
was not warranted, make an order quashing the decision of the Official Receiver refusing the
application, or revoking the authorisation, but otherwise, it shall make an order confirming the
Official Receiver's decision. (6) The Court may make such ancillary or consequential orders as it considers appropriate, including an
order as to payment of costs of the appeal proceedings. Part III – BANKRUPTCY OF NATURAL PERSONS
Division 1 — Bankruptcy: introductory provisions
12.

order as to payment of costs of the appeal proceedings. Part III – BANKRUPTCY OF NATURAL PERSONS
Division 1 — Bankruptcy: introductory provisions
12.

Interpretation: Part III
In this Part—
"bankruptcy application" means an application for a debtor to be adjudged bankrupt;
"bankruptcy order", in relation to a debtor, means an order of the Court adjudging the debtor bankrupt;
"creditor's application" means a bankruptcy application made in accordance with section 17 by one or
more creditors of a debtor;
"debtor" means a natural person who owes money to one or more creditors; and, if a trust, partnership
or other unincorporated body owes money to a creditor, includes all of the trustees of the trust, all of the
partners of the partnership and all of the members of the body;
"debtor's application” means a bankruptcy application made in accordance with section 32 by a debtor;
"statutory demand" means a demand for payment of a debt made as referred to in section 17(3)(a) or (4)(a). 13. Nature of bankruptcy
(1) Bankruptcy occurs when the Court makes an order in respect of a debtor adjudging the debtor
bankrupt—
(a) on the application of one or more creditors of the debtor made in accordance with section 17;
or
(b) on the application of the debtor made in accordance with section 32.

of one or more creditors of the debtor made in accordance with section 17;
or
(b) on the application of the debtor made in accordance with section 32.

(2) If a person is adjudged bankrupt—
(a) the property of the person vests in the bankruptcy trustee or, if there is no bankruptcy
trustee, the Official Receiver;
(b) the person becomes restricted as to the business activities that the person can undertake;
and
(c) the Official Receiver is entitled to recover assets that the person has transferred within the
two years immediately preceding the bankruptcy. 14. Alternatives to bankruptcy
A debtor who is insolvent may as an alternative to bankruptcy—
(a) enter into a voluntary arrangement in accordance with Division I of Part IV;
(b) make a proposal to creditors in accordance with Division 2 of Part IV;
(c) pay creditors in instalments under a summary instalment order under Division 3 of that Part; or
(d) enter the no asset procedure in accordance with Division 4 of that Part. 11

nts under a summary instalment order under Division 3 of that Part; or
(d) enter the no asset procedure in accordance with Division 4 of that Part. 11

Insolvency Act (Cap. 53) Kenya
15. Who is entitled to make a bankruptcy application
(1) A bankruptcy application may be made to the Court in accordance with the provisions of this Part—
(a) by one of the person's creditors or jointly by two or more one of them;
(b) by the debtor; or
(c) by the supervisor of any person who is for the time being bound by a voluntary arrangement
proposed by the debtor and approved under Division I of Part IV. (2) On the hearing of such an application, the Court may, subject to and in accordance with the
provisions of this Part, make a bankruptcy order. (3) An application may be made by a person referred to in subsection (1)(a) or (b) only if the debtor—
(a) is domiciled in Kenya;
(b) is personally present in Kenya on the date on which the application is made; or
(c) at any time during the three years immediately preceding that date—
(i) has been ordinarily resident, or has had a place of residence; or
(ii) has carried on business in Kenya.

ee years immediately preceding that date—
(i) has been ordinarily resident, or has had a place of residence; or
(ii) has carried on business in Kenya.

(4) In subsection (3)(c), the reference to a debtor carrying on business includes—
(a) the carrying on of a business by a firm or partnership of which the debtor is a member; and
(b) the carrying on of a business by an agent or manager for the debtor for such a firm or
partnership. 16. Proceedings on a bankruptcy application
(1) A bankruptcy application may not be withdrawn without the approval of the Court. (2) The Court has a general power to dismiss a bankruptcy application or to stay proceedings on such
an application on the ground that the Court is of the opinion that a requirement of this Part or the
insolvency regulations has not been complied with in a material respect. (3) If the Court stays proceedings on a bankruptcy application, it may do so on such terms as it
considers appropriate. Division 2 — Bankruptcy applications by creditors
17. Creditor may apply for bankruptcy order in respect of debtor
(1) One or more creditors of a debtor may make an application to the Court for a bankruptcy order to
be made in respect of the debtor in relation to a debt or debts owed by the debtor to the creditor or
creditors.

o the Court for a bankruptcy order to
be made in respect of the debtor in relation to a debt or debts owed by the debtor to the creditor or
creditors.

(2) Such an application may be made in relation to a debt or debts owed by the debtor only if, at the
time the application is made—
(a) the amount of the debt, or the aggregate amount of the debts, is equal to or exceeds the
prescribed bankruptcy level;
(b) the debt, or each of the debts, is for a liquidated amount payable to the applicant creditor, or
one or more of the applicant creditors, either immediately or at some certain, future time,
and is unsecured;
12

payable to the applicant creditor, or
one or more of the applicant creditors, either immediately or at some certain, future time,
and is unsecured;
12

Insolvency Act (Cap. 53) Kenya
(c) the debt, or each of the debts, is a debt that the debtor appears either to be unable to pay or
to have no reasonable prospect of being able to pay; and
(d) there is no outstanding application to set aside a statutory demand in respect of the debt or
any of the debts. (3) For the purposes of subsection (2)(c), a debtor appears to be unable to pay a debt if, but only if, the
debt is payable immediately and either—
(a) the applicant creditor to whom the debt is owed has served on the debtor a demand requiring
the debtor to pay the debt or to secure or compound for it to the satisfaction of the creditor,
at least twenty-one days have elapsed since the demand was served, and the demand has
been neither complied with nor set aside in accordance with the insolvency regulations; or
(b) execution or other process issued in respect of the debt on a judgment or order of any court
in favour of the applicant, or one or more of the applicants to whom the debt is owed, has
been returned unsatisfied either wholly or in part.

y court
in favour of the applicant, or one or more of the applicants to whom the debt is owed, has
been returned unsatisfied either wholly or in part.

(4) For the purposes of subsection (2)(c), a debtor appears to have no reasonable prospect of being able
to pay a debt if, but only if, the debt is not immediately payable and—
(a) the applicant to whom it is owed has served on the debtor a demand requiring the debtor to
establish to the satisfaction of the creditor that there is a reasonable prospect that the debtor
will be able to pay the debt when it falls due;
(b) at least twenty-one days have elapsed since the demand was served; and
(c) the demand has been neither complied with nor set aside in accordance with the insolvency
regulations. (5) This section is subject to sections 18 to 20. (6) An overstatement in a statutory demand of the amount owing by the debtor does not invalidate the
demand unless—
(a) the debtor notifies the creditor that the debtor disputes the validity of the demand because it
overstates the amount owing; and
(b) the debtor makes that notification within the period specified in the demand for the debtor
to comply with it.

it
overstates the amount owing; and
(b) the debtor makes that notification within the period specified in the demand for the debtor
to comply with it.

(7) A debtor complies with a demand that overstates the amount owing by—
(a) taking steps that would have complied with the demand had it stated the correct amount
owing, such as by paying the creditor the correct amount owing plus costs; and
(b) taking those steps within the period specified in the demand for the debtor to comply. 18. When court can make bankruptcy order on application by secured creditor
(1) A debt that is the debt, or one of the debts, in respect of which a creditor's application is made need
not be unsecured if either—
(a) the application contains a statement by the person having the right to enforce the security
that the creditor is willing, in the event of a bankruptcy order being made, to give up the
security for the benefit of all the bankrupt's creditors; or
(b) the application is expressed not to be made in respect of the secured part of the debt and
contains a statement by that person of the estimated value at the date of the application of
the security for the secured part of the debt.

e debt and
contains a statement by that person of the estimated value at the date of the application of
the security for the secured part of the debt.

(2) In a case to which subsection (1)(b) applies, the secured and unsecured parts of the debt are to be
treated for the purposes of sections 17, 19 and 20 as separate debts. 13

section (1)(b) applies, the secured and unsecured parts of the debt are to be
treated for the purposes of sections 17, 19 and 20 as separate debts. 13

Insolvency Act (Cap. 53) Kenya
19. Expedited creditor's application
If a creditor's application is made wholly or partly in respect of a debt that is the subject of a statutory
demand, the application may be made before the end of the twenty-one day period referred to in section
17 if—
(a) there is a serious possibility that the debtor's property, or the value of any of that property, will be
significantly reduced during that period; and
(b) the application contains a statement to that effect. 20. Proceedings on creditor's application
(1) The Court may not make a bankruptcy order on a creditor's application unless it is satisfied that the
debt, or one of the debts, in respect of which the application was made is either—
(a) a debt which, having been payable at the date of the application or having since become
payable, has been neither paid nor secured or compounded for; or
(b) a debt that the debtor has no reasonable prospect of being able to pay when it falls due. (2) If the application contains a statement of the kind referred to in section 19, the Court may not make
a bankruptcy order until at least twenty-one days have elapsed since the service of the relevant
statutory demand.

section 19, the Court may not make
a bankruptcy order until at least twenty-one days have elapsed since the service of the relevant
statutory demand.

(3) The Court may dismiss the application if it is satisfied that the debtor is able to pay all of the
debtor's debts or is satisfied—
(a) that the debtor has made an offer to secure or compound for a debt in respect of which the
application is made;
(b) that the acceptance of that offer would have required the dismissal of the application; and
(c) that the offer has been unreasonably refused. (4) In determining for the purposes of subsection (3) whether the debtor is able to pay all of the
debtor's debts, the Court shall take into account the debtor's contingent and prospective liabilities. (5) In determining for the purposes of this section what constitutes a reasonable prospect that a debtor
will be able to pay a debt when it falls due, the Court shall presume that the prospect given by the
information known to the creditor when the creditor entered into the transaction resulting in the
debt was a reasonable prospect.

rospect given by the
information known to the creditor when the creditor entered into the transaction resulting in the
debt was a reasonable prospect.

(6) Nothing in sections 17 to 19 prevents the Court from allowing a creditor's application to be
amended by the omission of any creditor or debt and to be proceeded with as if action taken for the
purposes of those sections had been taken only by or in relation to the remaining creditors or debts. 21. Creditor's execution process not to be issued or continued
(1) A creditor who makes an application for a bankruptcy order in respect of a debtor may not issue an
execution process against the debtor in respect of the property of the debtor to recover a debt on
which the application is based. (2) If the creditor has already issued the execution process, the creditor may not continue it. (3) The creditor may make an application to the relevant court for approval to issue or continue the
execution process. (4) On the hearing of an application made under subsection (3), the relevant court may make an order
permitting the applicant to begin or continue the execution process but only if it is satisfied after
considering all representations made to it that the interests of the other creditors will not be
detrimentally affected. 14

y if it is satisfied after
considering all representations made to it that the interests of the other creditors will not be
detrimentally affected. 14

Insolvency Act (Cap. 53) Kenya
(5) Any action taken in contravention of subsection (1) or (2) is void. 22. Power of relevant court to stay execution processes by other creditors or allow them
on terms
(1) After a creditor's application has been made, the debtor or any creditor may apply to the relevant
court for an order stopping the issue or continuance by any other creditor of an execution process
against the debtor in respect of the property of the debtor. (2) On the hearing of an application under subsection (1), the Court may make an order—
(a) stay the execution process on such terms as the Court considers appropriate; or
(b) allowing the execution process to continue on such terms as the Court considers appropriate. 23. Execution process issued by other court
(1) This section applies if an execution process has been issued by a court other than the High Court.

te. 23. Execution process issued by other court
(1) This section applies if an execution process has been issued by a court other than the High Court.

(2) If it is proved to the issuing court that an application for a bankruptcy order in respect of the debtor
has been made to the High Court, that court may either—
(a) stay the execution process on such terms as it considers appropriate; or
(b) permit the execution process to continue on such terms as it considers appropriate. 24. No restriction on execution process if bankruptcy application withdrawn or dismissed
The restrictions in sections 21 to 23 on issuing or continuing an execution process do not apply if an
application is withdrawn or dismissed. 25. When court may adjudge debtor bankrupt
(1) The Court may make a bankruptcy order in respect of the debtor if the creditor has complied with
section 7. (2) The Court may refuse to adjudge a debtor bankrupt if—
(a) the applicant creditor has not satisfied the requirements specified in section 17;
(b) the debtor is able to pay the debtor's debts; or
(c) it is just and equitable that the Court should not make a bankruptcy order. 26. When the Court may stay application
The Court may, at any time, stay an application by a creditor for bankruptcy on such terms, and for such
period, as the Court considers appropriate. 27.

e Court may, at any time, stay an application by a creditor for bankruptcy on such terms, and for such
period, as the Court considers appropriate. 27.

Orders if more than one application
(1) If there is more than one bankruptcy application in respect of a debtor, and one application has
been stayed by an order of the Court, the Court may, if it believes there is a good reason to do so,
make a bankruptcy order in respect of the application that has not been stayed. (2) On making a bankruptcy order under subsection (1), the Court shall dismiss the application that has
been stayed on such terms as it considers appropriate. 15

ng a bankruptcy order under subsection (1), the Court shall dismiss the application that has
been stayed on such terms as it considers appropriate. 15

Insolvency Act (Cap. 53) Kenya
28. Orders if there is more than one order
If an application made by a creditor for a bankruptcy order relates to more than one debtor, the Court may
refuse to make such an order in respect of one or some of the debtors without affecting the application
made in relation to the remaining debtor or debtors. 29. Power of the Court to make order staying bankruptcy application, etc. (1) This section applies if a debtor—
(a) has made a disposition of all, or substantially all, of the property of the debtor to a trustee
for the benefit of the creditors of the debtor;
(b) has made a proposal under Division I of Part IV; or
(c) has applied for a summary instalment order under that Division. (2) The debtor, the bankruptcy trustee or any creditor may apply for an order under this section.

for a summary instalment order under that Division. (2) The debtor, the bankruptcy trustee or any creditor may apply for an order under this section.

(3) On the hearing of an application under this section, the Court may make any of the following orders
—
(a) an order staying the bankruptcy application;
(b) an order staying any other bankruptcy application;
(c) an order as to costs;
(d) if it orders costs to be paid to the creditor who applied for the bankruptcy application—an
order that the costs be paid out of the assets of the debtor. (4) This section does not limit the powers of the Court under section 39. 30. Court may stay application while underlying debt is determined
(1) This section applies if a debtor appears in opposition to a creditor's application and the debtor
claims that the debtor—
(a) does not owe a specified debt to the creditor; or
(b) owes a specified debt to the creditor, but the debt is less than the prescribed bankruptcy
level. (2) The Court may, instead of refusing the application, stay the application so that the issue of—
(a) whether the debt is owed; or
(b) how much of the debt is owed, can be resolved at trial.

e application, stay the application so that the issue of—
(a) whether the debt is owed; or
(b) how much of the debt is owed, can be resolved at trial.

(3) As a condition of staying the application, the
Court may require the debtor to give security to the creditor for any debt that may be established as
owing by the debtor to the creditor, and for the cost of establishing the debt. 31. Court may allow one creditor to be substituted for another
In the case of a creditor's application, the Court may substitute another creditor for the creditor making
the application if—
(a) the applicant creditor has not proceeded with due diligence, or at the hearing of the application
offers no evidence; and
(b) the debtor owes the other creditor two hundred and fifty thousand shillings or more. 16

at the hearing of the application
offers no evidence; and
(b) the debtor owes the other creditor two hundred and fifty thousand shillings or more. 16

Insolvency Act (Cap. 53) Kenya
Division 3 — Bankruptcy applications by debtors
32. When debtor may make application for bankruptcy order
(1) A debtor may make an application to the Court for an order adjudging the debtor bankrupt only on
the grounds that the debtor is unable to pay the debtor's debts. (2) The Court may decline to deal with such an application if it is not accompanied by a statement of
the debtor's financial position containing—
(a) such particulars of the debtor's creditors and of the debtor's debts and other liabilities and
assets as may be prescribed by the insolvency regulations; and
(b) such other information as may be so prescribed. (3) The Court may reject a statement of the debtor's financial position if of the opinion that it is
incorrect or incomplete. (4) A debtor who makes an application under this section shall publish a notice of the application in—
(a) a newspaper circulating within the region in which the debtor ordinarily resides; and
(b) in such other publications (if any) as may prescribed by the insolvency regulations for
purposes of this section.

e debtor ordinarily resides; and
(b) in such other publications (if any) as may prescribed by the insolvency regulations for
purposes of this section.

(5) The Court may decline to hear the application if subsection (4) has not been complied with to its
satisfaction. 33. Appointment of insolvency practitioner by the Court
(1) Subject to section 34, on the hearing of a debtor's application, the Court may not make a bankruptcy
order if it appears to the Court—
(a) that if a bankruptcy order were made the total amount of the applicant's debts, so far as
unsecured, would be less than the small bankruptcies level;
(b) that if a bankruptcy order were made, the value of the bankrupt's estate would be equal to or
more than the prescribed minimum value;
(c) that, during the five years immediately preceding the debtor's application, the debtor has—
(i) neither been adjudged bankrupt; nor
(ii) made a composition with the debtor's creditors in satisfaction of the debtor's debts or
a scheme of arrangement of the debtor's financial affairs; and
(d) that it would be appropriate to appoint an authorised insolvency practitioner to prepare a
report under section 34.

ebtor's financial affairs; and
(d) that it would be appropriate to appoint an authorised insolvency practitioner to prepare a
report under section 34.

(2) If, on the hearing of the application, it appears to the Court that it would be appropriate to make an
appointment as referred to in subsection (1)(d), the Court shall appoint an authorised insolvency
practitioner in relation to the debtor—
(a) to prepare a report under section 34; or
(b) subject to Division 1 of Part IV, to act in relation to any voluntary arrangement to which the
report relates as supervisor for the purpose of supervising its implementation. (3) In this section—
(a) "prescribed minimum value" means the amount for the time being specified in the insolvency
regulations for the purposes of this section;
17

ction—
(a) "prescribed minimum value" means the amount for the time being specified in the insolvency
regulations for the purposes of this section;
17

Insolvency Act (Cap. 53) Kenya
(b) "small bankruptcies level" means the amount for the time being so specified for the purposes
of this section. 34. Action on report of insolvency practitioner
(1) The insolvency practitioner appointed under section 33 shall—
(a) inquire into the debtor's financial affairs; and
(b) within such period as the Court may specify, submit a report to the Court stating whether the
debtor is willing to make a proposal for a voluntary arrangement in accordance with Division
1 of Part IV. (2) If the insolvency practitioner proposes to state that the debtor is willing to make such a proposal,
that practitioner shall also state—
(a) whether, in his or her opinion, a meeting of the debtor's creditors should be convened to
consider the proposal; and
(b) if, in that practitioner's opinion such a meeting should be convened—the date on which, and
time and place at which, the meeting should be held.

d
(b) if, in that practitioner's opinion such a meeting should be convened—the date on which, and
time and place at which, the meeting should be held.

(3) On considering a report submitted under this subsection (1), the Court may—
(a) without any application, make an interim order under section 306, if it considers it
appropriate to do so for the purposes of facilitating the consideration and implementation of
the debtor's proposal; or
(b) if it considers it would be inappropriate to make such an order—make a bankruptcy order in
respect of the applicant. (4) An interim order made in accordance with subsection (3)(a) ceases to have effect at the end of such
period as the Court may specify for the purpose of enabling the debtor's proposal to be considered
by the debtor's creditors in accordance with the applicable provisions of Division I of Part IV. (5) If the insolvency practitioner has proposed in the report that a meeting of the debtor's creditors
should be convened, the insolvency practitioner shall, unless the Court otherwise directs, convene
such a meeting for the time, date and place proposed in the report. (6) Such a meeting is to be taken to have been convened under section 309 in which case subsections
(2) and (3) of that section and sections 309 to 314 apply to the meeting. 35.

taken to have been convened under section 309 in which case subsections
(2) and (3) of that section and sections 309 to 314 apply to the meeting. 35.

Joint application can be made by two or more debtors
Two or more debtors, who are partners in a business partnership, may make a joint application under
section 32. Division 4 — Appointment of interim trustee in respect of debtor's property
36. Appointment of interim trustee of debtor's property on application of creditor
(1) After a creditor's application has been made, the creditor or any other creditor of the debtor may
apply to the Court for an order for the appointment of an authorised insolvency practitioner as
interim trustee in respect of all or a specified part of the debtor’s property. (2) The Court may make such an order at any time before a bankruptcy order is made in respect of the
debtor. (3) In making an order under subsection (1), the Court may authorise the interim trustee to do all or
any of the following—
(a) take control of any property of the debtor;
18

nder subsection (1), the Court may authorise the interim trustee to do all or
any of the following—
(a) take control of any property of the debtor;
18

Insolvency Act (Cap. 53) Kenya
(b) sell any perishable property or property of the debtor that is likely to fall rapidly in value;
(c) control the affairs or property of the debtor as directed by the Court. (4) An order authorising the trustee to control a debtor's business may not extend beyond what, in the
Court's opinion, is necessary to conserve the debtor's property. (5) The Official Receiver and any authorised insolvency practitioner are suitably qualified persons for
the purpose of subsection (1). (6) In this section, "debtor's business" includes any business in which the debtor has a financial
interest. 37. Additional orders after appointment of interim trustee
(1) After the appointment of an interim trustee under section 36, the Court may, on an application
made under subsection (2), make additional orders under that section. (2) An application for the purpose of subsection (1) made by a creditor or the interim trustee or, with
the approval of the Court, by any other person. 38.

n application for the purpose of subsection (1) made by a creditor or the interim trustee or, with
the approval of the Court, by any other person. 38.

Notice of appointment of interim trustee to be published
(1) As soon as practicable after the appointment of an interim trustee, the trustee shall publish a notice
of the appointment—
(a) in one or more newspapers circulating in Kenya; and
(b) in such other publication as may be prescribed by the insolvency regulations for the purposes
of this section. (2) The appointment of the interim trustee does not take effect until subsection (1) has been complied
with. 39. Execution process not to be issued after notice of appointment of trustee is published
(1) A creditor of the debtor may not issue an execution process under section 23 after notice of the
appointment of the interim trustee has been published. (2) A creditor may not continue an execution process already issued before notice of the appointment
of the interim trustee has been published. (3) A creditor or any other interested person may apply to the Court for an order allowing the issue
or continuation of an execution process, and the Court may make an order on such terms as it
considers appropriate. (4) Any action taken in contravention of subsection (1) or (2) is void. 40.

and the Court may make an order on such terms as it
considers appropriate. (4) Any action taken in contravention of subsection (1) or (2) is void. 40.

Effect of staying execution
If execution is stayed under section 39, sections 109, 110, 111, 112, 113, 114 and 116 apply as if the order
staying execution were a bankruptcy order. Division 5 — Adjudication of bankruptcy applications
41. Bankruptcy commences on making of bankruptcy order
A bankruptcy under this Act commences on the date and at the time when a bankruptcy order is made in
respect of the debtor. 19

ing of bankruptcy order
A bankruptcy under this Act commences on the date and at the time when a bankruptcy order is made in
respect of the debtor. 19

Insolvency Act (Cap. 53) Kenya
42. Date and time of bankruptcy order to be recorded
(1) On making a bankruptcy order, the Court shall record the date and time when the order was made. (2) If the debtor is adjudged bankrupt on the application of the debtor, the Official Receiver shall record
on the application the date and time when the debtor made the application. 43. Registrar of the Court to notify trustee of bankruptcy order
As soon as practicable after the Court has made a bankruptcy order in respect of a debtor, the Registrar of
the Court shall forward a copy of the order to the Official Receiver. 44. Official Receiver to nominate bankruptcy trustee
(1) As soon as practicable after receiving a copy of a bankruptcy order, the Official Receiver shall
nominate a qualified person to be bankruptcy trustee in respect of the debtor's property. (2) In this subsection (1), "qualified person" means the Official Receiver or an authorised insolvency
practitioner. 45.

ect of the debtor's property. (2) In this subsection (1), "qualified person" means the Official Receiver or an authorised insolvency
practitioner. 45.

Presumption that act was done, or transaction was entered into or made, after
bankruptcy
If a doubt arises as to whether an act was done, or a transaction entered into or made, before or after the
time when a bankruptcy commenced, it is to be presumed, until the contrary is proved, that the act was
done, or the transaction was entered into or made, after that time. 46. Bankruptcy order to be binding on all persons
A bankruptcy order becomes binding on the bankrupt and all other persons—
(a) on the expiry of the time within which an appeal may be lodged against the order; or
(b) if an appeal is lodged in respect of the order within that period and the Court later confirms the
order or the appeal is later withdrawn—on the confirmation of the order or the withdrawal of the
appeal,
and the order can no longer be questioned on the ground that it was invalid or that a prerequisite for
making it did not exist. 47. Official Receiver to maintain public register of undischarged and discharged bankrupts
(1) The Official Receiver shall establish and maintain a public register of undischarged and discharged
bankrupts.

discharged and discharged bankrupts
(1) The Official Receiver shall establish and maintain a public register of undischarged and discharged
bankrupts.

(2) The Official Receiver shall maintain the register in accordance with Division 2 of Part XIl. Division 6 — What happens on and after bankruptcy commences
48. What happens or is to happen on and after bankruptcy commences
(1) When a bankruptcy order commences—
(a) all proceedings to recover the bankrupt's debts are stayed; and
(b) the property of the bankrupt (whether in or outside Kenya), and the powers that the bankrupt
could have exercised in respect of that property for the bankrupt's own benefit, vest in the
Official Receiver. 20

), and the powers that the bankrupt
could have exercised in respect of that property for the bankrupt's own benefit, vest in the
Official Receiver. 20

Insolvency Act (Cap. 53) Kenya
(2) Despite subsection (1), the Court may, on the application by a creditor or other person interested
in the bankruptcy, allow proceedings that had already begun before the bankruptcy commenced to
continue on such terms as the Court considers appropriate. (3) Within thirty days after the date of the bankruptcy order, the Official Receiver shall, subject to
subsection (4)—
(a) publish a notice advertising the order—
(i) once in the Gazette; and
(ii) once in a newspaper widely circulating in the area in which the bankrupt resides; or
(b) if the Court directs that the order be advertised in some other publication, publish such a
notice in that other publication. (4) If the bankrupt has appealed against the order or has applied for its annulment, the Court may
order the Official Receiver not to advertise the bankruptcy order, but only if it is satisfied that there
are compelling reasons for doing so. (5) Subsection (1) is subject to section 106. 49.

se the bankruptcy order, but only if it is satisfied that there
are compelling reasons for doing so. (5) Subsection (1) is subject to section 106. 49.

Official Receiver to serve notice on bankrupt requiring the bankrupt to lodge
statement of the bankrupt's financial position
(1) Within thirty days after receiving notice of a bankruptcy order, the Official Receiver shall serve on
the bankrupt a notice—
(a) stating that a bankruptcy order has been made in respect of the bankrupt;
(b) requiring the bankrupt to lodge with the Official Receiver a statement setting out the
bankrupt's financial position; and
(c) specifying a deadline for lodging the statement with the Official Receiver. (2) The Official Receiver shall serve the notice at the address of the bankrupt given in the bankruptcy
application or at the bankrupt's address last known to the Official Receiver. (3) This section does not apply if the bankrupt has already lodged a statement under section 32. 50.

pt's address last known to the Official Receiver. (3) This section does not apply if the bankrupt has already lodged a statement under section 32. 50.

Bankrupt to lodge statement of financial position with bankruptcy trustee
(1) Within fourteen days after being served with the notice in accordance with section 49 (or within
such extended period not exceeding sixty days as the Official Receiver may allow), the bankrupt
shall lodge with the Official Receiver a statement of the bankrupt's financial position setting out—
(a) particulars of the bankrupt's assets;
(b) the bankrupt's debts and liabilities;
(c) the names, residences and occupations of the bankrupt's creditors;
(d) the securities held by the bankrupt's creditors;
(e) the dates when the securities were given; and
(f) such other information as may be prescribed by the insolvency regulations or as the
bankruptcy trustee may reasonably require. (2) At any time after lodging with the bankruptcy trustee a statement of the bankrupt's financial
position, the bankrupt may lodge additional or amended statements or answers with the
bankruptcy trustee. 21

e a statement of the bankrupt's financial
position, the bankrupt may lodge additional or amended statements or answers with the
bankruptcy trustee. 21

Insolvency Act (Cap. 53) Kenya
(3) A bankrupt who fails to comply with a requirement of subsection (1) commits an offence and on
conviction is liable to a fine not exceeding one million shillings or to imprisonment for a term not
exceeding two years, or to both. (4) If, after being convicted of an offence under subsection (2), a bankrupt, without reasonable excuse,
continues to fail to comply with the relevant requirement, the bankrupt commits a further offence
on each day during which the failure continues and on conviction is liable to a fine not exceeding
one hundred thousand shillings for each such offence. 51. Creditors entitled to inspect and take copies of statement of bankrupt's financial
position
(1) A person who in writing claims to be a creditor of the bankrupt is entitled, at all reasonable times
(either personally or through an agent—
(a) to inspect the statement of the bankrupt's financial position; and
(b) to take a copy it or of part of it. (2) A person who falsely claims to be a creditor is in contempt of the Court. 52.

pt's financial position; and
(b) to take a copy it or of part of it. (2) A person who falsely claims to be a creditor is in contempt of the Court. 52.

Official Receiver to convene first meeting of creditors
(1) The Official Receiver shall, subject to subsection (5), convene the first meeting of the bankrupt's
creditors within the prescribed period, unless the Official Receiver decides, in accordance with
section 53, not to hold the meeting. (2) The Official Receiver shall convene the meeting by giving notice of the time, date and place of the
meeting to—
(a) the bankrupt;
(b) each creditor named in the statement of the bankrupt's financial position; and
(c) any other creditors known to the bankruptcy trustee,
a notice advertising the time, date and place of the meeting. (3) The Official Receiver shall publish a notice advertising the time, date and place of the meeting—
(a) in one or more newspapers circulating generally in Kenya; and
(b) in such other publications as the Official Receiver considers appropriate. (4) For the purpose of subsection (1), the prescribed period is—
(a) thirty days after the statement of the bankrupt's financial position is lodged Receiver; or
(b) if the bankrupt is late in lodging the statement or fails to lodge a statement at all, thirty days
after the date on which the bankruptcy order was made.

the bankrupt is late in lodging the statement or fails to lodge a statement at all, thirty days
after the date on which the bankruptcy order was made.

(5) The Official Receiver may delay convening the first meeting of creditors for a period not exceeding
fourteen days if the Official Receiver considers that there are special circumstances justifying the
delay. 53. Circumstances in which Official Receiver may decide not to convene first meeting of
creditors
(1) The Official Receiver may decide not to convene a first creditors' meeting if the Official Receiver—
(a) has sent to each creditor named in the statement of the bankrupt's financial position, and to
any other creditor known to the Official Receiver, a notice that complies with section 54; and
22

atement of the bankrupt's financial position, and to
any other creditor known to the Official Receiver, a notice that complies with section 54; and
22

Insolvency Act (Cap. 53) Kenya
(b) has not, within fourteen days after sending the notice, received from a creditor a request to
convene such a meeting. (2) In deciding whether the meeting should or should be convened, the Official Receiver shall have
regard to—
(a) the bankrupt's assets and liabilities;
(b) the likely result of the bankruptcy; and
(c) any other relevant matters. (3) Within seven days after deciding not to convene a first meeting of creditors, the Official Receiver
shall send to each creditor named in the statement of the bankrupt's financial position, and to any
other creditor known to the Official Receiver, a notice stating—
(a) the Official Receiver's view that a first creditors' meeting need not be convened;
(b) the reasons for not convening the meeting; and
(c) that the Official Receiver will convene a meeting only if the Official Receiver receives from a
creditor, within fourteen days after sending the notice, a request to convene such a meeting. 54.

eeting only if the Official Receiver receives from a
creditor, within fourteen days after sending the notice, a request to convene such a meeting. 54.

Documents to be sent with notice of meeting
(1) The Official Receiver shall send the following documents with the notice of the first meeting of
creditors—
(a) a summary of the bankrupt's statement of assets and liabilities;
(b) extracts from, or a summary of, the bankrupt's explanation of the causes of the bankruptcy;
and
(c) any comments on the bankruptcy that the Official Receiver chooses to make. (2) Subsection (1) does not apply if the Official Receiver has not received the statement of the
bankrupt's financial position when the notice is sent. (3) A failure in sending or receiving the documents in subsection (1) does not affect the validity of the
proceedings at the meeting. 55. Power of creditors to requisition meeting
(1) If, in the case of a bankruptcy, the Official Receiver has not yet convened a first meeting of
creditors, or has decided not to convene such a meeting, any creditor of the bankrupt may request
the Official Receiver to convene such a meeting.

of
creditors, or has decided not to convene such a meeting, any creditor of the bankrupt may request
the Official Receiver to convene such a meeting.

(2) As soon as practicable after receiving a request under subsection (1), the Official Receiver shall
convene a first meeting of creditors if the request appears to the Official Receiver to be made with
the concurrence of not less than one-quarter in value of the bankrupt's creditors (including the
creditor making the request). 56. Execution process not to be begin or continue after bankruptcy order advertised
(1) A creditor may not begin or continue an execution process in respect of the bankrupt's property or
person for the recovery of a debt provable in the bankruptcy, after the Official Receiver—
(a) has published an advertisement notifying the bankruptcy; or
(b) has given notice of the bankruptcy to the creditor. 23

fter the Official Receiver—
(a) has published an advertisement notifying the bankruptcy; or
(b) has given notice of the bankruptcy to the creditor. 23

Insolvency Act (Cap. 53) Kenya
(2) After the notice of the bankruptcy notice has been advertised, or after being given notice of the
bankruptcy by the Official Receiver, a creditor may not seize or sell any property by means of
distress for rent owed by the bankrupt. (3) If the distress procedure has already begun, such a creditor may continue with the procedure only
with the approval of the Court and subject to such conditions as the Court may specify. 57. Effect of bankrupt's death after bankruptcy order
If a bankrupt dies after being adjudged bankrupt, the bankruptcy continues in all respects as if the
bankrupt were still alive. 58. Creditors' role at creditors' meetings
The role of the creditors in the bankruptcy primarily—
(a) to attend meetings of the creditors;
(b) to submit proofs of the debts of the bankrupt; and
(c) to examine the bankrupt at those meetings. Division 7 — Appointment and functions of bankruptcy trustees
59.

ofs of the debts of the bankrupt; and
(c) to examine the bankrupt at those meetings. Division 7 — Appointment and functions of bankruptcy trustees
59.

Power to appoint bankruptcy trustee
(1) The power to appoint a person as a bankruptcy trustee in respect of a bankrupt's estate, or to fill a
vacancy in such an appointment, is exercisable—
(a) except as provided by paragraph (b) or (c), by a creditors' meeting;
(b) under section 60 or 61, by the Official Receiver;
(c) under section 62, by the Court. (2) A power to appoint a person as bankruptcy trustee includes power to appoint two or more persons
as joint bankruptcy trustees, but such an appointment is not effective unless it makes provision for
the circumstances in which the trustees are required to act together and the circumstances in which
one or more of them may act on behalf of the others. (3) The appointment of a person as bankruptcy trustee takes effect only if the person accepts the
appointment. (4) The appointment of a person as a bankruptcy trustee takes effect at the time specified in the
document by which the person is appointed. (5) This section does not affect the provisions of this Part under which the Official Receiver is,
in specified circumstances, to be, or required to act as, the bankruptcy trustee in respect of a
bankrupt's estate. 60.

hich the Official Receiver is,
in specified circumstances, to be, or required to act as, the bankruptcy trustee in respect of a
bankrupt's estate. 60.

Consequences of failure of creditors' meeting to appoint bankruptcy trustee
(1) If a meeting convened under section 52 or 55 is held but no one is appointed as bankruptcy trustee,
the Official Receiver shall decide whether or not there is a need to make such an appointment. (2) If the Official Receiver decides there is a need to make such an appointment, the Official Receiver
shall make an appointment accordingly. (3) If the Official Receiver decides that there is no need to make such an appointment, the Official
Receiver shall notify the decision to the Court. 24

) If the Official Receiver decides that there is no need to make such an appointment, the Official
Receiver shall notify the decision to the Court. 24

Insolvency Act (Cap. 53) Kenya
(4) On giving notice of the decision to the Court in accordance with subsection (3), the Official Receiver
becomes bankruptcy trustee in respect of the bankrupt's estate. 61. Power of Official Receiver acting as bankruptcy trustee to appoint another person to
act instead
(1) The Official Receiver may, at any time while acting as bankruptcy trustee in respect of a bankrupt's
estate under a provision of this Division (other than section 62), appoint another qualified person to
act as the bankruptcy trustee instead. (2) Immediately after making such an appointment, the Official Receiver shall notify the appointment
to the Court. (3) The person appointed shall, as soon as practicable (and not later than seven days) after being
appointed—
(a) give notice of the appointment to each of the bankrupt's creditors; or
(b) if, on application made to the Court, the Court so allows, advertise the appointment in
accordance with the directions of the Court.

creditors; or
(b) if, on application made to the Court, the Court so allows, advertise the appointment in
accordance with the directions of the Court.

(4) In the notice or advertisement, the person appointed shall state—
(a) whether the person proposes to convene a general meeting of the bankrupt's creditors for the
purpose of establishing a creditor's committee under section 100; and
(b) if the person does not propose to convene such a meeting, that the creditors are entitled
under this Division to require one to be convened. 62. Special case in which the Court may appoint bankruptcy trustee
(1) If a bankruptcy order is made when there is a supervisor of a summary instalment order approved in
relation to the bankrupt under Division 2 of Part IV, the Court may, if it considers it appropriate to
do so on making the order, appoint the supervisor of the order as bankruptcy trustee in respect of
the bankrupt's estate. (2) If an appointment is made under subsection (1), the Official Receiver is not required to decide under
section 60(1) whether or not to convene a creditors' meeting. (3) Section 61(4) and (5) apply to a bankruptcy trustee appointed under this section. 63.

ection 60(1) whether or not to convene a creditors' meeting. (3) Section 61(4) and (5) apply to a bankruptcy trustee appointed under this section. 63.

Powers of bankruptcy trustee
(1) A bankruptcy trustee may—
(a) with the approval of the creditor's committee, exercise of any of the powers specified in Part
1 of the First Schedule; and
(b) without that approval, exercise any of the general powers specified in Part 2 of that Schedule. (2) With the approval of the creditors' committee or the Court, a bankruptcy trustee may appoint the
bankrupt—
(a) to superintend the management of the bankrupt's estate or any part of it;
(b) to carry on the bankrupt's business (if any) for the benefit of the bankrupt's creditors; or
(c) in any other respect to assist in administering the estate in such manner and on such terms
as the bankruptcy trustee may direct. (3) An approval given for the purposes of subsection (1)(a) or (2) is required to be a specific one and to
relate to a particular exercise of the relevant power. 25

l given for the purposes of subsection (1)(a) or (2) is required to be a specific one and to
relate to a particular exercise of the relevant power. 25

Insolvency Act (Cap. 53) Kenya
(4) A person dealing with the bankruptcy trustee in good faith and for value is not required to ascertain
whether an approval required by subsection (1)(a) or (2) has been given. (5) If a bankruptcy trustee has done anything without the approval required by subsection (1)(a) or
(2), the Court or the creditor's committee (if any) may, for the purpose of enabling the bankruptcy
trustee to meet the bankruptcy trustee's expenses out of the bankrupt's estate, ratify what that
trustee has done. (6) Part 3 of the First Schedule has effect with respect to the things that the bankruptcy trustee is able
to do for the purposes of, or in connection with, the exercise of any of the bankruptcy trustee's
powers under this Act. (7) If, in exercising a power conferred by this Act, a bankruptcy trustee who is not the Official Receiver
—
(a) disposes of property comprised in the bankrupt's estate to an associate of the bankrupt; or
(b) employs an advocate,
the bankruptcy trustee shall, if there is a creditor's committee, give notice to the committee of that
exercise of that power.

b) employs an advocate,
the bankruptcy trustee shall, if there is a creditor's committee, give notice to the committee of that
exercise of that power.

(8) A bankruptcy trustee may use his or her discretion in administering a bankrupt's property, but, in
doing so, is required to have regard to the resolutions passed by the creditors at creditors' meetings. 64. Bankruptcy trustee not to sell bankrupt's property before first creditors' meeting
(1) A bankruptcy trustee may sell property of the bankrupt before the first meeting of creditors only if
—
(a) it is perishable or is likely to rapidly diminish in value;
(b) in that trustee's opinion, its sale could be prejudiced by delay; or
(c) expenses would, in that trustee's opinion, be incurred by the delay and, before sale, the
bankruptcy trustee has consulted the creditors. (2) The bankruptcy trustee shall ensure that the proceeds of the sale of a bankrupt's property in
accordance with subsection (1) are in every case invested in accordance with section 66. 65. Title of purchaser from bankruptcy trustee
The title of a purchaser of the bankrupt's property from a bankruptcy trustee under a document that is
made in the exercise of the bankruptcy trustee's power of sale in the First Schedule may not be questioned
except on account of fraud. 66.

ent that is
made in the exercise of the bankruptcy trustee's power of sale in the First Schedule may not be questioned
except on account of fraud. 66.

Bankruptcy trustee to bank money and power to invest surplus
(1) A bankruptcy trustee shall establish and maintain a bank account in respect of each bankrupt estate
administered by that trustee and shall pay into the relevant account all money that that trustee
receives in that capacity. (2) If money held by a bankruptcy trustee in respect of a bankrupt's estate is not immediately required
to be paid in connection with the administration of the estate, the bankruptcy trustee may invest
the money in an investment of a kind prescribed by the insolvency regulations for the purposes of
this section. (3) A bankruptcy trustee who invests money in accordance with subsection (2) shall credit to the
bankrupt's estate the interest, dividends or other money that accrues in respect of the investment. 26

ordance with subsection (2) shall credit to the
bankrupt's estate the interest, dividends or other money that accrues in respect of the investment. 26

Insolvency Act (Cap. 53) Kenya
67. Bankruptcy trustee may assign right to sue under this Act
(1) A bankruptcy trustee may, if the Court has first approved it, assign a right to sue that is conferred
on the bankruptcy trustee by this Act. (2) An application for such an approval may—
(a) be made only by the bankruptcy trustee or the person to whom it is proposed to assign the
right to sue; and
(b) be opposed only by a person who is a defendant to the bankruptcy trustee's action, if already
begun, or a proposed defendant. 68. Proceedings by bankruptcy trustee when bankrupt is partner in business partnership
(1) If a member of a business partnership is adjudged bankrupt, the Court may authorise the
bankruptcy trustee to bring proceedings in the names of the bankruptcy trustee and the bankrupt's
partner. (2) The bankruptcy trustee shall serve notice of the application on the partner for authority to bring
the proceedings, and the partner may oppose the application.

uptcy trustee shall serve notice of the application on the partner for authority to bring
the proceedings, and the partner may oppose the application.

(3) The partner may apply to the Court for a direction that—
(a) the partner is to be paid the partner's proper share of the proceeds of the proceedings; or
(b) the partner is to be indemnified by the bankruptcy trustee against any costs incurred in the
proceedings on the condition that the partner does not claim any benefit from them. (4) Any purported release by the partner of the debt or demand to which the proceedings relate is void. 69. Discharge or transfer of indenture of apprenticeship or articles of agreement on
bankruptcy of employer
(1) If a person is apprenticed or is an articled clerk to an employer who is adjudged bankrupt, either
of them may give notice to the bankruptcy trustee or the Official Receiver requesting that the
indenture of apprenticeship or articles of agreement be discharged. (2) On receiving a notice under subsection (1), the bankruptcy trustee or Official Receiver shall
discharge the indenture of apprenticeship or articles of agreement, but only if satisfied that it would
be in the interests of the apprentice or clerk to do so.

the indenture of apprenticeship or articles of agreement, but only if satisfied that it would
be in the interests of the apprentice or clerk to do so.

(3) If money has been paid to the bankrupt by or on behalf of the apprentice or clerk as a fee, the
bankruptcy trustee may, on the application of the apprentice or clerk, or of the agent of the
apprentice or clerk, pay from the bankrupt's estate such amount as the trustee considers reasonable
to or for the use of the apprentice or clerk. (4) In deciding whether to make a payment under subsection (3), the bankruptcy trustee shall take into
consideration—
(a) the amount paid by or on behalf of the apprentice;
(b) the time during which the apprentice or clerk served with the bankrupt under the indenture
or articles before the commencement of the bankruptcy; and
(c) any other relevant circumstance. (5) On the application of any apprentice or articled clerk to the bankrupt, or an agent of the apprentice
or articled clerk, the bankruptcy trustee or Official Receiver may, instead of acting under subsection
(2), transfer the indenture of apprenticeship or articles of agreement to some other person. (6) Subsection (5) is subject to section 12 of the Industrial Training Act (Cap. 237). 27

pprenticeship or articles of agreement to some other person. (6) Subsection (5) is subject to section 12 of the Industrial Training Act (Cap. 237). 27

Insolvency Act (Cap. 53) Kenya
(7) Any person dissatisfied with a decision of the bankruptcy trustee under subsection (3) may apply to
the Court for an order quashing or varying the decision. (8) On the hearing of an application made under subsection (7), the Court may make the order sought
by the applicant or such other order as it considers appropriate. 70. Bankruptcy trustee may apply for directions by the Court
(1) A bankruptcy trustee may apply to the Court for directions on any question concerning the
operation of this Part. (2) A bankruptcy trustee who acts under a direction of the Court discharges the bankruptcy trustee's
duty in relation to the matter for which the direction was sought, and it does not matter that the
direction is later invalidated, overruled, or set aside or otherwise becomes ineffective. (3) However, the bankruptcy trustee is not protected by subsection (2) if, in obtaining or following the
Court's direction, the bankruptcy trustee was guilty of—
(a) fraud; or
(b) deliberate concealment or misrepresentation. 71.

obtaining or following the
Court's direction, the bankruptcy trustee was guilty of—
(a) fraud; or
(b) deliberate concealment or misrepresentation. 71.

Application to the Court to reverse or modify bankruptcy trustee's decision
(1) A person (including the bankrupt or a creditor) whose interests, monetary or otherwise, are
detrimentally affected by an act or decision to which this section applies may apply to the Court to
reverse or modify the act or decision. (2) This section applies to—
(a) an act or decision of the bankruptcy trustee; or
(b) a decision of the Court in carrying out an examination under section 170. (3) The application may be entertained only if is made—
(a) within twenty-one days after the act or decision; or
(b) within such extended period as the Court allows. (4) On the hearing on an application made under subsection (1), the Court shall—
(a) confirm the bankruptcy trustee's act or decision, with or without such modifications as it
considers appropriate; or
(b) if it is of the opinion that the act or decision was unfair or unreasonable, quash it. 72.

hout such modifications as it
considers appropriate; or
(b) if it is of the opinion that the act or decision was unfair or unreasonable, quash it. 72.

Bankruptcy trustee to keep proper accounting records
(1) A bankruptcy trustee shall—
(a) keep proper accounting records for each bankruptcy in the form and manner prescribed by
the insolvency regulations; and
(b) if required by the Court to do so, verify those records by statutory declaration. (2) A creditor or other person who has an interest in a particular bankruptcy is entitled to inspect the
bankruptcy trustee's accounting records relating to the particular bankruptcy. (3) After the end of three years from the discharge of a bankrupt, the bankruptcy trustee may dispose of
the accounting records deposited with the bankruptcy trustee for the purposes of the bankruptcy by
—
(a) delivering them to the bankrupt or the bankrupt's personal representative, if requested; or
28

tcy trustee for the purposes of the bankruptcy by
—
(a) delivering them to the bankrupt or the bankrupt's personal representative, if requested; or
28

Insolvency Act (Cap. 53) Kenya
(b) destroying or otherwise disposing of them. 73. Bankruptcy trustee’s final statement of receipts and payments
(1) The bankruptcy trustee shall prepare a final statement of receipts and payments that complies with
subsection (2)—
(a) as soon as practicable after the distribution of the final dividend has been determined; or
(b) when the whole of the bankrupt's property has been realised, if there are insufficient assets
to pay all the proofs of debt. (2) A final statement of receipts and payments complies with this subsection if it—
(a) shows in detail the receipts and payments in respect of the bankrupt's estate; and
(b) can be inspected without fee by any creditor or other person who has an interest in it. (3) The bankruptcy trustee shall publish the final statement of receipts and payments in the prescribed
form, and advertise in the prescribed manner that it has been published. 74.

ll publish the final statement of receipts and payments in the prescribed
form, and advertise in the prescribed manner that it has been published. 74.

Audit of bankruptcy trustee's accounts
(1) If, in relation to a bankruptcy, the Official Receiver is not the bankruptcy trustee, the Official
Receiver may from time to time audit—
(a) the bankruptcy trustee's accounting records for any particular bankruptcy;
(b) any statement of accounts and statement of financial position prepared by the bankruptcy
trustee under section 73; and
(c) the account (if any) maintained by the bankruptcy trustee for the purposes of this Act. (2) If, in relation to a bankruptcy, the Official Receiver is the bankruptcy trustee, the Auditor-General
may from time to time audit the records, statements and account referred to in subsection (1)(a) to
(b). 75. Removal of bankruptcy trustee and vacation of office
(1) Except as otherwise provided by this section, a bankruptcy trustee appointed in respect of a
bankrupt’s estate may be removed from office only by—
(a) an order of the Court; or
(b) a creditor's meeting convened specially for that purpose in accordance with the insolvency
regulations.

ice only by—
(a) an order of the Court; or
(b) a creditor's meeting convened specially for that purpose in accordance with the insolvency
regulations.

(2) If the Official Receiver is the bankruptcy trustee, or the bankruptcy trustee is appointed by the
official Receiver or by the Court (otherwise than under section 62), a creditors meeting may be
convened for the purpose of replacing the bankruptcy trustee, but only if—
(a) the Official Receiver or that trustee considers it appropriate to do so;
(b) the Court so directs; or
(c) the meeting is requested by one of the bankrupt’s creditors with the concurrence of not less
than one-quarter, in value, of the creditors (including the creditor making the request). (3) A bankruptcy trustee who is not also the Official Receiver vacates office on ceasing to be authorised
as an insolvency practitioner. (4) A bankruptcy trustee who is not also the Official Receiver may resign office by giving to the Court
not less than thirty days' notice of the resignation. 29

ruptcy trustee who is not also the Official Receiver may resign office by giving to the Court
not less than thirty days' notice of the resignation. 29

Insolvency Act (Cap. 53) Kenya
(5) A bankruptcy trustee vacates office—
(a) on giving notice to the Court that a final meeting has been held in accordance with section
253 and of the decision (if any) of that meeting; or
(b) if the relevant bankruptcy order is annulled, on the annulment of the order. 76. When Official Receiver is released from obligations as bankruptcy trustee
(1) If a person has been appointed by the Court to replace the Official Receiver on his or her ceasing to
hold office as bankruptcy trustee in respect of a bankrupt's estate, the Official Receiver is released
from such time as the Court orders. (2) If a person has been appointed by a general meeting of a bankrupt’s creditors to replace the Official
Receiver on his or her ceasing to hold office as bankruptcy trustee in respect of the bankrupt’s
estate, the Official Receiver is released from office from the time at which the Official Receiver gives
notice to the Court that another person has been appointed as a replacement.

s released from office from the time at which the Official Receiver gives
notice to the Court that another person has been appointed as a replacement.

(3) If the Official Receiver, while acting as bankruptcy trustee, gives notice to the Cabinet Secretary
that the administration of the bankrupt's estate is for practical purposes complete, the Official
Receiver's release takes effect from such time as the Cabinet Secretary determines in writing. (4) On being released under this section, the Official Receiver is, from the time specified in accordance
with this section, discharged from all liability both in respect of acts or omissions occurring in the
course of, or in relation to, administering the estate of the bankrupt concerned. 77. When bankruptcy trustee, not being the Official Receiver, is released from obligation
(1) This section applies when a person other than the Official Receiver ceases hold office as a
bankruptcy trustee. (2) If the person has been removed from office by a meeting of the bankrupt’s creditors that has not
resolved against the person's release or who has died, the person is released from the time at which
a notice is given to the Court in accordance with the insolvency regulations that the person has
ceased to hold office.

eleased from the time at which
a notice is given to the Court in accordance with the insolvency regulations that the person has
ceased to hold office.

(3) If the person has been removed from office—
(a) by a general meeting of the bankrupt's creditors that has resolved against the bankrupt's
release;
(b) by the Court, the person is released from such time as the Official Receiver determines, on an
application made by that person. (4) If the person has vacated office under section 75(3), the person is released from such time as the
Official Receiver determines, on an application made by that person. (5) If the person has resigned office under section 75(4), the person is released from such time as may
be determined in accordance with the insolvency regulations. (6) If the person has vacated office under section 75(5)(a), the person is released—
(a) if the final meeting referred to in that subsection has resolved against that person's release,
such time as the Official Receiver determines, on an application made by that person; but
(b) if that meeting has not so resolved, the time at which the person vacated office. (7) When a bankruptcy order is annulled, the person is released from such time as the Court
determines. 30

he time at which the person vacated office. (7) When a bankruptcy order is annulled, the person is released from such time as the Court
determines. 30

Insolvency Act (Cap. 53) Kenya
(8) On being released under this section, a bankruptcy trustee is, from the time specified in accordance
with this section, discharged from all liability both in respect of acts or omissions occurring in the
course of, or in relation to, administering the estate of the bankrupt concerned. (7) Nothing in this section prevents the Court from exercising its powers under section 74 in relation to
a person who has been released under this section. 78. Vacancy in office of bankruptcy trustee
(1) This section applies to a vacancy in the office of bankruptcy trustee that has arisen because—
(a) the appointment of a person as bankruptcy trustee has failed to take effect; or
(b) when such an appointment has taken effect, the person appointed has died, resigned or
otherwise ceased to hold the office. (2) When this section applies to a vacancy, the Official Receiver holds office as bankruptcy trustee until
the vacancy is filled. (3) The Official Receiver may at any time convene a creditors' meeting for the purpose of filling such a
vacancy.

trustee until
the vacancy is filled. (3) The Official Receiver may at any time convene a creditors' meeting for the purpose of filling such a
vacancy.

(4) If the Official Receiver has not convened, and does not propose to convene, a creditors' meeting for
the purpose of filling such a vacancy, any creditor of the bankrupt may request the Official Receiver
to convene such a meeting. (5) If such a request appears to the Official Receiver to be made with the concurrence of not less than
one-quarter in value of the bankrupt's creditors (including the creditor making the request), the
Official Receiver shall convene the requested meeting. (6) A reference in this section to a vacancy includes a case in which it is necessary, in relation to
particular property that is or may be included in a bankrupt's estate, to revive the trusteeship of the
estate after the holding of a final meeting convened under section 253 or after the Official Receiver
has given notice under section 76(2) or 77(2). 79. General control of bankrupt trustee by the Court
(1) If, in relation to the bankruptcy trustee in respect of a bankrupt's estate, a person (including the
bankrupt or a creditor of the bankrupt) is dissatisfied with any act, omission to act or decision of
that trustee, the person may apply to the Court for an order under subsection (2).

krupt) is dissatisfied with any act, omission to act or decision of
that trustee, the person may apply to the Court for an order under subsection (2).

(2) On the hearing of such an application, the Court may—
(a) confirm, reverse or modify the act, omission or decision concerned; or
(b) give the bankruptcy trustee directions; or
(c) make such other order as it considers appropriate. (3) The Court may, on the application of a bankruptcy trustee, give directions in respect of the
bankrupt's estate in relation to any particular matter arising under the bankruptcy. 80. Liability of bankruptcy trustee for misapplication of money, etc. (1) Any of the following persons make an application to the Court for an order under this section
relating to a bankruptcy trustee's administration of a bankrupt's estate—
(a) the Official Receiver;
(b) the Attorney-General;
(c) a creditor of the bankrupt;
31

a bankruptcy trustee's administration of a bankrupt's estate—
(a) the Official Receiver;
(b) the Attorney-General;
(c) a creditor of the bankrupt;
31

Insolvency Act (Cap. 53) Kenya
(d) the bankrupt (whether or not there is, or is likely to be, a surplus available at the end of the
bankruptcy). (2) Approval of the Court is required for the making of such an application if it is to be made by the
bankrupt or if it is to be made after the bankruptcy trustee has been released in accordance with
section 77. (3) If, on hearing an application made under subsection (1), the Court is satisfied that the bankruptcy
trustee in respect of a bankrupt’s estate has misapplied or retained, or become accountable for
money or other property comprising the estate; the Court shall make either or both of the following
orders—
(a) an order directing the bankruptcy trustee, for the benefit of the bankrupt’s estate, to repay,
restore or account for the relevant money or other property, together with interest at such
rate as the Court considers appropriate;
(b) an order directing the bankruptcy trustee to be disqualified from acting as such for such
period as may be specified in the order.

rs appropriate;
(b) an order directing the bankruptcy trustee to be disqualified from acting as such for such
period as may be specified in the order.

(4) If, on hearing an application made under subsection (1), the Court is satisfied that the bankrupt's
estate has sustained a loss as a result of misfeasance or a breach of fiduciary or other duty by the
bankruptcy trustee in performing that trustee's functions, the Court shall make either or both of the
following orders:
Division 8 — Creditor’s' meetings and creditors’ committee
81. Kinds of creditors' meetings
There are two kinds of creditors' meetings—
(a) the first meeting of creditors; and
(b) subsequent creditors' meetings. 82. Subsequent meetings of creditors
(1) The bankruptcy trustee may at any time convene a meeting of creditors after the first meeting of
creditors. (2) The bankruptcy trustee shall convene such a meeting if—
(a) requested to do so by a creditor of the bankrupt; and
(b) the request is made with the concurrence of not less than one-quarter in number and value
of the creditors who have proved their debts.

krupt; and
(b) the request is made with the concurrence of not less than one-quarter in number and value
of the creditors who have proved their debts.

(3) The bankruptcy trustee shall convene the meeting by giving notice of the time, date and place of
the meeting to—
(a) the bankrupt; and
(b) each creditor named in the statement of the bankrupt's financial position; and
(c) any other creditors known to the bankruptcy trustee. (4) The bankruptcy trustee shall advertise the time, date and place of the meeting in the manner
prescribed by the insolvency regulations for the purpose of this section. (5) Nothing in this section limits the general effect of section 63(5) or Part 3 of the First Schedule. 32

egulations for the purpose of this section. (5) Nothing in this section limits the general effect of section 63(5) or Part 3 of the First Schedule. 32

Insolvency Act (Cap. 53) Kenya
83. Meeting and resolution not defective for lack of notice
A meeting of creditors convened by notice to creditors, and a resolution passed at the meeting, is valid
even if some creditors may not have received the notice, unless the Court orders otherwise. 84. Appointment of Chairperson to conduct creditor’s' meetings
(1) The Chairperson of a creditors' meeting is the bankruptcy trustee or a person appointed by the
bankruptcy trustee to be the Chairperson. (2) However, if neither the bankruptcy trustee nor the person (if any) appointed by the bankruptcy
trustee to be the Chairperson attends the meeting, the creditors may appoint one of them to act
as Chairperson for the purpose of the meeting, but only if that person is entitled to vote at the
meeting. (3) A person appointed by the bankruptcy trustee or elected by the creditors to act as Chairperson may
administer any oath that the bankruptcy trustee could have administered if the bankruptcy trustee
had attended the meeting. 85. Power of Chairperson to adjourn creditors' meeting
The Chairperson of a creditors' meeting may adjourn the meeting from time to time and place to place. 86.

of Chairperson to adjourn creditors' meeting
The Chairperson of a creditors' meeting may adjourn the meeting from time to time and place to place. 86.

Bankruptcy trustee to report to creditors' meeting
If the bankruptcy trustee attends a creditors' meeting or an adjournment of the meeting, the bankruptcy
trustee shall—
(a) report on the administration of the bankrupt's estate;
(b) give any creditor any further information that the creditor may properly require; and
(c) on being reasonably required to do so, produce for the meeting or its adjournment all documents in
the bankruptcy trustee's possession that relate to the bankrupt's property. 87. Who can attend creditors' meeting
(1) A person may attend a creditors' meeting—
(a) by being physically present at the time, date and place appointed for the meeting; or
(b) if the bankruptcy trustee makes it available, by means of an audio or audio-visual link, so
that all those participating in the meeting can hear and be heard by each other. (2) A creditor may also attend—
(a) by voting by postal or electronic vote under section 94; or
(b) by proxy on any resolution to be put to the meeting. 88.

creditor may also attend—
(a) by voting by postal or electronic vote under section 94; or
(b) by proxy on any resolution to be put to the meeting. 88.

Bankrupt may be required to attend creditors' meeting and be questioned
(1) The bankrupt shall, if required by the bankruptcy trustee, attend all creditors' meetings by being
physically present or present by an audio or audio-visual link. (2) The following persons may question the bankrupt about the bankrupt's property, conduct or
dealings—
(a) the bankruptcy trustee;
(b) the Chairperson of the meeting;
33

rsons may question the bankrupt about the bankrupt's property, conduct or
dealings—
(a) the bankruptcy trustee;
(b) the Chairperson of the meeting;
33

Insolvency Act (Cap. 53) Kenya
(c) a creditor or a representative of a creditor. (3) The Chairperson of the meeting may allow only questions that relate to the bankrupt's property,
conduct or dealings. (4) The questioning may be on oath. (5) The bankrupt shall sign a statement of the bankrupt's evidence given under the questioning, if
required to do so by the bankruptcy trustee or the Chairperson of the meeting. (6) A bankrupt who, without reasonable excuse, fails to comply with subsection (5) commits an offence
and on conviction is liable to a fine not exceeding two hundred thousand shillings. 89. Attendance at creditors' meeting by non-creditors
A person who is not a creditor of the bankrupt may attend a creditors' meeting with the consent of—
(a) the bankruptcy trustee; or
(b) the creditors attending the meeting, voting by ordinary resolution. 90. Minutes and record of creditors' meeting
(1) The bankruptcy trustee shall ensure that minutes are kept of each creditors' meeting. (2) The minutes are invalid unless signed by the bankruptcy trustee or the Chairperson of the meeting.

at minutes are kept of each creditors' meeting. (2) The minutes are invalid unless signed by the bankruptcy trustee or the Chairperson of the meeting.

(3) The bankruptcy trustee may record the meeting, but only with the consent of each person attending
the meeting. 91. Number of persons required for creditors' meeting to be valid
(1) A creditors' meeting is not valid unless at least the following persons attend—
(a) the bankruptcy trustee or a person who represents the bankruptcy trustee;
(b) a creditor or a person who represents a creditor. (2) The meeting lapses if those persons do not attend, in which case the bankruptcy trustee may
convene another creditors' meeting. 92. Who can represent creditors and bankrupt at creditors' meeting
(1) Any of the following persons may represent a creditor at a creditors' meeting—
(a) an advocate;
(b) a certified public accountant;
(c) a person who keeps the creditor's or bankrupt's accounting records;
(d) in the case of a creditor, a person who is the creditor's authorised agent under a power of
attorney;
(e) a person who satisfies the bankruptcy trustee that the person represents the creditor or
bankrupt;
(f) in the case of a partnership, a partner. (2) If the bankrupt attends a creditors' meeting, any of the following persons may represent the
bankrupt—
(a) an advocate;
34

partnership, a partner. (2) If the bankrupt attends a creditors' meeting, any of the following persons may represent the
bankrupt—
(a) an advocate;
34

Insolvency Act (Cap. 53) Kenya
(b) a certified public accountant;
(c) a person who keeps the creditor's or bankrupt's accounting records;
(d) a person who satisfies the bankruptcy trustee that the person represents the creditor or
bankrupt;
(e) in the case of a partnership, a partner. (3) In addition to the persons listed in subsection (1), a creditor may be represented—
(a) in the case of the State, by any officer of the appropriate government department or agency;
(b) in the case of a public body,by an officer of that body;
(c) in the case of a company, by a director, or its chief executive or secretary or by a person
authorised in writing by one of those persons. 93. Passing of resolutions at creditors' meetings
(1) At a creditors' meeting—
(a) an ordinary resolution is passed if a majority in number and value of the creditors, or their
proxies, who attend and who vote on the resolution vote in favour of it; and
(b) a special resolution is passed if three-quarters in number and value of the creditors or their
proxies who attend and who vote on the resolution vote in favour of it.

tion is passed if three-quarters in number and value of the creditors or their
proxies who attend and who vote on the resolution vote in favour of it.

(2) For the purposes only of deciding whether the requisite majority by value has voted in favour of a
resolution, the following provisions apply—
(a) the bankruptcy trustee may admit or reject proofs of debt;
(b) the Chairperson of the meeting may adjourn the meeting in order to admit or reject proofs of
debt;
(c) a person whose debt has been admitted is a creditor. (3) If a bankruptcy trustee or creditor alleges that a resolution of the creditors—
(a) conflicts with this or any other Act or any rule of law; or
(b) is unfair,
the bankruptcy trustee or creditor may apply to the Court for an order under subsection (4). (4) If, on the hearing of an application made under subsection (3), the Court finds that the allegation
is substantiated, it may make such order, and give such directions, as it considers appropriate to
address the conflict or unfairness. (5) This section is subject to section 311. 94.

ch order, and give such directions, as it considers appropriate to
address the conflict or unfairness. (5) This section is subject to section 311. 94.

What votes can be counted for passing of resolutions at creditors' meeting
(1) A creditor who is entitled to vote at a creditors' meeting may vote on a resolution to be put to the
meeting—
(a) by postal vote; or
(b) by electronic vote, if the voting paper for the resolution allows it, in accordance with the
procedure specified in the voting paper. (2) A postal or electronic vote can be counted only if it reaches the bankruptcy trustee at least seventy-
two hours before the meeting begins. 35

er. (2) A postal or electronic vote can be counted only if it reaches the bankruptcy trustee at least seventy-
two hours before the meeting begins. 35

Insolvency Act (Cap. 53) Kenya
(3) A voting paper for each resolution to be put to a creditors' meeting is required to accompany the
notice of the meeting, together with instructions for returning the voting paper or electronic
vote (if allowed by the voting paper under subsection (1)(b) to the bankruptcy trustee at least two
working days before the meeting begins. 95. Who may vote at creditors' meeting
Creditors of the bankrupt who are entitled to vote, or their representatives, may vote at a creditors'
meeting, but this rule is subject to sections 96 to 98. 96. When secured creditor may vote at creditors' meeting
A debt that is secured only entitles the creditor to vote at a creditors' meeting if the creditor has—
(a) surrendered the charge;
(b) valued the charge; or
(c) realised the charge. 97.

s the creditor to vote at a creditors' meeting if the creditor has—
(a) surrendered the charge;
(b) valued the charge; or
(c) realised the charge. 97.

When creditor under bill of exchange or promissory note may vote at creditors'
meeting
(1) A debt on, or secured by, a current bill of exchange or promissory note entitles the creditor to vote
only if the creditor is willing to take the following steps—
(a) to treat a qualifying liability as a charge in the creditor's hands;
(b) to estimate the value of the charge;
(c) to deduct the value of the charge from the creditor's claim for the purposes of voting (but not
for the purposes of distribution under this Part);
(d) to show the bill or note to the bankruptcy trustee when the bankruptcy trustee requires it. (2) In this section, "qualifying liability" means the liability to the creditor on the bill or note of every
person who—
(a) is liable on the bill or note antecedently to the debtor; and
(b) is not a bankrupt. 98. Person disqualified from voting at creditor's meeting through preferential effect
(1) A person is not entitled to vote in favour of a resolution that would, if passed, directly or indirectly
enable that person or any of the following persons to receive remuneration from the bankrupt's
estate except as a creditor sharing rateably with the other creditors.

son or any of the following persons to receive remuneration from the bankrupt's
estate except as a creditor sharing rateably with the other creditors.

Those persons are—
(a) that person's business partner, employer or employee;
(b) a creditor that that person represents; and
(c) a business partner, employer, or employee of a creditor whom that person represents. (2) A vote cast in contravention (1) is invalid. 99. Entitlement of partner's creditor to prove debt at creditors' meeting
The bankruptcy of a partner of a firm who is indebted to a creditor jointly with one or more of the other
partners entitles the creditor to prove the debt for the purpose of voting at any creditors' meeting, and to
vote. 36

ly with one or more of the other
partners entitles the creditor to prove the debt for the purpose of voting at any creditors' meeting, and to
vote. 36

Insolvency Act (Cap. 53) Kenya
100. Creditors may appoint expert or committee to assist bankruptcy trustee
(1) A creditors' meeting may pass an ordinary resolution—
(a) appointing an expert to assist the bankruptcy trustee in the administration of the bankrupt's
estate; and
(b) providing for the expert's remuneration out of that estate. (2) A creditors' meeting may, by ordinary resolution, appoint a committee of persons to assist the
bankruptcy trustee in the administration of the bankrupt's estate, but if it does so, the members of
such a committee are entitled to receive remuneration from the bankrupt's estate in their capacity
as members of the committee only if it has been approved by an order of the Court. 101. Creditors' right to inspect documents
A creditor who has lodged a creditor's claim, or an advocate or a certified public accountant who is acting
for the creditor, is entitled at any reasonable time to inspect or take copies of—
(a) the bankrupt's accounting records;
(b) the bankrupt's answers to questions under section 88;
(c) the statement of the bankrupt's financial position;
(d) all proofs of debt; or
(e) the minutes of a creditors' meeting. 102.

ons under section 88;
(c) the statement of the bankrupt's financial position;
(d) all proofs of debt; or
(e) the minutes of a creditors' meeting. 102.

Committee of creditors may be established
(1) A general meeting of the creditors of a bankrupt may establish a creditors' committee to perform
the functions conferred on it by or under this Part. (2) A general meeting of the creditors of a bankrupt may not establish such a committee, or impose
functions on such a committee, while the Official Receiver is the bankruptcy trustee in respect of
the bankrupt's estate, except in relation to appointing a person to be bankruptcy trustee instead of
the Official Receiver. 103. Exercise by Cabinet Secretary of functions of creditor's committee
(1) A creditors' committee may not perform its functions if at any time the Official Receiver is
bankruptcy trustee in respect of the bankrupt's estate. (2) If, in the case of a bankruptcy, no creditors' committee exists and the bankruptcy trustee in
respect of the bankrupt's estate is a person other than the Official Receiver, the functions of the
creditors committee are to be performed by the Cabinet Secretary, except in so far as the insolvency
regulations otherwise provide. Division 9 — Bankrupt's property after bankruptcy
104.

med by the Cabinet Secretary, except in so far as the insolvency
regulations otherwise provide. Division 9 — Bankrupt's property after bankruptcy
104.

Status of property acquired during bankruptcy
(1) Until the bankrupt is discharged—
(a) all property (whether in or outside Kenya) that the bankrupt acquires or that passes to the
bankrupt vests in the bankruptcy trustee without that trustee having to intervene or take
any other step in relation to the property, and any rights of the bankrupt in the property are
extinguished; and
37

rustee having to intervene or take
any other step in relation to the property, and any rights of the bankrupt in the property are
extinguished; and
37

Insolvency Act (Cap. 53) Kenya
(b) the powers that the bankrupt could have exercised in, over, or in respect of that property for
the bankrupt's own benefit vest in the bankruptcy trustee. (2) This section is subject to sections 106 and 124. (3) This section does not apply to property that is vested in the bankrupt under an order made under
section 120(3). 105. Property vests in replacement bankruptcy trustee
If the bankruptcy trustee is replaced, the property and powers vested in the former bankruptcy trustee
under this Act vest in the replacement bankruptcy trustee. 106. Property held in trust by bankrupt
Property held by the bankrupt in trust for another person vests in the bankruptcy trustee, who shall
assume control of the property and deal with it for the benefit of the beneficiaries of the trust. 107. Court may order money due to bankrupt to be assigned to bankruptcy trustee
(1) If a bankruptcy trustee considers it necessary to do so, the bankruptcy trustee may apply to the
Court for an order under subsection (2).

trustee
(1) If a bankruptcy trustee considers it necessary to do so, the bankruptcy trustee may apply to the
Court for an order under subsection (2).

(2) On the hearing of an application made under subsection (1), the Court may order that any money
due to the bankrupt, or any money to become due or payable to the bankrupt, is assigned or charged
to, or in favour of, the bankruptcy trustee. (3) The assignment or charge is a discharge to the person who pays the bankruptcy trustee. 108. Certain payments to be applied in accordance with the Second Schedule
The bankruptcy trustee shall apply the following payments in accordance with the Second Schedule
(Priority of payments to preferential creditors—
(a) any amount paid by the bankrupt under section 150; and
(b) any amount paid to the bankruptcy trustee under an order made under section 107. 109. When execution creditor may retain execution proceeds
(1) This section applies if a bankruptcy order has been made in respect of a debtor but, before the order
was made, a creditor has—
(a) issued execution against the debtor's property; or
(b) attached a debt payable by the debtor.

btor but, before the order
was made, a creditor has—
(a) issued execution against the debtor's property; or
(b) attached a debt payable by the debtor.

(2) If this section applies, the creditor may retain the benefit of the execution or attachment (including
the proceeds) only if the creditor completed the execution or attachment—
(a) before the bankruptcy order was made; and
(b) before the creditor had notice that an application for such an order had been lodged. (3) The creditor may retain as against the bankruptcy trustee a payment made by the bankrupt in the
course of the execution or attachment to avoid the execution or attachment as if—
(a) the payment was the proceeds of the execution or attachment; and
(b) the execution or attachment was completed when the payment was made. 38

s if—
(a) the payment was the proceeds of the execution or attachment; and
(b) the execution or attachment was completed when the payment was made. 38

Insolvency Act (Cap. 53) Kenya
(4) The right of a creditor under this section to retain the benefit of an execution or attachment is
subject to Division 19. 110. Effect of notice to judicial enforcement officer of bankruptcy
(1) This section applies if a judicial enforcement officer who has taken the property of a debtor in
execution is served with notice of the debtor's bankruptcy—
(a) before the property is sold; or
(b) before the execution is completed by the receipt or recovery of the full amount derived from
the execution. (2) If required to do so by the bankruptcy trustee, the judicial enforcement officer shall deliver to the
bankruptcy trustee all money and goods seized or received in satisfaction or part satisfaction of the
execution. (3) The costs of the execution are a first charge on the money or goods delivered to the bankruptcy
trustee, who may sell all or any of the goods to satisfy the charge. 111.

ecution are a first charge on the money or goods delivered to the bankruptcy
trustee, who may sell all or any of the goods to satisfy the charge. 111.

Judicial enforcement officer to retain proceeds of execution for fourteen days after sale
(1) This section applies if, under execution of a judgment for an amount exceeding ten thousand
shillings, the judicial enforcement officer—
(a) sells property of the debtor; or
(b) is paid money in order to avoid a sale. (2) The judicial enforcement officer is entitled to—
(a) deduct the costs of the execution from the proceeds of sale or the money paid; and
(b) retain the balance for the requisite period, to be applied in accordance with subsection (3) or
(4). (3) If the judicial enforcement officer is served with notice within the requisite period that a debtor's
application has been made, the judicial enforcement officer shall pay the balance to the bankruptcy
trustee, who is entitled to retain it as against the execution creditor.

ade, the judicial enforcement officer shall pay the balance to the bankruptcy
trustee, who is entitled to retain it as against the execution creditor.

(4) If the judicial enforcement officer is served with notice within the requisite period that a creditor's
application has been made in respect of a debtor—
(a) the judicial enforcement officer shall retain the balance until the application, and any other
application of which notice is served on the judicial enforcement officer pending disposal of
the first application, has been disposed of; and
(b) the judicial enforcement officer shall—
(i) if a bankruptcy order is made in respect of the debtor, pay the balance to the
bankruptcy trustee; or
(ii) if such an order is not made, pay the balance to the execution creditor, who is entitled
to retain it as against the bankruptcy trustee (subject to section 113). (5) If the judicial enforcement officer is not served with notice within the requisite period that a
bankruptcy application has been made in respect of the debtor, that officer shall pay the balance to
the execution creditor, who is entitled to retain it as against the bankruptcy trustee. (6) The requisite period for the purpose of this section is fourteen days from the date of the sale or
payment to avoid sale. 39

e bankruptcy trustee. (6) The requisite period for the purpose of this section is fourteen days from the date of the sale or
payment to avoid sale. 39

Insolvency Act (Cap. 53) Kenya
112. Purchaser under sale by judicial enforcement officer acquires good title
On the sale by the judicial enforcement officer of a debtor's property on which execution has been levied,
the purchaser, if acting in good faith, acquires a good title to the property as against the bankruptcy
trustee. 113. Court may set aside rights conferred on bankruptcy trustee
(1) An execution creditor may make an application to the Court for an order setting aside the rights of
the bankruptcy trustee under section 110 or 111. (2) On the hearing of an application made under subsection (1), the Court may make an order setting
aside those rights in favour of the execution creditor to the extent and on such terms (if any) as the
Court considers appropriate. (3) The Court may not make an order under subsection (2) unless satisfied that the bankruptcy trustee
has been served with a copy of the application. (4) The bankruptcy trustee is entitled to appear as respondent at the hearing of the application. 114.

has been served with a copy of the application. (4) The bankruptcy trustee is entitled to appear as respondent at the hearing of the application. 114.

Transaction in good faith and for value after bankruptcy
(1) This section applies to a transaction between a person and the bankrupt in relation to property
that the bankrupt has acquired, or that has passed to the bankrupt, after the bankruptcy has
commenced. (2) The transaction is valid as against the bankruptcy trustee if—
(a) the person concerned deals with the bankrupt in good faith and for value; and
(b) the transaction is completed without an intervention by the bankruptcy trustee. (3) If the person concerned is a bank of which the bankrupt is a client, a transaction by that person
dealing with the bankrupt for value includes—
(a) the receipt by that person of any money, charge, or negotiable instrument from the bankrupt
or by the bankrupt's order or direction;
(b) a payment by that person to the bankrupt or by the bankrupt's order or direction; and
(c) the delivery by that person of a charge or negotiable instrument to the bankrupt or by the
bankrupt's order or direction. (4) A payment of money or delivery of property by a legal personal representative to, or by the
direction of, the bankrupt is a transaction for value. 115.

payment of money or delivery of property by a legal personal representative to, or by the
direction of, the bankrupt is a transaction for value. 115.

Executions and attachments in good faith
If a bankrupt acquires property, or property passes to a bankrupt, after the bankruptcy has commenced, an
execution or attachment against the property is valid as against the bankruptcy trustee if it—
(a) is made in good faith;
(b) is made in respect of a debt or liability incurred by the bankrupt after the bankruptcy commenced;
and
(c) is completed before an intervention by the bankruptcy trustee. 40

a debt or liability incurred by the bankrupt after the bankruptcy commenced;
and
(c) is completed before an intervention by the bankruptcy trustee. 40

Insolvency Act (Cap. 53) Kenya
116. When execution or attachment completed for purposes of sections 109 and 115
For the purposes of sections 109 and 115—
(a) an execution against goods is completed by seizure and sale;
(b) an attachment of a debt is completed by receipt of the debt; and
(c) an execution against land is completed by sale or, in the case of an equitable interest, by the
appointment of a receiver. 117. Bankruptcy trustee's interest in property passes to transferee
If the bankruptcy trustee's interest in property is acquired by or passes to a bankrupt after bankruptcy has
commenced—
(a) the bankruptcy trustee's interest in the property ends; and
(b) that interest passes in the manner, and to the extent necessary, to give effect to a transaction,
execution, or attachment to which section 114 or 115 applies. Division 10 — Disclaimers of bankrupt's property
118. Bankruptcy trustee may disclaim onerous property
(1) The bankruptcy trustee may disclaim onerous property, subject to section 121. (2) Subsection (1) applies even if the bankruptcy trustee has taken possession of the property, tried to
sell it, or otherwise exercised rights of ownership in relation to it.

s even if the bankruptcy trustee has taken possession of the property, tried to
sell it, or otherwise exercised rights of ownership in relation to it.

(3) Within fourteen days after the disclaimer, the bankruptcy trustee shall send a notice of the
disclaimer to every person whose rights are, to the bankruptcy trustee's knowledge, affected by it. (4) Property is onerous for the purposes of this section if it is or comprises—
(a) an unprofitable contract;
(b) property of the bankrupt that is unsaleable, or not readily saleable, or that may give rise to a
liability to pay money or perform an onerous act; or
(c) a litigation right that, in the opinion of the bankruptcy trustee, has no reasonable prospect
of success or cannot reasonably be funded from the assets of the bankrupt's estate. 119. Effect of disclaimer
A disclaimer by the bankruptcy trustee—
(a) terminates, on and from the date of the disclaimer, the rights, interests, and liabilities of the
bankruptcy trustee and the bankrupt in relation to the property disclaimed; and
(b) does not affect the rights, interests, or liabilities of any other person, except in so far as is necessary
to release the bankruptcy trustee or the bankrupt from a liability. 120.

terests, or liabilities of any other person, except in so far as is necessary
to release the bankruptcy trustee or the bankrupt from a liability. 120.

Position of person who suffers loss as result of disclaimer
(1) A person who sustains loss or damage as a result of disclaimer by the bankruptcy trustee may—
(a) claim as a creditor in the bankruptcy for the amount of the loss or damage, taking account of
the effect of an order made by the Court under paragraph (b); or
(b) apply to the Court for an order that the disclaimed property be delivered to, or vested in, the
person. 41

de by the Court under paragraph (b); or
(b) apply to the Court for an order that the disclaimed property be delivered to, or vested in, the
person. 41

Insolvency Act (Cap. 53) Kenya
(2) The bankrupt may also apply to the Court for an order that the disclaimed property be delivered to,
or vested in, the bankrupt. (3) On the hearing of an application made under subsection (1)(b) or (2), the Court may make the order
sought if satisfied that it is fair and reasonable that the property should be delivered to, or vested
in, the applicant. 121. Bankruptcy trustee may be required to elect whether to disclaim
The bankruptcy trustee loses the right to disclaim onerous property if—
(a) a person whose rights would be affected by the disclaimer has sent the bankruptcy trustee a notice
requiring the bankruptcy trustee to elect whether to disclaim that property;
(b) the notice specifies a deadline for the disclaimer that is not less than twenty-one days after the
bankruptcy trustee has received the notice; and
(c) the bankruptcy trustee does not disclaim that property before that deadline. 122.

e days after the
bankruptcy trustee has received the notice; and
(c) the bankruptcy trustee does not disclaim that property before that deadline. 122.

Liability for rentcharge on bankrupt's land after disclaimer
(1) If land disclaimed by the bankruptcy trustee is subject to a rentcharge, the vesting of that land in
any other person (including the State), or the person's successors in title, does not make any of
them personally liable for the rentcharge. (2) Subsection (1) does not affect the liability of a person for a rentcharge accruing after the person has
taken possession or control of the land. 123. Transmission of interest in land
(1) This section applies to an interest in land that—
(a) is owned by the bankrupt;
(b) is subject to a mortgage or a charge; and
(c) is not disclaimed by the bankruptcy trustee. (2) The bankruptcy trustee shall—
(a) arrange for the transmission of the interest in the land to the bankruptcy trustee to be
registered under the Land Registration Act (Cap. 300); or
(b) give notice to the mortgagee or other person entitled under charge that the bankruptcy
trustee cannot, or does not intend to, register transmission of the interest in the land.

ee or other person entitled under charge that the bankruptcy
trustee cannot, or does not intend to, register transmission of the interest in the land.

(3) A notice given under subsection (2)(b) is notice that—
(a) the interest has vested in the bankruptcy trustee; and
(b) the mortgagee or holder of the charge is, on taking possession of, or selling, the interest,
liable to account to the bankruptcy trustee as if that trustee were the proprietor of the
interest. 124. Bankruptcy trustee cannot claim interest in land if bankrupt remains in possession
until discharge
(1) The bankruptcy trustee cannot, after the bankrupt's discharge, claim an interest in land to which
section 123(1) applies and for which the bankruptcy trustee has not registered a transmission if the
bankrupt—
(a) was in possession of the interest when the bankruptcy commenced; and
42

the bankruptcy trustee has not registered a transmission if the
bankrupt—
(a) was in possession of the interest when the bankruptcy commenced; and
42

Insolvency Act (Cap. 53) Kenya
(b) remained in possession until discharge from bankruptcy. (2) Subsection (1) applies whether or not the bankruptcy trustee gave a notice under section 123(2)(b). (3) However, the bankruptcy trustee may apply to the Court for an order that the bankruptcy trustee is
entitled, after discharge, to claim the bankrupt's interest in the land. (4) In deciding whether or not to make an order on the hearing of an application made under
subsection (3), the Court shall have regard to—
(a) the good faith of the bankrupt;
(b) the time that has elapsed since the bankruptcy commenced;
(c) the value of any improvements made by the bankrupt; and
(d) all other relevant matters. 125. Bankruptcy trustee may transfer shares and other securities
(1) The bankruptcy trustee may transfer the following property belonging to the bankrupt in the same
way as the bankrupt could have transferred it but for the bankruptcy—
(a) securities of a company;
(b) securities of the Government of Kenya;
(c) securities issued by a local authority;
(d) shares in ships;
(e) any other property transferable in the records of a company, office or person.

a;
(c) securities issued by a local authority;
(d) shares in ships;
(e) any other property transferable in the records of a company, office or person.

(2) A person whose act or consent is necessary for the transfer of the property shall, on being requested
to do so by the bankruptcy trustee, do whatever is necessary for the transfer to be completed. (3) If the bankruptcy trustee proposes to transfer shares of a company, a shareholder—
(a) to whom the shares are required to be offered for sale in accordance with the company's
constitution; and
(b) who agrees to purchase them,
shall pay a fair price for the shares, whether or not that constitution provides a procedure for fixing
the price. 126. Bankruptcy trustee may disclaim liability under shares
A bankruptcy trustee may disclaim any liability under shares owned by the bankrupt in any company by
disclaiming the shares as onerous property under section 118, but sections 120 and section 121 do not
apply to a disclaimer of liability under shares. 127. Bankruptcy trustee may disclaim liability under shares
(1) The bankruptcy trustee may disclaim a liability under shares owned by the bankrupt in a company
by disclaiming them as onerous property in accordance with section 118. (2) Neither section 120 nor section 121 applies to a disclaimer of liability under shares. 43

them as onerous property in accordance with section 118. (2) Neither section 120 nor section 121 applies to a disclaimer of liability under shares. 43

Insolvency Act (Cap. 53) Kenya
128. Bankruptcy trustee may be required to elect whether to disclaim liability under shares
The bankruptcy trustee loses the right to disclaim liability under shares if—
(a) the company or a person who has an interest in the shares has sent the bankruptcy trustee a notice
requiring that trustee to elect whether to disclaim liability under the shares;
(b) the notice specifies a deadline for the disclaimer that is not less than twenty-one days after the
bankruptcy trustee has received the notice; and
(c) the bankruptcy trustee does not disclaim liability under the shares before that deadline. 129. Transfer of shares after disclaimer
(1) After disclaimer, the bankruptcy trustee may, subject to any other written law and to the company's
constitution, transfer the relevant shares to any person who has an interest in them. (2) If that person refuses to accept the transfer, or if no person has an interest in them, the bankruptcy
trustee may transfer the shares to the bankrupt if the bankrupt consents, and in that case the
bankrupt is entitled as against the bankruptcy trustee to retain the shares and the proceeds if the
bankrupt sells them.

onsents, and in that case the
bankrupt is entitled as against the bankruptcy trustee to retain the shares and the proceeds if the
bankrupt sells them.

(3) If the bankruptcy trustee does not transfer the shares to a person who has an interest in them or to
the bankrupt, the directors of the company may—
(a) sell the shares; or
(b) with the Court's approval and whatever any other written law may provide, cancel the shares
if they believe it is in the company's best interests to do so. (4) The bankruptcy trustee is a director of the company for the purposes of transferring, selling, or
cancelling the shares under this section if—
(a) immediately before the bankruptcy commenced, the bankrupt was a director of the company;
and
(b) the number of directors is fewer than the minimum number of directors required by the
Companies Act (Cap. 486) or the company's constitution as a result of the bankrupt's
disqualification as a director. 130. Company may prove for unpaid calls
(1) This section applies if the bankruptcy trustee has disclaimed liability under shares and the company
is not in liquidation.

prove for unpaid calls
(1) This section applies if the bankruptcy trustee has disclaimed liability under shares and the company
is not in liquidation.

(2) The company may prove in the bankruptcy for—
(a) the amount of unpaid calls made before the bankruptcy commenced in respect of the
bankrupt's shares; and
(b) the value of calls to be made in respect of the bankrupt's shares within one year after the
bankruptcy commenced. (3) If the bankruptcy trustee and the company cannot agree, the Court, may on the application of
either of them, make an order determining the value of the calls to be made. Division 11 — Goods held by bankrupt under credit purchase transaction
44

either of them, make an order determining the value of the calls to be made. Division 11 — Goods held by bankrupt under credit purchase transaction
44

Insolvency Act (Cap. 53) Kenya
131.

Insolvency Act (Cap. 53) Kenya
131.

Interpretation: Division 11
In this Division—
"cash price", in relation to a sale of goods, means—
(a) the lowest price at which a person could have bought those goods from the creditor on the basis of
payment in full at the time the sale was made; or
(b) if there is no such price, the fair market value of those goods at the time the sale was made;
"creditor", in relation to a credit purchase transaction, means—
(a) the person disposing of the goods under the transaction; and
(b) if the rights of that person are transferred by assignment or by operation of law, means the person
for the time being entitled to those rights;
"debtor", in relation to a credit purchase transaction, means—
(a) the person to whom goods are disposed of under the transaction; and
(b) if the rights of that person are transferred by assignment or by operation of law, means the person
for the time being entitled to those rights;
"hirer", in relation to a credit purchase transaction, means—
(a) the person who is entitled to the use of the goods under the transaction; and
(b) if the rights of that person are transferred by assignment or by operation of law, means the person
for the time being entitled to those rights.

d
(b) if the rights of that person are transferred by assignment or by operation of law, means the person
for the time being entitled to those rights.

132. Restrictions on creditor dealing with goods
(1) If a bankrupt acquired goods under a credit purchase transaction before the bankruptcy commenced
and the creditor either—
(a) took possession of the goods within the twenty-one days immediately before the time when
the bankruptcy commenced, and after that time still possesses them; or
(b) takes possession of the goods after that time,
the creditor may not sell or dispose of the goods or part with possession of them until the expiry of
thirty days from and including the date when the creditor serves a post-possession notice on the
bankruptcy trustee. (2) Subsection (1) does not apply if the creditor, with the consent of the bankruptcy trustee, sells or
parts with possession of the goods before the end of the thirty-day period. (3) A sale or disposal in contravention of subsection (1) is void as against the bankruptcy trustee. 133.

ods before the end of the thirty-day period. (3) A sale or disposal in contravention of subsection (1) is void as against the bankruptcy trustee. 133.

Bankruptcy trustee's powers in relation to goods that are subject to a credit purchase
transaction
(1) In the case of goods to which section 131 applies, the bankruptcy trustee may—
(a) within the thirty-day period referred to in that section, exercise any right conferred by any
relevant written law to introduce a buyer for the goods; or
(b) at any time before the creditor sells or agrees to sell the goods under a power conferred by
any such law or by the relevant credit purchase transaction, settle the bankrupt's obligations
as debtor in accordance with that law or that transaction. (2) This section applies irrespective any other written law to the contrary. 45

obligations
as debtor in accordance with that law or that transaction. (2) This section applies irrespective any other written law to the contrary. 45

Insolvency Act (Cap. 53) Kenya
134. Creditor in possession of goods may prove in bankruptcy if bankruptcy trustee has not
exercised powers
(1) A creditor may prove in a bankruptcy for the amount (not exceeding that limited by any relevant
written law) that the creditor was entitled to recover from the bankrupt as a debtor if—
(a) the creditor has taken possession of consumer goods purchased under a credit purchase
transaction (whether before or after the bankruptcy of the debtor); and
(b) the bankruptcy trustee has not acted under section 133 in relation to the goods. (2) If a creditor has proved in a bankruptcy in accordance with under subsection (1)—
(a) the creditor shall submit with the creditor's claim form the documents (if any) prescribed by
the insolvency regulations for the purpose of this section; and
(b) the bankruptcy trustee may exercise the rights conferred on the debtor by any relevant
written law that applies after the creditor takes possession of goods in accordance with that
law. 135.

rights conferred on the debtor by any relevant
written law that applies after the creditor takes possession of goods in accordance with that
law. 135.

Creditor may assign goods to bankruptcy trustee
If—
(a) the bankrupt purchased goods under a credit purchase transaction before the time the bankruptcy
commenced; and
(b) at that time the creditor either—
(i) has not taken possession of the goods; or
(ii) has taken possession of them and has not sold or disposed of, or parted with possession of
them,
the creditor may assign the goods to the bankruptcy trustee, and, if the creditor does so, may prove in the
bankruptcy for the net balance due to the creditor under the transaction. Division 12 — Second bankruptcies
136. Status of bankrupt's property on second bankruptcy
(1) This section applies to and in respect of a bankrupt who, before discharge, is adjudged bankrupt for
a second time. (2) Property that is acquired by, or has passed to, the bankrupt since the first bankruptcy (including
property acquired or that has passed since the second bankruptcy) vests in the bankruptcy trustee
in the second bankruptcy.

irst bankruptcy (including
property acquired or that has passed since the second bankruptcy) vests in the bankruptcy trustee
in the second bankruptcy.

(3) Despite subsection (2), the Court may, if it considers it appropriate to do so, order that all or part of
the following assets or their proceeds vest in the bankruptcy trustee in the first bankruptcy—
(a) assets in the second bankruptcy that, in the Court's opinion, were acquired independently of
the creditors in the second bankruptcy;
(b) assets in the second bankruptcy that devolved on the bankrupt. (4) A surplus in the second bankruptcy is an asset in the estate in the first bankruptcy, and is payable to
the bankruptcy trustee in the first bankruptcy. (5) This section has effect despite section 104. 46

estate in the first bankruptcy, and is payable to
the bankruptcy trustee in the first bankruptcy. (5) This section has effect despite section 104. 46

Insolvency Act (Cap. 53) Kenya
137. Effect of notice to bankruptcy trustee of application for bankruptcy
(1) This section applies if the bankruptcy trustee in respect of a bankrupt's estate receives notice that a
creditor has lodged an application for another bankruptcy. (2) The bankruptcy trustee shall hold property in that trustee's possession that has been acquired by, or
passed to, the bankrupt since the first bankruptcy until the application for the other bankruptcy has
been dealt with. (3) The bankruptcy trustee shall transfer the property and its proceeds, less any deduction for the
bankruptcy trustee's costs and expenses, to the bankruptcy trustee in the other bankruptcy if—
(a) the creditor's application results in another bankruptcy; or
(b) the bankrupt is automatically adjudged bankrupt on the bankrupt's own application. Division 13 — Persons jointly adjudged bankrupt
138. Separate accounts to be kept for each bankrupt
If two or more persons are adjudged bankrupt jointly, the bankruptcy trustee shall keep distinct accounts
in respect of—
(a) the joint estate; and
(b) the separate estate of each bankrupt. 139.

t jointly, the bankruptcy trustee shall keep distinct accounts
in respect of—
(a) the joint estate; and
(b) the separate estate of each bankrupt. 139.

How joint and separate estates are to be applied
(1) When two or more persons have been adjudged bankrupt jointly, the bankruptcy trustee shall first
apply—
(a) the joint estate to the debts due by the bankrupts jointly; and
(b) the separate estate of each bankrupt to the debts of that bankrupt. (2) The bankruptcy trustee shall then—
(a) apply any surplus in the joint estate to the separate estate of each bankrupt in proportion to
the interest of each bankrupt in the joint estate; and
(b) credit any surplus in the separate estate of a bankrupt to the joint estate. Division 14 — Duties of bankrupt
140. General duty of bankrupt
(1) A bankrupt shall, to the best of the bankrupt's ability, assist in the realisation of the bankrupt's
property and the distribution of the proceeds among the creditors. (2) The duty imposed by subsection (1) is in addition to any other duty imposed on the bankrupt by this
Act or by any other written law. 141.

editors. (2) The duty imposed by subsection (1) is in addition to any other duty imposed on the bankrupt by this
Act or by any other written law. 141.

Bankrupt to disclose property acquired before discharge
(1) As soon as practicable after acquisition, the bankrupt shall notify the bankruptcy trustee of any
property that—
(a) was acquired by, or passed to, the bankrupt before discharge; and
(b) is divisible among the creditors. 47

ankruptcy trustee of any
property that—
(a) was acquired by, or passed to, the bankrupt before discharge; and
(b) is divisible among the creditors. 47

Insolvency Act (Cap. 53) Kenya
(2) A bankrupt who, without reasonable excuse, fails to comply with subsection (1) commits an
offence and on conviction is liable to a fine not exceeding two hundred thousand shillings or to
imprisonment for a term not exceeding six months, or to both. 142. Bankrupt to deliver property to bankruptcy trustee on demand
(1) On demand by the bankruptcy trustee, the bankrupt shall deliver to the bankruptcy trustee, or to a
person authorised by the bankruptcy trustee to receive it, all of the bankrupt's property that—
(a) is divisible among the creditors; and
(b) is under the bankrupt's control. (2) On demand by the bankruptcy trustee, the bankrupt shall deliver to the bankruptcy trustee, or to a
person authorised by the bankruptcy trustee to receive it, all property that is acquired by, or passes
to, the bankrupt before the bankrupt's discharge.

rson authorised by the bankruptcy trustee to receive it, all property that is acquired by, or passes
to, the bankrupt before the bankrupt's discharge.

(3) A bankrupt shall take all the steps (including the steps specified in subsection (4)) in relation to the
bankrupt's property, and the distribution of the proceeds to the creditors, that are—
(a) required by the bankruptcy trustee;
(b) prescribed by the insolvency regulations for the purposes of this section;
(c) directed to be taken by the Court by an order made in reference to the bankruptcy; or
(d) directed to be done by the Court on an application by the bankruptcy trustee or a creditor. (4) The steps referred to in subsection (3) include the execution by the bankrupt of powers of attorney,
transfers, and other relevant documents. (5) A bankrupt who, without reasonable excuse, fails to comply with a requirement imposed by or
under this section is guilty of contempt of the Court and is liable to be punished accordingly, in
addition to any other punishment to which the bankrupt may be subject. 143.

ilty of contempt of the Court and is liable to be punished accordingly, in
addition to any other punishment to which the bankrupt may be subject. 143.

Court may impose charge on bankrupt's property
(1) If—
(a) any property consisting of an interest in a dwelling house that is occupied by the bankrupt or
by the bankrupt's spouse or former spouse is comprised in the bankrupt's estate; and
(b) the bankruptcy trustee is, for any reason, unable for the time being to realise that property,
that trustee may apply to the Court for an order imposing a charge on the property for the benefit of
the bankrupt's estate. (2) lf, on the hearing of an application under this section the Court imposes a charge on any property—
(a) the benefit of that charge is included in the bankrupt's estate; and
(b) is enforceable up to the charged value from time to time, for the payment of any amount that
is payable otherwise than to the bankrupt out of the estate and of interest on that amount at
the rate prescribed by the insolvency regulations for the purposes of this section. (3) In subsection (2), the charged value means the—
(a) the amount specified in the charging order as the value of the bankrupt's interest in the
property at the date of the order; and
(b) interest on that amount from the date of the charging order at the prescribed rate.

krupt's interest in the
property at the date of the order; and
(b) interest on that amount from the date of the charging order at the prescribed rate.

(4) In determining the value of an interest for the purposes of this section, the Court shall disregard
any matter that it is required to disregard by the insolvency regulations. 48

an interest for the purposes of this section, the Court shall disregard
any matter that it is required to disregard by the insolvency regulations. 48

Insolvency Act (Cap. 53) Kenya
(5) In making an order under this section in respect of property vested in the bankruptcy trustee, the
Court shall provide, in accordance with the insolvency regulations, for the property—
(a) to cease to be included in the bankrupt's estate; and
(b) to vest in the bankrupt subject to the charge and any prior charge. 144. Bankrupt to give bankruptcy trustee accounting records and other documents
(1) As soon as practicable after being adjudged bankrupt, the bankrupt shall—
(a) deliver to the bankruptcy trustee relevant documents that are in the bankrupt's possession or
control; and
(b) notify that trustee of relevant documents that are in the possession or control of any other
person. (2) In subsection (1), "relevant documents" means all accounting records and other documents relating
to the bankrupt's estate. 145.

any other
person. (2) In subsection (1), "relevant documents" means all accounting records and other documents relating
to the bankrupt's estate. 145.

Bankrupt to give bankruptcy trustee information relating to property
A bankrupt shall—
(a) as soon as practicable after being adjudged bankrupt—
(i) give the bankruptcy trustee a complete and accurate list of the bankrupt's property and of the
bankrupt's creditors and debtors, and update the lists as necessary;
(ii) give the bankruptcy trustee any other information relating to the bankrupt's property that
that trustee requires;
(b) attend before the bankruptcy trustee at all reasonable times whenever required by that trustee to
so; and
(c) verify any statement by statutory declaration when required by that trustee to do so. 146. Bankrupt to give bankruptcy trustee information relating to income and expenditure
(1) Whenever the bankruptcy trustee requires it, the bankrupt shall provide the bankruptcy trustee
with details of the bankrupt's income and expenditure since the bankruptcy commenced.

e requires it, the bankrupt shall provide the bankruptcy trustee
with details of the bankrupt's income and expenditure since the bankruptcy commenced.

(2) A bankrupt who, without reasonable excuse, fails to comply with a requirement of the bankruptcy
trustee under subsection (1) commits an offence and on conviction is liable to a fine not exceeding
two hundred thousand shillings or to imprisonment for a term not exceeding twelve months, or to
both. 147. Bankrupt to notify bankruptcy trustee of change in personal information
(1) A bankrupt shall, within seven days after any change occurs in the bankrupt's name, address,
employment or income, notify the bankruptcy trustee of the change. (2) A bankrupt who, without reasonable excuse, fails to comply with subsection (1) commits an
offence and on conviction is liable to a fine not exceeding two hundred thousand shillings or to
imprisonment for a term not exceeding six months, or to both. (3) If, after being convicted of an offence under subsection (2), a bankrupt, without reasonable excuse,
continues to fail to notify the relevant change to the bankruptcy trustee, the bankrupt commits a
further offence on each day during which the failure continues and on conviction is liable to a fine
not exceeding twenty thousand shillings for each such offence. 49

on each day during which the failure continues and on conviction is liable to a fine
not exceeding twenty thousand shillings for each such offence. 49

Insolvency Act (Cap. 53) Kenya
148. Bankrupt to give bankruptcy trustee financial information
(1) The bankrupt shall give the bankruptcy trustee (or any person employed by the bankruptcy trustee)
the information and details that are necessary to prepare a financial statement that shows the
financial position of the bankrupt's estate. (2) If required to do so by the bankruptcy trustee, the bankrupt shall, before the deadline, prepare and
deliver to the bankruptcy trustee a full, true, and detailed financial statement that shows—
(a) details of the bankrupt's trading and stocktaking; and
(b) details of the bankrupt's profit and losses during any period within the three years
immediately preceding the date on which the bankruptcy commenced. (3) To enable the bankrupt to prepare the financial statement referred to in subsection (2)—
(a) the bankruptcy trustee shall give the bankrupt full access to the bankrupt's accounting
records that are in the bankruptcy trustee's possession; and
(b) if the bankruptcy trustee believes it necessary to do so, that trustee shall provide the
bankrupt with the assistance of a certified public accountant at the expense of the bankrupt's
estate.

essary to do so, that trustee shall provide the
bankrupt with the assistance of a certified public accountant at the expense of the bankrupt's
estate.

(4) A bankrupt who, without reasonable excuse, fails to comply with a requirement of this section
commits an offence and on conviction is liable to a fine not exceeding two hundred thousand
shillings or to imprisonment for a term not exceeding six months, or to both. (5) If, after being convicted of an offence under subsection (4), a bankrupt, without reasonable excuse,
continues to fail to comply with the relevant requirement, the bankrupt commits a further offence
on each day during which the failure continues and on conviction is liable to a fine not exceeding
twenty thousand shillings for each such offence. (6) For the purposes of this section, the deadline is the expiry of twenty-one days after the bankruptcy
commenced or of such extended period as the bankruptcy trustee may allow. 148A. Principles of Data Protection
The principles of personal data protection set out in the Data Protection Act (Cap. 411C) shall apply with
necessary modifications to the processing and handling, by the bankruptcy trustee, of the bankrupt's
personal data. [Act No. 24 of 2019, 2nd Sch.]
Division 15 — Restrictions on bankrupt during bankruptcy
149.

the bankruptcy trustee, of the bankrupt's
personal data. [Act No. 24 of 2019, 2nd Sch.]
Division 15 — Restrictions on bankrupt during bankruptcy
149.

Interpretation: Division 15
In this Division—
"building", in relation to a bankrupt, includes a reference to a part of a building in which the bankrupt
holds a proprietorial interest;
"place" includes building, premises, aircraft, ship, or other means of transporting people or goods;
"relevant property", in relation to a bankrupt, means—
(a) property of the bankrupt; or
(b) a document relating to the bankrupt's property, conduct, or dealings. 50

erty", in relation to a bankrupt, means—
(a) property of the bankrupt; or
(b) a document relating to the bankrupt's property, conduct, or dealings. 50

Insolvency Act (Cap. 53) Kenya
150. Bankrupt can be required to contribute to payment of debts
(1) If required by the bankruptcy trustee to do so, the bankrupt shall pay an amount or periodic
amounts during the bankruptcy as a contribution towards payment of the bankrupt's debts. (2) The bankruptcy trustee may impose conditions with respect to the payments, including conditions
as the dates on which and the manner in which they are to be made, and may from time to time
amend any such conditions or substitute new conditions for existing ones. (3) In deciding whether to require the bankrupt to make the payment or payments, the bankruptcy
trustee shall—
(a) have regard to all the circumstances of the bankruptcy and the bankrupt's conduct, earning
power, responsibilities, and prospects; and
(b) make reasonable allowance for the maintenance of the bankrupt and the bankrupt's relatives
and dependants. (4) If the bankrupt fails to comply with a requirement made under subsection (1), or with a condition
imposed in respect of such a requirement under subsection (2), the bankruptcy trustee may make an
application to the Court for an order under subsection (5).

in respect of such a requirement under subsection (2), the bankruptcy trustee may make an
application to the Court for an order under subsection (5).

(5) On the hearing of an application made under subsection (4), the Court may order the bankrupt to
pay the amount or amounts required by the bankruptcy trustee under subsection (1), or to comply
with any condition imposed in respect of the requirement under subsection (2). (6) On the hearing of an application made to the Court by the bankruptcy trustee, the bankrupt, or a
creditor, the Court may—
(a) amend, suspend, or cancel the bankrupt's obligations to make payments under this section:
(b) amend, suspend or discharge an order made under subsection (5); or
(c) remit any arrears owing by the bankrupt. 151. Onus of proof if bankrupt defaults in making payment
If a bankrupt fails to make a payment required under section 150, the onus is on the bankrupt in any
proceedings arising out of the failure to show that the failure was not deliberate. 152.

equired under section 150, the onus is on the bankrupt in any
proceedings arising out of the failure to show that the failure was not deliberate. 152.

Prohibition of bankrupt entering business
(1) An undischarged bankrupt shall not, without the consent of the bankruptcy trustee or the Court
(either directly or indirectly)—
(a) enter into, carry on, or take part in the management or control of any business;
(b) be employed by a relative of the bankrupt or
(c) be employed by a company, trust, trustee, or incorporated body that is owned, managed, or
controlled by a relative of the bankrupt. (2) A bankrupt who contravenes subsection (1) commits an offence and on conviction is liable to a fine
not exceeding five hundred thousand shillings or to imprisonment for a term not exceeding two
years, or to both. 153. Warrant to search for and seize bankrupt's property
(1) The Court may issue a search warrant to the bankruptcy trustee or any other person if it reasonably
believes that any relevant property is concealed in a specified place. 51

earch warrant to the bankruptcy trustee or any other person if it reasonably
believes that any relevant property is concealed in a specified place. 51

Insolvency Act (Cap. 53) Kenya
(2) The warrant may authorise the bankruptcy trustee or other person named in the warrant, together
with any assistants that may be necessary—
(a) to enter and search the place;
(b) to seize and take possession of relevant property;
(c) if necessary, to use force to enter the place (including by breaking open doors); and
(d) to open any container found in the place, by force if necessary. 154. Seizure of bankrupt's property
(1) If authorised by a warrant issued by the Court, the bankruptcy trustee or (if not the bankruptcy
trustee) the Official Receiver, with such assistants as are considered necessary—
(a) may seize any part of the bankrupt's property that is under the control of the bankrupt or of
any other person; and
(b) with a view to seizing the bankrupt's property, may—
(i) break open any building or room of the bankrupt where the bankrupt is believed to be;
(ii) break open any building, room, or receptacle of the bankrupt where the bankrupt's
property is believed to be; and
(iii) seize and take possession of the bankrupt's property found in the building, room, or
receptacle.

the bankrupt's
property is believed to be; and
(iii) seize and take possession of the bankrupt's property found in the building, room, or
receptacle.

(2) For the purposes of this section and section 153, if the execution of a warrant takes place without
the bankrupt being present, the person executing the warrant shall leave in a prominent place at
the place searched a notice that—
(a) states the date and time when the warrant was executed; and
(b) states the name of the person who executed it. (3) For the purposes of this section and section 153, the person executing the warrant shall leave with
the bankrupt, or leave in a prominent place at the place searched if the bankrupt is not present, a
list of any property seized during the course of the search. (4) Subsection (3) does not apply if it is impractical to leave a list of property seized or if the bankrupt
consents to receiving a list sent in accordance with subsection (5).

apply if it is impractical to leave a list of property seized or if the bankrupt
consents to receiving a list sent in accordance with subsection (5).

(5) If subsection (4) applies, the person executing the search shall leave with the notice referred to in
subsection (2), or with the bankrupt if the bankrupt is present, a notice stating that—
(a) relevant property has been seized in the course of the search; and
(b) within seven days after the execution of the warrant, a list of the property seized will be
delivered or sent to the bankrupt or left in a prominent position at the place searched. (6) If subsection (5) applies, the person executing the warrant shall ensure that within seven days
after the execution of the warrant there is delivered or sent to the bankrupt, or left in a prominent
position at the place searched, a notice listing the property seized and identifying the place where
the property was seized. 155. Bankrupt to vacate land or buildings if required to do so
(1) The bankruptcy trustee may require the bankrupt and relatives of the bankrupt to vacate any land
or building that is part of the property vested in the bankruptcy trustee under the bankruptcy.

krupt and relatives of the bankrupt to vacate any land
or building that is part of the property vested in the bankruptcy trustee under the bankruptcy.

(2) If the bankruptcy trustee's demand is not complied with, the bankruptcy trustee may apply to a
court of competent jurisdiction for an order for possession of the land or building. 52

nd is not complied with, the bankruptcy trustee may apply to a
court of competent jurisdiction for an order for possession of the land or building. 52

Insolvency Act (Cap. 53) Kenya
(3) On the hearing of an application made under subsection (2), the court may make an order for the
possession of the land or building if it believes that the bankrupt or relatives of the bankrupt have
no justification for remaining there. (4) The bankrupt or the bankrupt's relatives concerned are entitled to appear and be heard as
respondents at the hearing. 156. Bankrupt's right to inspect documents
A bankrupt is entitled at any reasonable time to inspect and to take copies of—
(a) the bankrupt's accounting records;
(b) the bankrupt's answers to questions put to the bankrupt in the course of an examination under this
Act;
(c) the statement of the bankrupt's financial position;
(d) all proofs of debt;
(e) the minutes of any creditors' meeting; and
(f) the record of any examination of the bankrupt. 157. Restrictions on bankrupt dealing with property
(1) After the bankruptcy commences, the bankrupt, and any person (other than the bankruptcy trustee)
who claims through or under the bankrupt, ceases to be entitled—
(a) to recover property that is part of the bankrupt's estate; or
(b) to give a release or discharge in relation to that property.

ses to be entitled—
(a) to recover property that is part of the bankrupt's estate; or
(b) to give a release or discharge in relation to that property.

(2) Subsection (1) applies subject to sections 114 and 115 and whether or not the bankruptcy trustee
has intervened. 158. Bankrupt prohibited from taking steps to defeat beneficial interests of others in
bankrupt's property
(1) After the bankruptcy has commenced, the bankrupt may not execute a power of appointment, or
any other power vested in the bankrupt, if the result would be to defeat or destroy any contingent
or other estate or interest in any property to which the bankrupt may otherwise be beneficially
entitled at any time before the bankrupt's discharge. (2) The restriction on the bankrupt in subsection (1) applies—
(a) both before and after the bankrupt obtains a discharge; and
(b) subject to sections 114 and 115 (transactions entered into in good faith). 159. Responsibility of bank to notify bankruptcy trustee of bankrupt's account
(1) As soon as practicable after becoming aware or formings reasonable suspicion that a customer is an
undischarged bankrupt, a bank shall—
(a) notify the bankruptcy trustee of any account that the customer holds with the bank; and
(b) not pay any money from the account, unless subsection (2) applies.

he bankruptcy trustee of any account that the customer holds with the bank; and
(b) not pay any money from the account, unless subsection (2) applies.

(2) The bank may pay money out of the account if—
(a) the bank is authorised by an order of the Court or instructed by the bankruptcy trustee to do
so; or
53

bank may pay money out of the account if—
(a) the bank is authorised by an order of the Court or instructed by the bankruptcy trustee to do
so; or
53

Insolvency Act (Cap. 53) Kenya
(b) the bank has notified the bankruptcy trustee of the account and has not, within one month
after the notification, received any instructions from the bankruptcy trustee. (3) At the same time as the bank notifies the bankruptcy trustee under subsection (1)(a), it shall inform
the customer that it has notified the bankruptcy trustee in accordance with subsection (1). (4) A bank that—
(a) without reasonable excused, fails to comply with subsection (1)(a) or (3); or
(b) contravenes subsection (1)(b), commits an offence and on conviction is liable to a fine not
exceeding two million shillings. 160. Official Receiver entitled to require bank to search records relating to bankrupt's
account
(1) The Official Receiver may, by notice, require a bank to search its account records by comparing the
names of its customers with the names (including any aliases) of undischarged bankrupts specified
in the notice or in a list that is attached to it.

e
names of its customers with the names (including any aliases) of undischarged bankrupts specified
in the notice or in a list that is attached to it.

(2) Within seven days after receiving the notice, the bank shall search its account records and provide
the Official Receiver with written results of the search in so far as the search reveals the names of
undischarged bankrupts specified in the notice or list. (3) If a bank fails to comply with subsection (2), the Official Receiver may make an application to the
Court for an order under subsection (4). (4) On the hearing of an application made under subsection (3), the Court shall, unless it considers that
the Official Receiver's requirement was unjustified, make an order directing the bank to comply with
the requirement. (5) The bank is entitled to be served with a copy of the application and to appear and be heard as
respondent at the hearing of the application. Division 16 — Provision allowed for bankrupt during bankruptcy
161. Bankrupt entitled to retain certain assets
(1) A bankrupt may choose and retain as the bankrupt's own property assets of a description specified
in subsection (2) up to a maximum value determined in accordance with subsection (3).

as the bankrupt's own property assets of a description specified
in subsection (2) up to a maximum value determined in accordance with subsection (3).

(2) The assets are—
(a) the bankrupt's necessary tools of trade;
(b) necessary household furniture and personal effects (including clothing) for the bankrupt and
the bankrupt's relatives and dependants; and
(c) a motor vehicle. (3) The maximum value of those assets are—
(a) in the case of the bankrupt's necessary tools of trade, the value fixed by the bankruptcy
trustee;
(b) in the case of necessary household furniture and personal effects, the value fixed by the
bankruptcy trustee; and
(c) a motor vehicle, one million shillings or, if a greater amount is prescribed by the insolvency
regulations, that amount. 54

ankruptcy trustee; and
(c) a motor vehicle, one million shillings or, if a greater amount is prescribed by the insolvency
regulations, that amount. 54

Insolvency Act (Cap. 53) Kenya
162. Bankrupt may retain certain assets with consent of creditors
A bankrupt may retain necessary tools of trade and necessary household furniture and effects that are
worth more than the maximum value fixed in accordance with section 161, if the bankrupts' creditors
consent to it by an ordinary resolution passed at a creditors' meeting. 163. Retention of assets not to affect rights under charge or credit purchase transaction
(1) Subject to subsection (2), the retention of an asset by the bankrupt under section 161 or 162 does
not affect rights arising under a valid charge, bailment contract or credit purchase transaction in
respect of the asset. (2) In relation to goods that that are in the possession of the bankrupt under a bailment contract or
credit purchase transaction, the Court may make an order authorising the bankruptcy trustee to
dispose of the goods as if all the rights of the owner under the contract or agreement were vested in
the bankrupt.

horising the bankruptcy trustee to
dispose of the goods as if all the rights of the owner under the contract or agreement were vested in
the bankrupt.

(3) An order under subsection (2) may be made—
(a) only on the application of the bankruptcy trustee; and
(b) only if the Court is satisfied that disposal of the goods would be in the overall best interests
of the bankrupt's creditors. (4) An order under subsection (2) is subject to the condition that—
(a) the net proceeds of disposal of the goods; and
(b) any additional money required to be added to the net proceeds so as to produce the amount
determined by the Court as the net amount that would be realised on a sale of the goods
at market value, be applied towards discharging the amounts payable under the bailment
contract or credit purchase transaction. 164. Retention provisions not to confer rights to other assets
The fact that the net value of the assets that the bankrupt retains is less than the maximum values
specified in section 161 does not give the bankrupt any rights in relation to other assets in the bankrupt's
estate. 165.

less than the maximum values
specified in section 161 does not give the bankrupt any rights in relation to other assets in the bankrupt's
estate. 165.

Relative or dependant entitled to exercise bankrupt's right to retain assets
If the bankrupt has died, a relative or dependant of the bankrupt, who has been approved for this purpose
by the bankruptcy trustee or the Court, may exercise the right to retain assets under section 161 or 162 for
the benefit of the bankrupt's relatives and dependants. 166. Bankruptcy trustee may make allowance to bankrupt
The bankruptcy trustee may make an allowance out of the property of the bankrupt to the bankrupt, or to
any relative or dependant of the bankrupt, for the support of the bankrupt and the bankrupt's relatives and
dependants. 167. Bankruptcy trustee may allow bankrupt to retain money
(1) The bankruptcy trustee may allow the bankrupt to retain, for the immediate maintenance of the
bankrupt and the bankrupt's relatives and dependants, money up to the prescribed limit that the
bankrupt has in the bankrupt's possession or in a bank account when the bankruptcy commenced. 55

dependants, money up to the prescribed limit that the
bankrupt has in the bankrupt's possession or in a bank account when the bankruptcy commenced. 55

Insolvency Act (Cap. 53) Kenya
(2) For the purpose of subsection (1), the prescribed limit is one hundred thousand shillings or, if a
greater amount is prescribed by the insolvency regulations for the purposes of this section, that
amount. Division 17 — Powers of bankruptcy trustee and the Court to examine bankrupt and others
Subdivision 1 — Examination by bankruptcy trustee
168. Bankruptcy trustee may summon bankrupt and others to be examined
(1) The bankruptcy trustee may, at any time before or after a bankrupt's discharge—
(a) serve on any of the persons listed in subsection (2) a summons to appear before the
bankruptcy trustee or the Court to be examined on oath in relation to the bankrupt's
conduct, affairs or property; and
(b) require that person—
(i) to produce and surrender to the bankruptcy trustee or the Court any document under
that person's control that relates to the bankrupt's conduct, affairs or property; or
(ii) to answer any question put to that person relating to the bankrupt's conduct, affairs or
property.

he bankrupt's conduct, affairs or property; or
(ii) to answer any question put to that person relating to the bankrupt's conduct, affairs or
property.

(2) The following are the persons referred to in subsection (1)—
(a) the bankrupt;
(b) the bankrupt's spouse;
(c) a person known or suspected to be in possession any of the bankrupt's property or any
document relating to the bankrupt's conduct, affairs or property;
(d) a person believed to owe the bankrupt money;
(e) a person believed by the bankruptcy trustee to be able to provide information regarding—
(i) the bankrupt; or
(ii) the bankrupt's conduct, affairs or property;
(f) a trustee of a trust of which the bankrupt is a settlor or of which the bankrupt is or has been a
trustee. 169. Conduct of examination of person summoned by bankruptcy trustee
(1) The bankruptcy trustee may examine on oath the persons summoned for examination in accordance
with section 168. (2) The bankruptcy trustee shall ensure that the examination is recorded in writing, and that the
person summoned signs the written record unless excused from doing so.

trustee shall ensure that the examination is recorded in writing, and that the
person summoned signs the written record unless excused from doing so.

(3) If person, without reasonable excuse, refuses to sign the refusal to sign the written record of the
person's examination before the bankruptcy trustee, the bankruptcy trustee may report the person's
conduct to the Court, in which case the Court may, if satisfied that the refusal was unjustified, find
the person to be in contempt of the Court. (4) If a person summoned for examination by the bankruptcy fails to appear at the appointed time and
has no reasonable excuse, the Court—
(a) may, on the bankruptcy trustee's application, by warrant, have the person arrested and
brought before the Court for examination; and
56

the Court—
(a) may, on the bankruptcy trustee's application, by warrant, have the person arrested and
brought before the Court for examination; and
56

Insolvency Act (Cap. 53) Kenya
(b) if it does so, may order the person to pay all the expenses arising out of the arrest and
examination before the Court if it believes that that person's evidence was required for the
purpose of ascertaining the bankrupt's estate. 170. Expenses of person summoned by bankruptcy trustee or the Court
A person who is summoned for examination by the bankruptcy trustee—
(a) is entitled to be paid the expenses incurred in attending the examination, not exceeding the
amount prescribed by the insolvency regulations for the purposes of this section; and
(b) is not obliged to attend the examination if those expenses have not been paid or tendered to the
person before the examination. 171. Entitlement of examinee to be represented
(1) A person who is examined or questioned at an examination by the bankruptcy trustee is entitled to
be represented by an advocate. (2) Such a person may be questioned by the bankrupt's advocate, and any answers given by the person
form part of the examination. 172.

by an advocate. (2) Such a person may be questioned by the bankrupt's advocate, and any answers given by the person
form part of the examination. 172.

Creditor may inspect record of examination
A creditor, or the creditor's advocate, is entitled at any reasonable time to inspect the record of the
examination of a person conducted in accordance with section 169. 173. Report of examination not to be published without court's consent
(1) A person shall not, without the approval of the Court, publish a report of—
(a) any examination of a person summoned for examination by the bankruptcy trustee; or
(b) any matter arising in the course of the examination. (2) A person who wishes to publish a report of such an examination or matter may make an application
to the Court for approval to publish it. (3) On the hearing of an application made under subsection (2), the Court may give approval for the
publication of a report subject to such conditions (if any) as the Court may specify. (4) A person who contravenes subsection (1) commits an offence and on conviction is liable to a fine
not exceeding five hundred thousand shillings or to imprisonment for a term not exceeding three
months, or to both. 174.

onviction is liable to a fine
not exceeding five hundred thousand shillings or to imprisonment for a term not exceeding three
months, or to both. 174.

Examination provisions also apply when bankruptcy trustee appointed interim trustee
in respect of debtor's property
Sections 168 to 173 also apply when the bankruptcy trustee has been appointed as interim trustee in
respect of all or part of a debtor's property under section 36 and, for that purpose, references in sections
168 to 173 to the bankrupt are to be read with as if they were references to the debtor. 175. No lien over bankrupt's documents and other records
(1) A person is not entitled as against the bankruptcy trustee to withhold possession of, or claim a lien
over—
(a) a document that belongs to the bankrupt; or
(b) the bankrupt's business records. 57

uptcy trustee to withhold possession of, or claim a lien
over—
(a) a document that belongs to the bankrupt; or
(b) the bankrupt's business records. 57

Insolvency Act (Cap. 53) Kenya
(2) However, a person may claim as a preferential creditor under paragraph 3(1)(f) of the Second
Schedule if the person—
(a) has performed services in connection with the bankrupt's business records or a document
belonging to the bankrupt;
(b) has not been paid, or has not been paid in full, for those services; and
(c) would, but for subsection (1), ordinarily have had a lien over the business records or
document. (3) The limit to which the person can claim as a preferential creditor under paragraph 3(1)(f) of the
Second Schedule is ten percent of the total value of the services specified in subsection (2), up to a
maximum amount of two hundred thousand shillings. 176.

Schedule is ten percent of the total value of the services specified in subsection (2), up to a
maximum amount of two hundred thousand shillings. 176.

Offences relating to conduct of examinations by bankruptcy trustee
(1) A person who, without reasonable excuse—
(a) fails to comply with a summons attend the public examination of a bankrupt as required by
section 168(1);
(b) fails without reasonable excuse to produce a document that the person is required to produce
as required by section 168(1)(b)(i);
(c) fails to answer a question as required by section 168(1)(b)(ii); or
(d) in purporting to answer such a question, gives an answer that the person knows, or ought
reasonably to know, is false or misleading in a material respect. commits an offence and on conviction is liable to a fine not exceeding one million shillings or to
imprisonment for a term not exceeding twelve months, or to both. (2) A person who is questioned under section 168(1)(b)(ii) shall answer all questions put to the person
in relation to the bankrupt's conduct, affairs and property to the extent that the person is able to do
so. (3) A person is not excused from answering a question because the question may incriminate or tend to
incriminate the person.

person is able to do
so. (3) A person is not excused from answering a question because the question may incriminate or tend to
incriminate the person.

(4) Except as provided by subsection (5), a statement made by a person examined or questioned under
section 168(1)(b)(ii) in response to a question put to the person in the exercise of a power conferred
by this Part is not admissible in criminal proceedings against the person. (5) Such a statement is admissible in any such proceedings if—
(a) the person was examined or questioned under oath and is charged with an offence under
section 108 or 114 of the Penal Code (which respectively relate to perjury and subornation of
perjury and to false swearing); or
(b) the statement was made by the bankrupt and the bankrupt is charged with an offence under
subsection (1)(c) or (d). Subdivision 2 — Public examination before the Court
177. Court to hold public examination if bankruptcy trustee or creditors require
(1) At any time before an absolute order for a bankrupt's discharge is made—
(a) the bankruptcy trustee; or
58

bankruptcy trustee or creditors require
(1) At any time before an absolute order for a bankrupt's discharge is made—
(a) the bankruptcy trustee; or
58

Insolvency Act (Cap. 53) Kenya
(b) if a ordinary resolution has been passed at a creditor's meeting seeking the public
examination of the bankrupt before the Court, any of the creditors concerned,
may make an application to the Court for an order that the bankrupt be publicly examined before
the Court. (2) On the hearing of an application made under subsection (1), the Court shall, subject to subsection
(3), make an order directing the bankrupt to be publicly examined before the Court and shall fix a
time and date for the holding of the examination. The date fixed may not be earlier than fourteen
days from the date of the order unless the Court is of the opinion that there are compelling reasons
for holding the examination sooner. (3) The Court shall reject a copy of a creditors' ordinary lodged under subsection (1) unless it is
authenticated by either the bankruptcy trustee or the Chairperson of the meeting at which the
resolution was passed. 178. Bankruptcy trustee to serve notice of examination on bankrupt
(1) As soon as practicable after the Court has made an order under section 177, the bankruptcy trustee
shall serve a copy of the order on the bankrupt.

1) As soon as practicable after the Court has made an order under section 177, the bankruptcy trustee
shall serve a copy of the order on the bankrupt.

(2) At least seven days before the date fixed for holding the examination, the bankruptcy trustee shall—
(a) publish a notice advertising the examination—
(i) once in the Gazette; and
(ii) once in at least two newspapers circulating in the area in which the bankrupt resides;
and
(b) send a notice to each creditor a notice giving details of the time, date and place of the
examination. 179. Bankruptcy trustee to lodge report with the Court before start of examination
Before the public examination of a bankrupt before the Court begins, the bankruptcy trustee shall lodge
with the Court a report on—
(a) the bankrupt's estate;
(b) the bankrupt's conduct; and
(c) all other matters of which the Court should be informed. 180. Conduct of public examination before the Court
(1) At the time and date fixed by the Court for holding the public examination of a bankrupt, the
bankrupt shall attend the examination, and may be examined as to the bankrupt's conduct, affairs
and property. (2) At the examination, the following persons may examine the bankrupt—
(a) the bankruptcy trustee, or an advocate for the bankruptcy trustee;
(b) a creditor who has proved a claim, or an advocate for the creditor.

nkrupt—
(a) the bankruptcy trustee, or an advocate for the bankruptcy trustee;
(b) a creditor who has proved a claim, or an advocate for the creditor.

(3) A person examining the bankrupt shall examine the bankrupt on oath. (4) At the examination, the bankrupt shall—
(a) produce all documents relevant to the examination that the person conducting the
examination requires the bankrupt to produce; and
59

krupt shall—
(a) produce all documents relevant to the examination that the person conducting the
examination requires the bankrupt to produce; and
59

Insolvency Act (Cap. 53) Kenya
(b) answer all questions that that person asks the bankrupt or that the Court allows the bankrupt
to be asked. (5) The bankrupt is not entitled to advance notice of who will ask the questions or what the questions
will be. 181. Bankruptcy trustee to ensure record of examination is kept
(1) On the holding of a public examination of a bankrupt before the Court, the Court shall ensure that a
written record is made of the examination. (2) The Court shall also ensure that the record of the examination—
(a) is read over to the bankrupt; and
(b) is made available for inspection at all reasonable times by the bankrupt's creditors or their
advocates. (3) If required by the Court to do so, the bankrupt shall sign the record of the examination. (4) A bankrupt who, without reasonable excuse, fails to comply with a request made under subsection
(3) is in contempt of the Court. 182. When examination ends
(1) The public examination of a bankrupt ends when the Court makes an order declaring that the
examination is ended.

Court. 182. When examination ends
(1) The public examination of a bankrupt ends when the Court makes an order declaring that the
examination is ended.

(2) The Court may make an order declaring that the examination has ended only if it is satisfied
that the bankrupt's conduct, affairs and property have been sufficiently investigated and that the
investigation is complete. 183. Consequence of bankrupt's failing to attend examination
If the bankrupt does not appear for the examination at the appointed time and has no reasonable excuse—
(a) the Court may, either on the bankruptcy trustee's application or its own initiative, by warrant, have
the bankrupt arrested and brought before the Court for examination; and
(b) the Court may order the bankrupt to pay all the expenses arising out of the arrest and examination
before the Court, if it believes that the bankrupt's evidence was necessary for the purposes of
ascertaining the bankrupt's estate. 184. Bankrupt entitled to be paid expenses for attending examination
(1) A bankrupt is entitled to be paid such expenses for attending a public examination before the Court
as are prescribed by the insolvency regulations for the purposes of this section. (2) It the relevant expenses have not been paid or tendered to the bankrupt, the bankrupt person is not
obliged to attend the examination. 185.

ction. (2) It the relevant expenses have not been paid or tendered to the bankrupt, the bankrupt person is not
obliged to attend the examination. 185.

Power to extend examination companies controlled by bankrupt and bankrupt's
associates
(1) If authorised by the Court, the bankruptcy trustee or a person appointed by that trustee may
exercise the powers specified in subsection (2) in relation to a company with which the bankrupt is
associated or a partnership of which the bankrupt is a member. (2) The powers referred to in subsection (1) are the powers—
(a) to examine the documents of the company or partnership; and
60

bankrupt is a member. (2) The powers referred to in subsection (1) are the powers—
(a) to examine the documents of the company or partnership; and
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Insolvency Act (Cap. 53) Kenya
(b) to examine—
(i) any past or present officer, employee or member of the company about the affairs of
that body; or
(ii) any past or present member or employee about the affairs of the partnership. (3) The bankruptcy trustee shall ensure that a record of the examination of a person under subsection
(2)(b) is recorded in writing, and the person examined signs the written record unless for good
reason the bankruptcy trustee excuses the person from doing so. (4) For the purposes of this section, a company is associated with the bankrupt if the bankrupt is an
officer or employee of the company or is in a position to appoint or control the appointment of its
directors. 186. No privilege against self-incrimination, but statements not generally admissible in
criminal proceedings against their maker
(1) A person (including the bankrupt) who is examined or questioned at a public examination of a
bankrupt shall answer all questions put to the person in relation to the bankrupt's conduct, affairs
and property to the extent that the person is able to do so.

all answer all questions put to the person in relation to the bankrupt's conduct, affairs
and property to the extent that the person is able to do so.

(2) A person is not excused from answering a question because the question may incriminate or tend to
incriminate the person. (3) Except as provided by subsection (4), a statement made by a person examined or questioned under
this Part in response to a question put to the person in the course of the public examination of a
bankrupt is not admissible in criminal proceedings against the person. (4) Such a statement is admissible in any such proceedings if—
(a) the person was examined or questioned under oath and is charged with an offence under—
(i) section 108 of the Penal Code (Cap. 63) (which deals with perjury and subornation of
perjury); or
(ii) section 114 of that Code (which deals with false swearing); or
(b) the statement was made by the bankrupt and the bankrupt is charged with an offence under
section 187(1) (c) or (d). 187.

with false swearing); or
(b) the statement was made by the bankrupt and the bankrupt is charged with an offence under
section 187(1) (c) or (d). 187.

Offences relating to examinations of bankrupts
(1) A person who, without reasonable excuse—
(a) fails to attend an examination as required by section 180(1);
(b) fails to deliver a document as required under section 180(4)(a);
(c) fails to answer a question as required under section 180(4)(b); or
(d) in purporting to answer such a question, gives an answer that the person knows, or ought
reasonably to know, is false or misleading in a material respect,
commits an offence and on conviction is liable to a fine not exceeding one million shillings or to
imprisonment for a term not exceeding twelve months, or to both. (2) The fact that a bankrupt may be charged with, tried for and convicted of an offence under
subsection (1) does not prevent the Court from punishing the bankrupt for contempt of the Court. 61

with, tried for and convicted of an offence under
subsection (1) does not prevent the Court from punishing the bankrupt for contempt of the Court. 61

Insolvency Act (Cap. 53) Kenya
188. Entitlement of examinee to be represented
(1) A person (including the bankrupt) who is examined or questioned at a public examination of a
bankrupt is entitled to be represented by an advocate. (2) Such a person may be questioned by the bankrupt's advocate, and any answers given by the person
form part of the examination. Division 18 — Status of bankrupt's contracts
189. Bankruptcy trustee may continue or disclaim bankrupt's contracts entered into before
bankruptcy commenced
If a bankrupt is a party to a contract, the bankruptcy trustee may—
(a) continue the contract, subject to the terms of the contract and all relevant rules of law; or
(b) disclaim the contract if it is onerous property for the purposes of section 118. 190. Contract terminated by other contracting party
(1) This section applies if the other party to a contract to which the bankrupt is a party, in accordance
with a term of the contract, terminates the contract in consequence of the bankruptcy.

y to a contract to which the bankrupt is a party, in accordance
with a term of the contract, terminates the contract in consequence of the bankruptcy.

(2) Irrespective of what the contract provides, the bankruptcy trustee may recover such amount from
the other contracting party as the Court considers to be fair and reasonable, but that amount may
not be greater than the amount calculated in accordance with the formula in subsection (3). (3) The formula is as follows:
A = B - C, where—
A is the amount to be calculated for the purpose of subsection (2);
B is the amount payable to the bankrupt under the contract; and
C is the total of—
(a) the amount paid to the bankrupt;
(b) the cost to complete the contract; and
(c) a reasonable amount as a penalty for delay in completing the contract. 191. Transaction with bankrupt made in ignorance of bankruptcy
(1) This section applies to a payment of money or a delivery of property to a person who is adjudged
bankrupt, whether the payment or delivery is made—
(a) on the order of the person; or
(b) from the person to an assignee or to the order of an assignee.

nkrupt, whether the payment or delivery is made—
(a) on the order of the person; or
(b) from the person to an assignee or to the order of an assignee.

(2) The payment or delivery is a good discharge to the person who made the payment or delivery if—
(a) the payment or delivery was made before the bankruptcy of the person referred to in
subsection (1) was advertised; and
(b) the person making the payment or delivery satisfies the Court that—
(i) that person had no knowledge of the bankruptcy or that an application for a
bankruptcy order had been made; and
62

ivery satisfies the Court that—
(i) that person had no knowledge of the bankruptcy or that an application for a
bankruptcy order had been made; and
62

Insolvency Act (Cap. 53) Kenya
(ii) the payment or delivery was made in the ordinary course of business or was otherwise
made in good faith. 192. Bankrupt's co-contractor may sue and be sued if there is a joint contractual liability
If the bankrupt is jointly liable under a contract with another person, that other person may sue and be
sued on the contract without the bankrupt being joined as a party to the proceeding. 193. Bankruptcy trustee may recover advocate's costs
(1) The bankruptcy trustee may recover money paid by a bankrupt to the bankrupt's advocate for costs
in obtaining a bankruptcy order, except for those (if any) prescribed for the purpose of this section
by the insolvency regulations. (2) Subsection (1) applies whether the relevant payment was made before or after the bankruptcy
commenced. Division 19 — Irregular transactions involving bankrupt
194. Application of Division 19
(1) This Division applies to the following irregular transactions by the bankrupt before the bankruptcy
commenced—
(a) an insolvent transaction;
(b) an insolvent charge;
(c) an insolvent gift;
(d) a transaction at undervalue;
(e) a contribution by the bankrupt to the property of another person.

(b) an insolvent charge;
(c) an insolvent gift;
(d) a transaction at undervalue;
(e) a contribution by the bankrupt to the property of another person.

(2) The general effect of this Division is—
(a) to enable irregular transactions of the kinds listed in subsection (1)(a) to (c) to be cancelled
on the initiative of the bankruptcy trustee; and
(b) to enable that trustee, in appropriate cases, to recover property or money from a party to an
irregular transaction with the bankrupt. 195. Power to extend certain periods specified in this Division
For the purposes of this Division, a two year period or a six months period referred to in this Division can
be extended—
(a) in the case of a bankruptcy order made on a creditor's application, by the period between the time
when the application was served on the bankrupt and the time when the bankruptcy order was
made; and
(b) in the case of a bankruptcy order made on the bankrupt's own application while a creditor's
application was pending, by the period between the time when the creditor's application was served
on the bankrupt and the time when the bankruptcy order was made. 196. Insolvent transactions may be cancelled by bankruptcy trustee
A transaction by a bankrupt can be cancelled on the bankruptcy trustee's initiative if it—
(a) is an insolvent transaction; and
63

bankruptcy trustee
A transaction by a bankrupt can be cancelled on the bankruptcy trustee's initiative if it—
(a) is an insolvent transaction; and
63

Insolvency Act (Cap. 53) Kenya
(b) was made within two years immediately before the bankruptcy commenced. 197. Meaning of insolvent transaction for purposes of sections 196
(1) For the purposes of section 196, a transaction is an insolvent transaction by a bankrupt if it—
(a) is entered into or made at a time when the bankrupt is unable to pay the bankrupt's debts;
and
(b) enables a creditor to receive more towards satisfaction of a debt by the bankrupt than the
creditor would receive, or would be likely to receive, in the bankruptcy. (2) Any of the following actions by a bankrupt is a transaction for the purpose of subsection (1)—
(a) conveying or transferring the bankrupt's property;
(b) giving a charge over the bankrupt's property;
(c) incurring an obligation;
(d) undergoing an execution process;
(e) paying money (including money paid in accordance with a judgment or an order of a court);
(f) any other act done or omitted to be done for the purpose of entering into such a transaction
or giving effect to it. 198.

or an order of a court);
(f) any other act done or omitted to be done for the purpose of entering into such a transaction
or giving effect to it. 198.

Insolvent transaction presumed
For the purposes of section 196, a transaction that was entered into within the six months before a
bankrupt is adjudged bankrupt is presumed, until the contrary is proved, to have been made at a time
when the bankrupt is unable to pay the bankrupt's debts. 199. When series of transactions are to be regarded as single transaction
(1) This section applies if a series of transactions made for commercial purposes forms an integral part
of a continuing business relationship (such as a running account) between a bankrupt and a creditor
in circumstances in which, during the course of the relationship, the level of the bankrupt's net
indebtedness to the creditor is increased and reduced from time to time. (2) For the purposes of subsection (1), it does not matter whether persons other than the bankrupt or
the creditor are parties to any of the transactions.

For the purposes of subsection (1), it does not matter whether persons other than the bankrupt or
the creditor are parties to any of the transactions.

(3) When this section applies—
(a) section 196 applies in relation to all of the transactions forming part of the relationship as if
they together formed a single transaction; and
(b) any particular transaction of the series referred to in subsection (1) may be treated as an
insolvent transaction that can be cancelled by the bankruptcy trustee only if the effect of
applying that section as provided by paragraph (a) is that the single transaction referred to in
that paragraph is treated as an insolvent transaction that can be cancelled by the bankruptcy
trustee. 200. Insolvent charges can be cancelled on bankruptcy trustee's initiative
A charge over any property of a bankrupt can be cancelled on the bankruptcy trustee's initiative if—
(a) the charge was created within the two years immediately before the bankruptcy commenced; and
(b) immediately after the charge was given, the bankrupt was unable to pay the bankrupt's due debts. 64

mediately before the bankruptcy commenced; and
(b) immediately after the charge was given, the bankrupt was unable to pay the bankrupt's due debts. 64

Insolvency Act (Cap. 53) Kenya
201. Charge for new consideration or replacement charge not affected
(1) A charge may not be cancelled under section 200 if it secures—
(a) money actually advanced or paid;
(b) the actual price or value of property sold or transferred; or
(c) any other valuable consideration given,
in good faith by the secured creditor to the bankrupt at the time when, or at any time after, the
charge was created. (2) A charge may not be cancelled under section 200 if the charge is a replacement for an earlier charge
that was given by the bankrupt more than two years before the bankruptcy commenced, except to
the extent that—
(a) the amount secured by the substituted charge is greater than the amount that was secured by
the earlier charge; or
(b) the value of the property that was subject to the substituted charge at the date of
substitution was greater than the value of the property subject to the earlier charge at that
date. 202.

ject to the substituted charge at the date of
substitution was greater than the value of the property subject to the earlier charge at that
date. 202.

Presumption that bankrupt unable to pay due debts
A bankrupt who gave a charge within the six months immediately preceding the commencement of the
bankruptcy is presumed, until the contrary is proved, to have been unable to pay the bankrupt's debts
immediately after the charge was created. 203. Charge for unpaid purchase price given after sale of property
(1) If, in relation to property purchased by a bankrupt, the bankrupt has given to the seller a charge
over the property within the two years immediately preceding the bankruptcy, section 200 does not
affect the charge to the extent that it secures unpaid purchase money, but only if the charge was
given not more than fourteen days after the date of the sale of the property to the bankrupt. (2) Money is unpaid purchase money for the purpose of subsection (1) whether it is unpaid in relation
to the property over which the charge is given or some other property. 204. Appropriation of payments by bankrupt to secured creditor
(1) This section applies if the bankrupt has made a payment or payments to a secured creditor after the
bankrupt has given a charge to which section 202 or 203 applies.

pplies if the bankrupt has made a payment or payments to a secured creditor after the
bankrupt has given a charge to which section 202 or 203 applies.

(2) The bankruptcy trustee shall credit the bankrupt's payment or payments (as far as is necessary)
towards—
(a) repayment of the money actually advanced or paid by the secured creditor to the bankrupt
when or after the bankrupt gave the charge;
(b) payment of the actual price or value of property sold or supplied by the secured creditor to
the bankrupt when or after the bankrupt gave the charge; or
(c) payment of any other liability of the bankrupt to the secured creditor in respect of any other
valuable consideration given in good faith when or after the bankrupt gave the charge. (3) This section does not apply to payments received by a bank in good faith in the ordinary course of
business and without negligence. 65

the charge. (3) This section does not apply to payments received by a bank in good faith in the ordinary course of
business and without negligence. 65

Insolvency Act (Cap. 53) Kenya
205. Charge agreed before specified period not to be cancelled
A charge or a security right given by the bankrupt under an agreement to give the charge or create a
security right that was made or made effective against third parties before the two years immediately
before the bankruptcy is not liable to be cancelled under section section 200. [Act No. 13 of 2017, Sch.]
206. Cancellation of gifts made within two years before bankruptcy
A gift made by a bankrupt to another person can be cancelled on the bankruptcy trustee's initiative if the
bankrupt made the gift within the two years immediately preceding the commencement of the bankruptcy. 207. Cancellation of gifts made by bankrupt made within five and two years before
bankruptcy
(1) A gift by a bankrupt to another person can be also cancelled on the bankruptcy trustee's initiative if
—
(a) the bankrupt made the gift during the period beginning five years and ending two years
before the commencement of the bankruptcy; and
(b) at the time when the gift was made, the bankrupt was unable to pay the bankrupt's debts.

two years
before the commencement of the bankruptcy; and
(b) at the time when the gift was made, the bankrupt was unable to pay the bankrupt's debts.

(2) A bankrupt is presumed to have been unable to pay the bankrupt's debts for the purpose of
subsection (1)(b) unless the person claiming the gift proves that—
(a) immediately after the gift was made; or
(b) at any later time before the commencement of the bankruptcy,
the bankrupt was able to pay the bankrupt's debts without the aid of the property of which the gift
was composed. 208. Procedure for cancelling irregular transactions
(1) The procedure set out in this section applies to the following irregular transactions—
(a) an insolvent transaction;
(b) an insolvent charge;
(c) an insolvent gift;
(d) any other transaction of a class prescribed by the insolvency regulations for the purposes of
this section. (2) A bankruptcy trustee who wishes to cancel an irregular transaction to which this section applies
shall—
(a) lodge a notice with the Court that complies with subsection (3); and
(b) serve the notice on—
(i) the other party to the transaction; and
(ii) any other party from whom the bankruptcy trustee intends to recover.

3); and
(b) serve the notice on—
(i) the other party to the transaction; and
(ii) any other party from whom the bankruptcy trustee intends to recover.

(3) A notice complies with this subsection if it—
(a) is in writing;
(b) states the bankruptcy trustee's postal and street addresses and e-mail address (if any);
66

omplies with this subsection if it—
(a) is in writing;
(b) states the bankruptcy trustee's postal and street addresses and e-mail address (if any);
66

Insolvency Act (Cap. 53) Kenya
(c) specifies the irregular transaction to be cancelled;
(d) describes the property, or states the amount, that the bankruptcy trustee wishes to recover;
(e) includes a statement that the person named in the notice may object to the cancellation of
the transaction by sending to the bankruptcy trustee a notice of objection to be received by
the bankruptcy trustee at that trustee's postal, street or email address within twenty-one
days after service on that person of that trustee's notice;
(f) states that a person making an objection is required to specify the reasons for the objection;
(g) states that the transaction will be cancelled as against the person named in the notice if that
person does not object; and
(h) states that if the person named in the notice does object, the bankruptcy trustee may apply
to the Court for the transaction to be cancelled.

and
(h) states that if the person named in the notice does object, the bankruptcy trustee may apply
to the Court for the transaction to be cancelled.

(4) An irregular transaction is automatically cancelled in relation to a person on whom the bankruptcy
trustee has served a bankruptcy trustee's notice, if the person has not objected by sending to the
bankruptcy trustee a notice of objection that is received by the bankruptcy trustee at that trustee's
postal, street or email address within twenty-one days after the bankruptcy trustee's notice has
been served on that person. (5) The bankruptcy trustee may disregard a notice of objection that fails to specify the reasons for the
objection. (6) The Court may, on the application of the bankruptcy trustee, cancel an irregular transaction that is
not automatically cancelled by subsection (4). 209.

e Court may, on the application of the bankruptcy trustee, cancel an irregular transaction that is
not automatically cancelled by subsection (4). 209.

Court may order retransfer of property or payment of an equivalent value
(1) On the cancellation of an irregular transaction under which property of the bankrupt, or an interest
in property of the bankrupt, was transferred, the Court may make an order—
(a) for the retransfer to the bankruptcy trustee of the property or interest in the property; or
(b) for payment to the bankruptcy trustee of such amount as the Court considers appropriate,
but the amount may not be greater than the value of the property, or interest in the property,
at the time when the transaction was cancelled. (2) The Court may make any other order for the purpose of giving effect to an order under subsection
(1). (3) An order under subsection (1) is in addition to any other rights and remedies available to the
bankruptcy trustee, and this section does not affect those rights and remedies. 210.

is in addition to any other rights and remedies available to the
bankruptcy trustee, and this section does not affect those rights and remedies. 210.

Limits on what can be recovered
The Court may not make an order under section 209 against a person if the person proves that when the
person received the property or interest in the property—
(a) the person acted in good faith;
(b) a reasonable person in the same position would not have suspected that—
(i) in the case of an insolvent gift, the bankrupt was, or would become, unable to pay the
bankrupt's debts without the aid of the property that the gift is composed of; or
(ii) in the case of any other irregular transaction of a kind to which section 208 applies, the
bankrupt was, or would become, unable to pay the bankrupt's due debts; and
67

other irregular transaction of a kind to which section 208 applies, the
bankrupt was, or would become, unable to pay the bankrupt's due debts; and
67

Insolvency Act (Cap. 53) Kenya
(c) the person gave value for the property or interest in the property or altered the person's position in
the reasonably held belief that the transfer of the property or interest in the property to the person
was valid and would not be cancelled. 211. Bankruptcy trustee may recover difference in value if transaction is found to be under
value
(1) Under section 212, the bankruptcy trustee may recover from a party to a transaction with the
bankrupt an amount calculated in accordance with the following formula:
A = B - C
where—
A is the amount to be calculated;
B is the value that the party received from the bankrupt under the transaction; and
C is the value (if any) that the bankrupt received from the party under the transaction. (2) In this section and in section 212, "transaction" includes the giving of a guarantee by the bankrupt.

ceived from the party under the transaction. (2) In this section and in section 212, "transaction" includes the giving of a guarantee by the bankrupt.

(3) The bankruptcy trustee may recover from the party the amount calculated under subsection (1) if—
(a) the bankrupt entered into the transaction with the party within the two years immediately
before the bankruptcy commenced; and
(b) either—
(i) the bankrupt was unable to pay the bankrupt's debts when the transaction was entered
into; or
(ii) the bankrupt became unable to pay the bankrupt's debts as a result of having entered
into the transaction. 212. Court may order recipient of bankrupt's contribution to property of another to pay
value to bankruptcy trustee
(1) The bankruptcy trustee may make an application to the Court for an order directing the recipient of
a contribution by the bankrupt to the recipient's property to pay the value of the contribution to the
bankruptcy trustee.

directing the recipient of
a contribution by the bankrupt to the recipient's property to pay the value of the contribution to the
bankruptcy trustee.

(2) On the hearing on an application made under subsection (1), the Court may make the order sought
but only if satisfied that—
(a) the bankrupt was not paid an adequate amount in money or money's worth for the
contribution;
(b) the value of the bankrupt's assets was reduced by the contribution; and
(c) the bankrupt made the contribution—
(i) within the two years immediately preceding the commencement of the bankruptcy; or
(ii) within the five years immediately before that commencement, and the recipient is not
able to prove that the bankrupt, either at the time of the contribution or at any later
time before that commencement, was able to pay the bankrupt's debts without the aid
of the contribution. (3) For the purposes of this section and section 213, a bankrupt has made a contribution to the
recipient's property if the bankrupt has—
(a) erected buildings on, or otherwise improved, land or any other property of the recipient;
68

tion to the
recipient's property if the bankrupt has—
(a) erected buildings on, or otherwise improved, land or any other property of the recipient;
68

Insolvency Act (Cap. 53) Kenya
(b) bought land or any other property in the recipient's name;
(c) provided money to buy land or any other property in the recipient's name or on the
recipient's behalf; or
(d) paid instalments for the purchase of, or towards the purchase of, land or any other property
in the recipient's name or on the recipient's behalf. 213. Court's powers in relation to bankrupt's contribution to recipient's property
(1) The Court may—
(a) ascertain the value of the bankrupt's contribution for the purposes of section 212; and
(b) order the recipient to pay an amount equal to that value to the bankruptcy trustee. (2) In subsection (1)(a), the bankrupt's contribution includes any payments for legal expenses, interest,
rates, and other expenses or charges.

ustee. (2) In subsection (1)(a), the bankrupt's contribution includes any payments for legal expenses, interest,
rates, and other expenses or charges.

(3) The Court may order the recipient to pay less than the value of the contribution, or refuse to order
the recipient to pay anything, if—
(a) the recipient acted in good faith and has altered the recipient's position in the reasonably
held belief that the bankrupt's contribution was valid and that the recipient would not be
liable to repay it in full or in part; or
(b) in the Court's opinion, it is unfair that the recipient should repay all or part of the
contribution. (4) If the Court orders the recipient to repay the bankrupt's contribution or a part of it, it may in the
same order or in a subsequent order—
(a) direct the bankruptcy trustee to sell the whole or part of the relevant property, and to convey
or transfer it to the purchaser; and
(b) make vesting and other orders that are necessary for the sale and transfer of the property. 214.

nd to convey
or transfer it to the purchaser; and
(b) make vesting and other orders that are necessary for the sale and transfer of the property. 214.

How bankruptcy trustee is to use repayment of bankrupt's contribution to property
(1) The bankruptcy trustee shall apply—
(a) the money repaid under section 212 by the recipient of a contribution by the bankrupt to
property; or
(b) the proceeds of sale of that property, by taking the steps specified in subsection (2) in the
order specified in that subsection. (2) The steps to be taken by the bankruptcy trustee are as follows:
Step 1: The bankruptcy trustee shall keep as much of the proceeds as the bankruptcy trustee needs,
when added to the other assets in the bankrupt's estate, to pay the creditors in full (including
interest);
Step 2: If there is a surplus after the creditors have been paid in full, the bankruptcy trustee shall
pay as much of the surplus to the recipient of the property to which the bankrupt has contributed as
was repaid under section 212;
Step 3: The bankruptcy trustee may not pay anything to the bankrupt without having taken steps 1
and 2. Division 20—Processing of creditors' claims against bankrupt's estate
69

stee may not pay anything to the bankrupt without having taken steps 1
and 2. Division 20—Processing of creditors' claims against bankrupt's estate
69

Insolvency Act (Cap. 53) Kenya
215. Interpretation: Division 20
(1) For the purposes of this Division, a creditor's claim is a document that a creditor submits to the
bankruptcy trustee for the purpose of proving the debt. (2) A debt is proved when it is allowed by the bankruptcy trustee. 216. What debts are provable debts
(1) For the purpose of this Division, a provable debt is a debt or liability that the bankrupt owes—
(a) at the commencement of the bankruptcy; or
(b) after that commencement but before discharge, because of an obligation incurred by the
bankrupt before that commencement. (2) A fine, penalty or other order made by a court ordering the payment of money that has been made
following a conviction—
(a) is not a provable debt; and
(b) is not discharged when the bankrupt is discharged from bankruptcy. 217. Procedure for proving debt: creditor to submit claim form
(1) A creditor (including a creditor who has a preferential claim) who wishes to claim in the bankruptcy
shall submit a creditor's claim to the bankruptcy trustee before the deadline for submitting claims.

tial claim) who wishes to claim in the bankruptcy
shall submit a creditor's claim to the bankruptcy trustee before the deadline for submitting claims.

(2) The bankruptcy trustee may accept such a claim only if it is in the form prescribed by the insolvency
regulations for the purposes of this section. (3) For the purpose of subsection (1), the deadline is either—
(a) the time specified by the bankruptcy trustee in a notice given to the creditor; or
(b) the time specified in an advertisement published by the bankruptcy trustee in a newspaper
widely circulating in the area in which the creditor normally resides or carries on business. (4) In submitting a claim, a creditor shall comply with the procedure and formalities (if any) prescribed
by the insolvency regulations. (5) The creditor is required to bear the costs of proving the debt, unless the Court makes an order as to
the creditor's costs under section 225. (6) The creditor may amend or withdraw the claim, but an amended claim has to comply with the
formalities prescribed for the original claim. 218. Bankruptcy trustee required to examine creditor's claim
(1) The bankruptcy trustee shall examine each creditor's claim and the grounds of the debt, unless of
the opinion that no dividend will be paid to creditors.

bankruptcy trustee shall examine each creditor's claim and the grounds of the debt, unless of
the opinion that no dividend will be paid to creditors.

(2) As soon as practicable after examining a claim, the bankruptcy trustee shall do one or more of the
following—
(a) wholly or partly allow the claim;
(b) wholly or partly reject the claim;
(c) require further evidence in support of the claim or an item contained in it. 70

or partly allow the claim;
(b) wholly or partly reject the claim;
(c) require further evidence in support of the claim or an item contained in it. 70

Insolvency Act (Cap. 53) Kenya
219. Bankruptcy trustee to give creditor notice of grounds of rejection
As soon as practicable after rejecting a creditor's claim, or a part of it, the bankruptcy trustee shall give the
creditor a notice rejecting the claim or part and specifying the grounds for the rejection. 220. Bankruptcy trustee's power to obtain evidence of debt
(1) The bankruptcy trustee may summon for examination, and examine (on oath or otherwise), any of
the following persons—
(a) a person who has submitted a creditor's claim;
(b) a person who has made a declaration or statement as part of a creditor's claim;
(c) a person who is capable of giving evidence concerning a creditor's claim or the debt to which
the claim relates.

nt as part of a creditor's claim;
(c) a person who is capable of giving evidence concerning a creditor's claim or the debt to which
the claim relates.

(2) If a person who has been summoned under this section fails to attend, or attends but refuses to be
sworn or give evidence, and has no reasonable excuse for doing so, the Court, on the bankruptcy
trustee's application may—
(a) may issue a warrant directing the person to be arrested and brought before the Court for
examination; and
(b) if the Court believes that the person's evidence was relevant to deciding whether a creditor's
claim should be allowed or rejected, make an order directing the person to pay all or a
specified part of the expenses attributable to the arrest and examination. 221. Notice by bankrupt or creditor to bankruptcy trustee to allow or reject creditor's claim
(1) The bankrupt or any creditor may give the bankruptcy trustee notice to allow or reject a creditor's
claim. (2) It the bankruptcy trustee has not made a decision allowing or rejecting the creditor's claim within
fourteen days after receiving the claim, the creditor or the bankrupt may apply to the Court for an
order under subsection (3).

reditor's claim within
fourteen days after receiving the claim, the creditor or the bankrupt may apply to the Court for an
order under subsection (3).

(3) On the hearing of an application made under subsection (2), the Court shall—
(a) if it finds the claim to be substantiated or partly substantiated, make an order allowing the
claim or partly allowing the claim; or
(b) if it finds that the claim is wholly or partly unsubstantiated, make an order rejecting or partly
it,
and in either case may make such other order of an ancillary nature as it considers appropriate. 222. Court may cancel creditor's claim
(1) The Official Receiver, the bankrupt or a creditor may make an application to the Court for an order
under subsection (2) on the ground that the bankruptcy trustee improperly allowed a creditor's
claim. (2) On the hearing of an application made under subsection (1), the Court may make an order
cancelling the creditor's claim or reducing the amount claimed, if it considers that the claim was
improperly allowed or was improperly allowed in part. 223. Power of court to quash or vary bankruptcy trustee's decision rejecting creditor's claim
(1) A creditor whose claim has been rejected by the bankruptcy trustee may apply to the Court to make
an order under subsection (3). 71

editor's claim
(1) A creditor whose claim has been rejected by the bankruptcy trustee may apply to the Court to make
an order under subsection (3). 71

Insolvency Act (Cap. 53) Kenya
(2) An application can be made only within twenty-one days after the creditor receives the bankruptcy
trustee's notice of rejection of the claim, or within such extended period as the Court may allow. (3) On the hearing of an application made under subsection (1), the Court shall—
(a) if it considers that the bankruptcy trustee's decision was wholly justified, confirm the
decision; or
(b) if it considers that the decision was only partly justified, confirm the decision as to that
part and quash the rest of the decision, but if it considers that the decision was wholly
unjustified, it shall quash the decision. (4) A creditor has no right to prove for a debt that has been rejected by the bankruptcy trustee, unless
the creditor has made an application under this section. 224. Parties to proceedings relating to creditor's claim
(1) This section applies to an application made under section 221, 222 or 223. (2) If the applicant is not the bankruptcy trustee, the applicant shall serve a copy of the application on
the bankruptcy trustee as a party to the proceeding.

e applicant is not the bankruptcy trustee, the applicant shall serve a copy of the application on
the bankruptcy trustee as a party to the proceeding.

(3) If the applicant is not the bankrupt or a creditor who is affected by the decision of the bankruptcy
trustee, the applicant shall serve a copy of the application on the bankrupt or that creditor. (4) On being served with a copy of the application, the bankrupt or creditor may give notice to the
Court that the bankrupt or creditor wishes to appear and be heard at the hearing and, on doing so,
becomes a party to the proceeding. 225. Court may make order as to costs
On the hearing of an application made under section 221, 222 or 223, the Court may, if it considers it
appropriate to do so, make an order—
(a) directing specified costs of a creditor to be added to the creditor's claim;
(b) directing specified costs of a party to the proceeding to be paid out of the bankrupt's estate; or
(c) directing specified costs to be paid by a specified party to the proceedings (other than the
bankruptcy trustee). 226. Secured creditor’s options in relation to property that is subject to a charge
(1) If the property of a bankrupt is subject to a charge, the creditor who holds the charge may choose
an option specified in subsection (2).

a charge
(1) If the property of a bankrupt is subject to a charge, the creditor who holds the charge may choose
an option specified in subsection (2).

(2) The options are as follows—
(a) Option 1: to realise the property by having it sold (but only if the creditor is entitled to do so
under the terms of the charge); or
(b) Option 2: to have the property valued and prove in the bankruptcy as an unsecured creditor
for the balance due (if any) after deducting the amount of the valuation;
(c) Option 3: to surrender the charge to the bankruptcy trustee for the general benefit of the
creditors and prove in the bankruptcy as an unsecured creditor for the whole debt. (3) The bankruptcy trustee may, at any time by notice, require a creditor who holds a charge over a
bankrupt's property—
(a) within thirty days after receipt of the notice, to choose one of the options specified in
subsection (2); and
72

harge over a
bankrupt's property—
(a) within thirty days after receipt of the notice, to choose one of the options specified in
subsection (2); and
72

Insolvency Act (Cap. 53) Kenya
(b) if the creditor chooses option 2 or option 3, to exercise the chosen option within that period. (4) A creditor who, having been served with a notice under subsection (1), fails to comply with the
notice is taken to have surrendered the charge to the bankruptcy trustee under option 3 for the
general benefit of the creditors, in which case the creditor may prove as an unsecured creditor for
the whole debt. (5) This section is subject to section 227. 227. Power of Court to order disposal of property that is subject to a charge
(1) If property of a bankrupt is subject to a security, the bankruptcy trustee may make an application to
the Court for an order under subsection (2). (2) On the hearing of an application made under subsection (1), the Court may make an order enabling
the bankruptcy trustee to dispose of the property as if it were not subject to the security, but only if
it is satisfied that the disposal of the property would be likely to provide a better overall outcome for
the creditors of the bankrupt.

, but only if
it is satisfied that the disposal of the property would be likely to provide a better overall outcome for
the creditors of the bankrupt.

(3) An order under subsection (2) is subject to the condition that the bankruptcy trustee apply towards
discharging the amounts secured by the security—
(a) the net proceeds of disposal of the property, and
(b) any additional money required to be added to the net proceeds so as to produce the amount
determined by the Court as the net amount that would be realised on a sale of the propefiy at
market value. (4) If an order under subsection (2) relates to more than one security, the bankruptcy trustee shall
apply the money from the disposal in the order of the priorities of the securities. (5) Within fourteen days after an order is made under subsection (2), the bankruptcy trustee shall lodge
a copy of the order with the Official Receiver for recording in the public register kept under Division
2 of Part XII. (6) A bankruptcy trustee who, without reasonable excuse, fails to comply with subsection (5) commits
an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings. 228.

cuse, fails to comply with subsection (5) commits
an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings. 228.

Realisation of property that is subject to a security
(1) A creditor who realises property that is subject to a charge may prove as an unsecured creditor for
any balance due after deducting the net amount realised. (2) However, subsection (1) does not apply if the bankruptcy trustee has accepted a valuation and
creditor's claim under section 231. (3) A secured creditor who realises property subject to a charge shall account to the bankruptcy trustee
for any surplus remaining after the following amounts have been paid—
(a) the amount of the debt;
(b) interest payable on the debt up to the time when it is paid;
(c) any proper payments to the holder of any other charge over the property. 229. Valuation of charge held by creditor and claim for balance due
(1) This section applies if a creditor who holds a charge or security right over a bankrupt's property has
the property valued and seeks to prove as an unsecured creditor for the balance due after deducting
the amount of the valuation. 73

upt's property has
the property valued and seeks to prove as an unsecured creditor for the balance due after deducting
the amount of the valuation. 73

Insolvency Act (Cap. 53) Kenya
(2) The creditor shall ensure that the valuation and the claim for the balance—
(a) is made in the prescribed creditor's claim form;
(b) contains full particulars of the valuation and the debt;
(c) contains full particulars of the charge (including the date when it was given) or a copy of the
registration with respect to a security right; and
(d) identifies the documents (if any) that substantiate the debt and the charge or security right. (3) If required to do so by the bankruptcy trustee, the creditor shall produce for inspection the
documents so identified. (4) Failure to comply with subsection (2), or with a requirement of the bankruptcy trustee under
subsection (3), renders the creditor's claim invalid. [Act No. 13 of 2017, Sch.]
230.

ction (2), or with a requirement of the bankruptcy trustee under
subsection (3), renders the creditor's claim invalid. [Act No. 13 of 2017, Sch.]
230.

Offence for secured creditor to make false claim
(1) A person who—
(a) makes, or authorises the making of, a claim under section 229 (1) knowing it to be false or
misleading; or
(b) omits, or authorises the omission of, any matter from a claim under section 229 (1) knowing
that the omission will make the claim false or misleading, commits an offence
(2) A person who is found guilty of an offence under subsection (1) is liable on conviction to a fine not
exceeding two million shillings or to imprisonment for a term not exceeding five years, or to both. 231. Bankruptcy trustee's powers when secured creditor values property subject to charge
and proves for balance
(1) If a creditor who holds a charge or security right over property of a bankrupt values the property
and seeks to prove for the balance due, the bankruptcy trustee shall—
(a) accept the valuation and the creditor's claim; or
(b) reject the valuation and creditor's claim in whole or in part. (2) Within fourteen days after receiving a notice of rejection of the creditor's valuation and claim, the
creditor may submit to the bankruptcy trustee a revised valuation and creditor's claim.

notice of rejection of the creditor's valuation and claim, the
creditor may submit to the bankruptcy trustee a revised valuation and creditor's claim.

(3) If the bankruptcy trustee subsequently finds that a decision rejecting a valuation and creditor's
claim was wrong, the bankruptcy trustee may revoke or amend the decision. (4) It the bankruptcy trustee accepts the valuation and creditor's claim, the bankruptcy trustee may,
at any time before the creditor realises the property, redeem the charge or collateral subject to a
security right by paying the amount of the valuation to the creditor. (5) For the purpose of subsection (4), the bankruptcy trustee accepts the valuation and creditor's claim
if the bankruptcy trustee—
(a) accepts the original or an amended valuation and creditor's claim; or
(b) accepts a valuation and creditor's claim after amending or revoking a decision to reject a
valuation and creditor's claim. [Act No. 13 of 2017, Sch.]
74

cepts a valuation and creditor's claim after amending or revoking a decision to reject a
valuation and creditor's claim. [Act No. 13 of 2017, Sch.]
74

Insolvency Act (Cap. 53) Kenya
232. Secured creditor who surrenders charge may with approval of the Court withdraw
claim or submit a new claim
(1) This section applies to a creditor who has surrendered a charge under option 3 in section 226(2) or
is taken to have surrendered the charge under section 226(4). (2) The creditor may, with the approval of the Court or the bankruptcy trustee and subject to the terms
that the Court or that trustee imposes—
(a) withdraw the surrender and rely on the charge; or
(b) submit a new creditor's claim under this Division. (3) Subsection (2) does not apply if the bankruptcy trustee has already realised the property that is
subject to the charge. 233. Bankruptcy trustee may estimate amount of uncertain creditor's claim
If a creditor's claim is subject to a contingency or is for damages, or if, for some other reason, the amount
of the claim is uncertain, the bankruptcy trustee may estimate the amount of the claim. 234.

is for damages, or if, for some other reason, the amount
of the claim is uncertain, the bankruptcy trustee may estimate the amount of the claim. 234.

Application to the Court to determine amount of uncertain creditor's claim
(1) If the bankruptcy trustee—
(a) chooses not to estimate the amount of a creditor's claim in accordance with section 233; or
(b) has estimated the amount of the claim but the creditor is dissatisfied with the estimate,
the creditor may apply to the Court to make an order under subsection (2). (2) On the hearing of an application made under subsection (1), the Court shall make an order
determining the amount of the creditor's claim. (3) The bankruptcy trustee is entitled to be served with a copy of the application and, at the hearing of
the application, to appear and be heard as respondent. 235. Creditor's claim payable six months or more after commencement of bankruptcy
(1) A creditor's claim that would, but for the bankruptcy, be payable six months or more after the
commencement of the bankruptcy is taken to be a claim for the present value of the debt. (2) The present value of the debt is to be calculated by deducting interest at the rate prescribed by the
insolvency regulations for the period from the date on which the bankruptcy commenced to the
date when the debt would be payable. 236.

escribed by the
insolvency regulations for the period from the date on which the bankruptcy commenced to the
date when the debt would be payable. 236.

Bankruptcy trustee's duty when mutual dealings have occurred between the bankrupt
and other persons
(1) If there have been mutual credits, mutual debts or other mutual dealings between a bankrupt and
another person, the bankruptcy trustee shall—
(a) take an account of what is due from the one party to the other in respect of those credits,
debts or dealings;
(b) set-off an amount due from one party to the other against an amount due from the other
party; and
(c) allow only the balance of the account to be proved in the bankruptcy. 75

om one party to the other against an amount due from the other
party; and
(c) allow only the balance of the account to be proved in the bankruptcy. 75

Insolvency Act (Cap. 53) Kenya
(2) However, a person may not claim the benefit of a set-off against an amount due from the bankrupt
if, at the time when the credit was given to the bankrupt, the person knew or had reason to know
that the bankrupt was insolvent. (3) A creditor of the bankrupt who claims a set-off shall declare in the creditor's claim form that, at the
time when the creditor gave the bankrupt credit, the creditor did not know and had no reason to
know that the bankrupt was insolvent. (4) The bankruptcy trustee shall reject a claim form that does not comply with subsection (3). 237. Creditor may claim pre-bankruptcy interest
A creditor may claim interest up to the date on which the bankruptcy commences—
(a) in the case of contract debt interest, at the rate specified in the contract that provides for interest
on the debt; or
(b) in the case of judgment debt interest, at the rate payable on the debt. 238. Post-bankruptcy interest payable at prescribed rate if surplus remains
(1) The bankruptcy trustee shall pay interest on all allowed creditors' claims at the prescribed rate if
surplus assets remain after the bankruptcy trustee has paid the claims.

shall pay interest on all allowed creditors' claims at the prescribed rate if
surplus assets remain after the bankruptcy trustee has paid the claims.

(2) The bankruptcy trustee shall pay the interest from and including the date on which the bankruptcy
commences to the date on which the debt is paid. (3) If the surplus is not enough to pay the interest in full on all debts, payment of the interest is to
abate rateably among those debts. Example:
A and B are the only creditors of the bankrupt, C. A's contract with C provided for interest of 20
percent but B's contract did not provide for interest. C's bankruptcy commenced on 1 July 2015. At that date— (1) C owed K.Sh.100,000 plus $10,000 contractual debt interest; and (2) C owed B
K.Sh.$200,000 but no interest. A can prove in the bankruptcy for $110,000 and B for KS200,000. The
bankruptcy trustee pays their claims in full on 1 July 2014, twelve months after the commencement
of the bankruptcy. If there are surplus assets after the bankruptcy trustee has paid the claims of
A and B in full, the bankruptcy trustee has to use the surplus to pay interest on both debts for the
period from 1 July 2015 to 1 July 2014. If there is enough, and assuming that the prescribed rate is
10 percent, the bankruptcy trustee has to pay A K.Sh11,000 and B KS20,000 in post-the bankruptcy
interest.

h, and assuming that the prescribed rate is
10 percent, the bankruptcy trustee has to pay A K.Sh11,000 and B KS20,000 in post-the bankruptcy
interest.

Assume that the bankruptcy trustee has a surplus of only K.Sh15,500. In that case A and B
share pro rata, so that A is paid K.Sh5,500 in post-the bankruptcy interest, and B is paid $10,000. 239. Additional post-bankruptcy interest on contract or judgment debt if surplus remains
(1) If there is a surplus after the bankruptcy trustee has paid post-bankruptcy interest as provided by
section 238, the bankruptcy trustee shall pay additional interest on allowed proofs for a contract
debt or judgment debt, by making up—
(a) in the case of a contract debt, the difference between the prescribed rate and the rate
specified in the contract; and
(b) in the case of a judgment debt, the difference between the prescribed rate and the rate
payable on the debt. (2) The bankruptcy trustee shall pay the additional interest from and including the date on which the
bankruptcy commenced to the date on which the creditor's claim is paid. (3) If the surplus is not enough to pay the additional interest in full on the creditors' claims that are
eligible for that interest, payment of the interest is to abate rateably among those claims. 76

nal interest in full on the creditors' claims that are
eligible for that interest, payment of the interest is to abate rateably among those claims. 76

Insolvency Act (Cap. 53) Kenya
240. Meaning of prescribed rate for purposes of sections 238 and 239
For the purposes of sections 238 and 239, the prescribed rate of interest is the rate for the time being
prescribed by the insolvency regulations for the purposes of those sections. 241. Creditor required to deduct trade discounts
A creditor shall deduct from the creditor's claim any trade discount that the creditor would have given a
debtor if the debtor had not become bankrupt. 242. Secured creditor can prove as unsecured creditor if security is void or partly void
If a creditor's security over assets of the bankrupt is wholly or partly void under a provision of this or any
other Act, the creditor may prove as an unsecured creditor—
(a) if the security is wholly void, for the whole of the debt; or
(b) if the security is partly void, to the extent that the debt is unsecured. 243. Judgment creditor may prove for costs
A person who obtained an order for costs against the bankrupt before the commencement of the
bankruptcy may prove for the amount of those costs even if that amount is not fixed until after that
commencement. 244.

before the commencement of the
bankruptcy may prove for the amount of those costs even if that amount is not fixed until after that
commencement. 244.

Company may prove for unpaid calls
(1) If a bankrupt is, at the commencement of the bankruptcy, a shareholder of a company (not being a
company that is in liquidation), the company may prove for—
(a) the amount of unpaid calls on the bankrupt made before that commencement in respect of
the bankrupt's shares; and
(b) the value of the liability to calls to be made during the twelve-month period after that
commencement. (2) The value referred to in subsection (1)(b) is to be estimated—
(a) as agreed by the bankruptcy trustee and the company; or
(b) if the bankruptcy trustee and the company cannot agree, as directed by the Court. 245. When guarantor for bankrupt may prove claim
(1) If, in relation to a bankruptcy—
(a) a person is, at the commencement of the bankruptcy, a guarantor of, or is otherwise liable for
a debt of, the bankrupt; and
(b) the person discharges the debt or liability (before or after that commencement),
the person is entitled to the benefit to subsection (3) or (4), whichever is applicable to the person. (3) If the creditor of the bankrupt has submitted a creditor's claim for the debt or liability, the person
may stand in the creditor's place in respect of the claim.

itor of the bankrupt has submitted a creditor's claim for the debt or liability, the person
may stand in the creditor's place in respect of the claim.

(4) If the creditor has not submitted a creditor's claim form for the debt or liability—
(a) the person may prove for the payment that the person has made as if the payment were a
debt, without disturbing dividends already paid to the creditor in the bankruptcy; and
77

he payment that the person has made as if the payment were a
debt, without disturbing dividends already paid to the creditor in the bankruptcy; and
77

Insolvency Act (Cap. 53) Kenya
(b) if the person does so, the person is entitled to receive dividends paid subsequently. Division 21 — Distribution of Bankrupt's Estate
246. Interpretation: Division 21
In this Division, "preferential claim" means a claim in respect of a debt listed in paragraphs 2, 3 or 4 of the
Second Schedule. 247. Preferential debts: priority of debts
(1) For the purpose of this Act, a bankrupt's preferential debts are those specified in paragraphs 2 to 4
of the Second Schedule and are payable as provided by that Schedule in priority to the bankrupt's
other debts. (2) Debts of the bankrupt that are neither preferential debts nor debts to which section 248 applies
also rank equally between themselves and, after the preferential debts, are payable in full unless
the bankrupt's estate is insufficient to satisfy them, in which case they abate in equal proportions
among themselves. (3) Any surplus remaining after the payment of the debts referred to in subsection (2) is to be applied
in paying interest on those debts in respect of the periods during which they have been outstanding
since the commencement of the bankruptcy.

applied
in paying interest on those debts in respect of the periods during which they have been outstanding
since the commencement of the bankruptcy.

(4) Interest on preferential debts ranks equally with interest on debts that are not preferential debts. (5) The rate of interest payable under subsection (4) in respect of a debt is the rate for the time being
prescribed by the insolvency regulations for the purposes of this section. (6) Neither this section nor section 248 limits the effect of a provision of any written law under which
the payment of any debt or the making of any other payment is, in the event of bankruptcy, given a
particular priority or required to be postponed. (7) If, before the commencement of the bankruptcy, a creditor agrees to accept a lower priority in
respect of a debt than it would otherwise have under this section, nothing in this section or the
Second Schedule prevents the agreement from having effect according to its terms. 248. Priority ranking of debts owed to bankrupt's spouse
(1) This section applies to bankruptcy debts owed in respect of credit provided by a person who was the
bankrupt's spouse at the commencement of the bankruptcy and so applies even if the person was
not the bankrupt's spouse at the time the credit was provided.

pt's spouse at the commencement of the bankruptcy and so applies even if the person was
not the bankrupt's spouse at the time the credit was provided.

(2) Those debts—
(a) rank in priority after the debts and interest required to be paid in accordance with section
247(3) and (4); and
(b) are payable with interest at the rate specified in section 247(5) in respect of the period during
which they have been outstanding since the commencement of the bankruptcy. (3) The interest payable under subsection (2)(b) has the same priority as the debts on which it is
payable. 249. Person who makes payment on account of preferential creditor to be subrogated to the
rights of that creditor
If a payment has been made to a person on account of a preferential creditor out of money advanced by
another person for that purpose, the other person has, in the bankruptcy, the same right of priority in
78

ferential creditor out of money advanced by
another person for that purpose, the other person has, in the bankruptcy, the same right of priority in
78

Insolvency Act (Cap. 53) Kenya
respect of the money so advanced as the preferential creditor would have if the payment had not been
made. 250. Priority given to landlord or other person who distrains on goods and effects of
bankrupt
(1) If a landlord or other person has distrained on goods or effects of the bankrupt during the thirty day
period before the bankruptcy commenced, the preferential claims are a first charge on the goods or
effects so distrained, or the proceeds from their sale. (2) However, if any money is paid to a claimant under that charge, the landlord or other person has the
same rights of priority as that claimant. 251. Creditors to have priority over creditors of joint bankrupt
If a bankrupt is a partner of a firm, any creditor to whom the bankrupt is indebted jointly with the other
partners of the firm is not entitled to receive money obtained from the realisation of the bankrupt's
separate property until the claims of all of the other creditors have been paid in full. 252.

ve money obtained from the realisation of the bankrupt's
separate property until the claims of all of the other creditors have been paid in full. 252.

Final distribution of bankrupt's estate
(1) On realising the bankrupt's estate or so much of it as can be realised without needlessly protracting
the bankruptcy trusteeship, the bankruptcy trustee shall give notice either—
(a) of an intention to declare a final dividend; or
(b) that no dividend, or further dividend, will be declared. (2) The bankruptcy trustee shall include in the notice the prescribed information and a statement that
requires all claims against the bankrupt's estate to be established by a final date specified in the
notice. (3) The Court may, on the application of any person, the Court may make an order postponing the final
date. (4) After the final date, the bankruptcy trustee shall—
(a) pay any outstanding expenses of the bankruptcy out of the bankrupt's estate; and
(b) if the bankruptcy intends to declare a final dividend, declare and distribute that dividend
without regard to the claim of any person in respect of a debt not already proved in the
bankruptcy. (5) After paying the interest referred to in section 238 and paying in full the claims referred to in
section 237, the bankruptcy trustee shall pay any surplus to the bankrupt.

est referred to in section 238 and paying in full the claims referred to in
section 237, the bankruptcy trustee shall pay any surplus to the bankrupt.

(6) Subsection (5) is subject to section 214. 253. Final meeting of creditors
(1) Subject to this section, if—
(a) it appears to the bankruptcy trustee that the administration of the bankrupt's estate in
accordance with this Division is for practical purposes complete; and
(b) the bankruptcy trustee is not the Official Receiver, the bankruptcy trustee shall summon a
final general meeting of the bankrupt's creditors. (2) The final general meeting of the bankrupt's creditors shall—
(a) receive and consider the bankruptcy trustee's report of the administration of the bankrupt's
estate; and
79

ing of the bankrupt's creditors shall—
(a) receive and consider the bankruptcy trustee's report of the administration of the bankrupt's
estate; and
79

Insolvency Act (Cap. 53) Kenya
(b) determine whether the bankruptcy trustee should be released under section 77. (3) The bankruptcy trustee may give the notice summoning the final general meeting at the same time
as giving notice under section 252(1). (4) If the final general meeting is summoned for an earlier date, the bankruptcy trustee shall adjourn
the meeting (and, if necessary, further adjourn the meeting) until a date on which the bankruptcy
trustee is able to report to the meeting that the administration of the bankrupt's estate is for
practical purposes complete. (5) In the administration of the estate it is the bankruptcy trustee's duty to retain sufficient sums from
the estate to cover the expenses of summoning and holding the final general meeting.

t is the bankruptcy trustee's duty to retain sufficient sums from
the estate to cover the expenses of summoning and holding the final general meeting.

(6) If—
(a) the bankrupt's estate property consists of or includes an interest in a dwelling house that is
occupied by the bankrupt or the bankrupt's spouse or former spouse; and
(b) the bankruptcy trustee has for any reason been unable to realise that property,
the bankruptcy trustee may not summon a final general meeting unless one of the following
has been satisfied:
(c) the Court has made an order under section 143 imposing a charge on that property for the
benefit of the bankrupt's estate;
(d) the Court has declined, on an application under that section, to make such an order;
(e) the Attorney-General has issued a certificate to the bankruptcy trustee stating that it would
be inappropriate for such an application to be made. Division 22 — Discharge of Bankrupt from Bankruptcy
254. Automatic discharge three years after bankrupt lodges statement of financial position
(1) A bankrupt is automatically discharged from bankruptcy three years after the bankrupt lodged a
statement of the bankrupt's financial position in accordance with section 50, but may apply to be
discharged earlier.

ears after the bankrupt lodged a
statement of the bankrupt's financial position in accordance with section 50, but may apply to be
discharged earlier.

(2) However, a bankrupt is not automatically discharged if—
(a) the bankruptcy trustee or a creditor has objected under section 256 and the objection has not
been withdrawn by the end of the three-year period referred to in subsection (1);
(b) the bankrupt has to be publicly examined in accordance with section 180 and has not
completed that examination; or
(c) the bankrupt is undischarged from an earlier bankruptcy. 255. Effect of automatic discharge
The automatic discharge of the bankrupt has the same effect as if the Court made an order for the
bankrupt's discharge. 256. Right of creditor to object to automatic discharge
(1) The bankruptcy trustee, the Official Receiver (if not the bankruptcy trustee) or, with the approval of
the Court, a creditor may object to a bankrupt's automatic discharge. (2) An objection has no effect unless it is made in the manner and form prescribed by the insolvency
regulations. 80

a bankrupt's automatic discharge. (2) An objection has no effect unless it is made in the manner and form prescribed by the insolvency
regulations. 80

Insolvency Act (Cap. 53) Kenya
257. Objection can be withdrawn
(1) An objection to the automatic discharge of the bankrupt may be withdrawn in the manner
prescribed by the insolvency regulations. (2) A bankrupt is automatically discharged on the withdrawal of the objection if—
(a) the three-year period referred to in section 254(1) has elapsed;
(b) there is no other objection to the discharge that has not been withdrawn; and
(c) neither section 254(2)(b) nor (c) applies. 258. Bankrupt may apply for early discharge
(1) A bankrupt may at any time apply to the Court for an order of discharge from bankruptcy. (2) However, if the Court has previously refused an application by the bankrupt for a discharge, and has
specified the earliest date when the bankrupt may again apply, the bankrupt may not make another
application before that date. (3) The Court shall hear an application made under subsection (1) in the manner prescribed by section
180. 259.

another
application before that date. (3) The Court shall hear an application made under subsection (1) in the manner prescribed by section
180. 259.

When bankrupt is to be publicly examined before the Court concerning discharge
(1) The bankruptcy trustee shall summon the bankrupt to be publicly examined before the Court
concerning the bankrupt's discharge if—
(a) the bankruptcy trustee or a creditor has objected to the bankrupt's automatic discharge and
the objection has not been withdrawn;
(b) the bankrupt is due for automatic discharge but is still undischarged from an earlier
bankruptcy;
(c) the bankrupt has been required to be publicly examined in accordance with section 180 and
has not completed that examination. (2) The bankruptcy trustee shall summon the bankrupt as soon as practicable after the end of the
three-year period referred to in section 254(1). (3) The provisions of Division 17, so far as relevant, apply with any necessary modifications to a public
examination under this section. 260. Bankruptcy trustee to lodge report with the Court in specified circumstances
(1) The bankruptcy trustee shall prepare a report and lodge it with the Court when—
(a) the bankrupt has applied under section 258 for a discharge; or
(b) the bankruptcy trustee has summoned the bankrupt to be examined in accordance with
section 259.

has applied under section 258 for a discharge; or
(b) the bankruptcy trustee has summoned the bankrupt to be examined in accordance with
section 259.

(2) The bankruptcy trustee shall include in the report a comprehensive review of—
(a) the bankrupt's affairs;
(b) the causes of the bankruptcy;
(c) the bankrupt's performance of the bankrupt's responsibilities under this Act;
(d) the manner in which, and the extent to which, the bankrupt has complied with orders of the
Court;
81

e bankrupt's responsibilities under this Act;
(d) the manner in which, and the extent to which, the bankrupt has complied with orders of the
Court;
81

Insolvency Act (Cap. 53) Kenya
(e) the bankrupt's conduct before and after the commencement of the bankruptcy; and
(f) any other matter that is likely to assist the Court in making a decision as to whether or not to
discharge the bankrupt. 261. When creditor required to give notice of opposition to discharge
(1) A creditor shall give to the bankruptcy trustee and the bankrupt a notice that complies with
subsection (2) if the creditor intends to oppose the bankrupt's discharge on a ground that is not
mentioned in the bankruptcy trustee's report. (2) A notice complies with this subsection if it—
(a) specifies the ground or grounds for opposing the discharge; and
(b) is given within the period prescribed by the insolvency regulations for the purposes of this
section. 262.

grounds for opposing the discharge; and
(b) is given within the period prescribed by the insolvency regulations for the purposes of this
section. 262.

Power of the Court to grant or refuse discharge
(1) On hearing an application made under section 258, or the holding of a public examination of the
bankrupt under section 259, the Court may—
(a) immediately discharge the bankrupt;
(b) discharge the bankrupt on conditions;
(c) discharge the bankrupt but suspend the order for a specified period; or
(d) discharge the bankrupt, with or without conditions, at a specified future date,
or may refuse to make an order of discharge, in which case the Court may specify the earliest date
when the bankrupt may reapply for discharge. (2) The conditions referred to in subsection (1)(b) may include a condition that the bankrupt consents
to a judgment or order for the payment of any sum of money. (3) If the Court discharges the bankrupt on the condition that the bankrupt consents to any judgment,
and the bankrupt does consent, the Court may vary the judgment to such extent as it considers
appropriate. 263.

the bankrupt consents to any judgment,
and the bankrupt does consent, the Court may vary the judgment to such extent as it considers
appropriate. 263.

Court may restrict bankrupt from engaging in business after discharge
(1) On making an order of discharge or at any earlier time, the Court may prohibit the bankrupt from
doing after discharge all or any of the following without the Court's approval—
(a) entering into, carrying on, or taking part in the management or control of any business or
class of business;
(b) being a director of a company or a partner of a firm or limited liability partnership;
(c) directly or indirectly being concerned, or taking part, in the management of any company or
limited liability partnership;
(d) being employed by a relative of the bankrupt;
(e) being employed by a company, trust or other body that is managed or controlled by a relative
of the bankrupt. (2) The Court may impose such a prohibition for a specified period, or without specifying a time limit. (3) The Court may at any time vary or cancel a prohibition imposed under this section. 82

for a specified period, or without specifying a time limit. (3) The Court may at any time vary or cancel a prohibition imposed under this section. 82

Insolvency Act (Cap. 53) Kenya
264. Court may quash order discharging bankrupt
(1) The bankruptcy trustee or a creditor of the bankrupt may make an application to the Court for an
order under subsection (2). (2) On the hearing of an application made under subsection (1), the Court may make an order quashing
the discharge of a bankrupt at any time before—
(a) in the case of an absolute discharge, two years after the discharge; or
(b) in the case of a discharge that is conditional or suspended, two years after the discharge has
taken effect. (3) The Court may make an order quashing a discharge only if it is satisfied that facts have been
established that—
(a) were not known to it when it made the order of discharge; and
(b) had it known of them, would have justified it in refusing a discharge or in imposing
conditions in respect of the discharge. (4) The Court may not make an order quashing a discharge if the facts relied on by the applicant, at the
time when it made an order discharging the bankrupt—
(a) were known to the applicant; or
(b) could have been known if the applicant had inquired with reasonable diligence.

order discharging the bankrupt—
(a) were known to the applicant; or
(b) could have been known if the applicant had inquired with reasonable diligence.

(5) If the Court makes an order quashing a discharge, it may then, or at any time afterwards, make a
new order of discharge. (6) Such an order may be absolute, be suspended for a specified period or be made subject to
conditions. (7) The Court may not hear an application made under subsection (1) unless it is satisfied that
the bankrupt has been given notice of the application (including the grounds relied on by the
applicant). 265. Effect of quashing order discharging bankrupt from bankruptcy
(1) The quashing of a discharge does not affect the rights or remedies that a person other than the
bankrupt would have had if the discharge had not been quashed. (2) It property acquired by the bankrupt after discharge is owned by the bankrupt at the date when the
order quashing the discharge is made, the property vests in the bankruptcy trustee subject to any
securities or other encumbrances. (3) The bankruptcy trustee shall apply any such property in paying the debts that the bankrupt has
incurred since the date of discharge. 266.

brances. (3) The bankruptcy trustee shall apply any such property in paying the debts that the bankrupt has
incurred since the date of discharge. 266.

Bankrupt may apply for absolute discharge on ground that conditions of discharge are
too onerous
(1) A bankrupt may apply to the Court for an absolute discharge even though the bankrupt is not able
to comply with any or all of the conditions of the bankrupt's discharge. (2) The Court may discharge the bankrupt absolutely if satisfied that the bankrupt's inability to comply
with the conditions is due to circumstances for which the bankrupt should not reasonably be held
responsible. 83

at the bankrupt's inability to comply
with the conditions is due to circumstances for which the bankrupt should not reasonably be held
responsible. 83

Insolvency Act (Cap. 53) Kenya
267. Debts from which bankrupt is released on discharge
(1) On being discharged, a bankrupt is released from all debts provable in the bankruptcy except those
listed in subsection (2). (2) The debts from which the bankrupt is not released are the following—
(a) any debt or liability incurred by fraud or fraudulent breach of trust to which the bankrupt
was a party;
(b) any debt or liability for which the bankrupt has obtained forbearance through fraud to which
the bankrupt was a party;
(c) any judgment debt or amount payable under any order for which the bankrupt is liable under
section 150 or 262;
(d) amounts payable under a Court order made under the Marriage Act (Cap. 150);
(e) amounts payable under the Children Act (Cap. 141). 268. Discharge to be conclusive evidence of bankruptcy and the validity of bankruptcy
proceedings
A discharge of a bankrupt from bankruptcy is conclusive evidence of the bankruptcy and of the validity of
the proceedings in course of the bankruptcy. 269.

charge of a bankrupt from bankruptcy is conclusive evidence of the bankruptcy and of the validity of
the proceedings in course of the bankruptcy. 269.

Discharge not to release partners of bankrupt and others
The discharge of a bankrupt does not release a person who, at the commencement of the bankruptcy, was
—
(a) a business partner of the bankrupt;
(b) a co-trustee with the bankrupt;
(c) jointly bound or had made any contract with the bankrupt; or
(d) a guarantor or in the nature of a guarantor of the bankrupt. 270. Discharged bankrupt to assist bankruptcy trustee
(1) A person who is discharged from bankruptcy shall assist the bankruptcy trustee, as required by the
Court or the bankruptcy trustee, in the realisation and distribution of the property of the person
that is vested in that trustee. (2) lf a person who has been discharged from bankruptcy fails to comply with subsection (1), the Court
may, on the application of the bankruptcy trustee, order the person to provide the bankruptcy
trustee with such assistance as is specified in the order. 271. Official Receiver to record in public register decision of the Court refusing to discharge
bankrupt, etc.

ssistance as is specified in the order. 271. Official Receiver to record in public register decision of the Court refusing to discharge
bankrupt, etc.

lf the Court refuses to discharge a bankrupt or makes an order discharging the bankrupt but suspends
the discharge, the Official Receiver shall record that information in the relevant public register kept the
Official Receiver under Division 2 of Part XII. Division 23 — Annulment of Bankruptcy Orders
84

t information in the relevant public register kept the
Official Receiver under Division 2 of Part XII. Division 23 — Annulment of Bankruptcy Orders
84

Insolvency Act (Cap. 53) Kenya
272. Court may annul bankruptcy order in certain circumstance
(1) The Official Receiver or any other person claiming to have a legitimate interest in the matter may
make an application to the Court for an order under subsection (2). (2) On the hearing of an application made under subsection (1), the Court may annul a bankruptcy
order made in respect of a bankrupt if—
(a) on reconsideration it finds that the bankrupt should not have been adjudged bankrupt;
(b) it is satisfied that the bankrupt's debts have been fully paid or satisfied and that the
bankruptcy trustee's fees and costs incurred in the bankruptcy have been paid;
(c) it considers that the liability of the bankrupt to pay the bankrupt's debts should be revived
because there has been a substantial change in the bankrupt's financial circumstances since
the bankruptcy commenced; or
(d) it has approved a deed of composition under Division 24 of Part III or a voluntary
arrangement under Division 1 of Part IV.

nkruptcy commenced; or
(d) it has approved a deed of composition under Division 24 of Part III or a voluntary
arrangement under Division 1 of Part IV.

(3) If an application is made by an applicant other than the Official Receiver on one of the grounds
specified in subsection (2)(a) to (c)—
(a) the applicant shall serve a copy of the application on the Official Receiver in the manner and
within the period directed by the Court; and
(b) on being served with a copy of the application, the Official Receiver is entitled to appear at
the hearing of the application as a party to the proceeding. (4) A bankruptcy order is annulled—
(a) in the case of an application made on the ground specified in subsection (2)(a), from the time
when it was made; or
(b) in the case of an application made on one of the grounds specified in subsection (2)(b) to (d),
from the time when the Court made the order of annulment. (5) If an application for annulment is made on the ground that the bankrupt should not have been
adjudged bankrupt because of a defect in form or procedure, the Court may, in addition to annulling
the bankruptcy order, exercise its powers under section 696 to correct the defect and order that the
bankruptcy application be reheard as if no bankruptcy order had been made.

rcise its powers under section 696 to correct the defect and order that the
bankruptcy application be reheard as if no bankruptcy order had been made.

(6) If a bankruptcy order is annulled on one of the grounds specified in subsection (2)(a) to (c)—
(a) the Court may, on the Official Receiver's application, fix an amount as reasonable
remuneration for the Official Receiver's services and order that it be paid, in addition to any
costs that may be awarded;
(b) the Official Receiver shall pay that amount into the Consolidated Fund or into some other
public account prescribed by the insolvency regulations for the purposes of this section; and
(c) the Official Receiver is not entitled to remuneration under section 710 for those services. 273. When Official Receiver may annul bankruptcy order
(1) The Official Receiver may annul a bankruptcy order on any of the grounds specified in subsection
(2), but only if the order was made on a debtor's application. (2) The grounds for annulment by the Official Receiver are as follows—
(a) that the Official Receiver considers that the bankrupt should not have been adjudged
bankrupt;
85

nulment by the Official Receiver are as follows—
(a) that the Official Receiver considers that the bankrupt should not have been adjudged
bankrupt;
85

Insolvency Act (Cap. 53) Kenya
(b) that the Official Receiver is satisfied that the bankrupt's debts have been fully paid or
satisfied and that the bankruptcy trustee's fees and costs incurred in the bankruptcy have
been paid;
(c) that the Official Receiver considers that the liability of the bankrupt to pay the bankrupt's
debts should be revived because there has been a substantial change in the bankrupt's
financial circumstances since the bankruptcy commenced;
(d) that the Court has approved a deed of composition under Division 24 of Part III or a
voluntary arrangement under Division 1 of Part IV. (3) The Official Receiver may annul the bankruptcy order on the application of any person interested or
on the Official Receiver's own initiative. (4) The annulment of bankruptcy order under subsection (3) takes effect—
(a) in the case of an application on the ground specified in subsection (2)(a), from the time when
the order was originally made; and
(b) in the case of an application on one of the grounds specified in subsection (2)(b) to (d), from
the time of the Official Receiver's order of annulment. 274.

case of an application on one of the grounds specified in subsection (2)(b) to (d), from
the time of the Official Receiver's order of annulment. 274.

Effect of annulment of bankruptcy order
(1) On annulment of a bankruptcy order, all property of the bankrupt vested in the Official Receiver on
bankruptcy and not sold or otherwise disposed of by the Official Receiver revests in the bankrupt
without the need for a transfer. (2) A contract, sale, disposition or payment duly made, or any action duly taken by the Official Receiver
before the annulment—
(a) is not affected as to its validity by the annulment; and
(b) has effect as if no bankruptcy order had been made in respect of the bankrupt. Division 24 — Composition during bankruptcy
275. Interpretation: Division 24
In this Division—
"confirming resolution" means a special resolution passed by a bankrupt's creditors in accordance with
section 276 confirming a preliminary resolution;
"preliminary resolution" means a special resolution passed by a bankrupt's creditors in accordance with
section 276. 276. Creditors may accept composition by passing preliminary resolution
(1) The creditors of a bankrupt may accept a composition in satisfaction of the debts due to them from
the bankrupt by passing a special resolution that contains the terms of the composition.

t a composition in satisfaction of the debts due to them from
the bankrupt by passing a special resolution that contains the terms of the composition.

(2) If there is more than one class of creditors, the delay of one class in accepting, or the failure of one
class to accept, does not prevent any other of the classes from accepting the composition. 277. Composition not effective unless approved by confirming resolution
(1) A composition is ineffective only when creditors have passed a special resolution confirming
preliminary resolution. 86

d by confirming resolution
(1) A composition is ineffective only when creditors have passed a special resolution confirming
preliminary resolution. 86

Insolvency Act (Cap. 53) Kenya
(2) In the confirming resolution, the creditors may vary the terms of the composition set out in the
preliminary resolution, if the terms as varied are at least as favourable to the creditors as those set
out in the preliminary resolution. (3) The notice of the meeting convened to pass the confirming resolution is ineffective unless it—
(a) states generally the terms of the proposal for composition; and
(b) is accompanied by a report by the Official Receiver on that proposal. (4) If the proposal for composition provides for the payment in full of all creditors whose respective
debts do not exceed a specified amount, that class of creditors is not to be counted either in number
or value for the purpose of counting the requisite majority of creditors for passing the confirming
resolution. 278. Compositions with members of partnership
(1) If members of a partnership have been adjudged bankrupt, the joint creditors and each class of
separate creditors can make separate compositions.

(1) If members of a partnership have been adjudged bankrupt, the joint creditors and each class of
separate creditors can make separate compositions.

(2) lf subsection (1) applies, the majorities of creditors required for passing the confirming resolution
are the separate majorities of each class, but with that exception the joint and separate creditors are
to be counted as one body for voting purposes. 279. Composition not binding unless approved by the Court
(1) A composition is not binding until it is approved by the Court. (2) When approved by the Court, a composition binds all the creditors in respect of provable debts due
to them by the bankrupt. (3) The Court may refuse to approve a composition if it finds that—
(a) section 276 or 277;
(b) the terms of the composition are not reasonable or are not calculated to benefit the general
body of creditors;
(c) the bankrupt is guilty of misconduct that justifies the Court in refusing, qualifying, or
suspending the bankrupt's discharge; or
(d) for any other reason it should not approve the composition. (4) The Court may not approve a composition if the composition does not provide for the payment,
before any other debts are paid, of those debts that have priority under the Second Schedule. (5) The Court's approval is conclusive as to the validity of the composition. 280.

paid, of those debts that have priority under the Second Schedule. (5) The Court's approval is conclusive as to the validity of the composition. 280.

Procedure for court approval of composition
(1) The bankrupt or the Official Receiver may apply to the Court to approve the composition. (2) The Court may hear the application only if satisfied that each creditor who has submitted a claim in
the bankruptcy has been given notice of it. (3) Before approving the composition, the Court shall—
(a) receive and consider a report by the Official Receiver regarding the terms of the composition
and the bankrupt's conduct; and
(b) hear any objection by or on behalf of a creditor. 87

the Official Receiver regarding the terms of the composition
and the bankrupt's conduct; and
(b) hear any objection by or on behalf of a creditor. 87

Insolvency Act (Cap. 53) Kenya
(4) When it approves the composition, the Court may correct any formal or accidental error or
omission, but may not alter the substance of the composition. 281. Deed of composition to be executed
(1) As soon as practicable after the Court has approved a composition—
(a) the bankrupt and the Official Receiver shall execute a deed of composition for putting the
proposal into effect; and
(b) the Official Receiver shall apply to the Court for confirmation of the deed. (2) If it is satisfied that the deed conforms with the composition that it has earlier approved, the Court
shall—
(a) direct that the deed be lodged in the Court; and
(b) on lodgement of the deed, quash the relevant bankruptcy order. (3) The deed may not be entered and lodged in the Court unless the prescribed commission has been
paid to the Official Receiver. (4) The quashing under subsection (2) does not revest the bankrupt's property in the bankrupt in
accordance with section 274(1). 282.

ficial Receiver. (4) The quashing under subsection (2) does not revest the bankrupt's property in the bankrupt in
accordance with section 274(1). 282.

Effect of deed of composition
When the Court has confirmed the deed and quashed the bankruptcy order—
(a) the deed binds all the creditors in all respects as if they had each executed the deed; and
(b) subject to the provisions of the Land Registration Act (Cap. 300), the bankrupt's property to which
the deed relates vests, und is to be dealt with, as provided by the deed. 283. Bankrupt remains liable for unpaid balances of certain debts
(1) A bankrupt who makes a composition with the bankrupt's creditors remains liable for the unpaid
balance of a debt if—
(a) the bankrupt, by means of fraud—
(i) incurred or increased the debt; or
(ii) on or before the date of the composition, obtained forbearance on the debt; and
(b) the creditor who has been defrauded has not agreed to the composition. (2) For the purposes of subsection (1)(b), a creditor does not agree to the composition merely by
proving the debt and accepting payment of a distribution of the assets in the estate. 284.

(b), a creditor does not agree to the composition merely by
proving the debt and accepting payment of a distribution of the assets in the estate. 284.

Deadlines for steps to approve composition and execute deed
(1) The deadlines for steps to approve the composition and execute the deed are as follows—
(a) the confirming resolution has to have been passed within one month after the preliminary
resolution is passed;
(b) the Court has to have approved the composition within one month after the confirming
resolution is passed;
(c) the bankrupt has to have executed the deed of composition within seven days after the Court
approves the composition or, if the Court allows the bankrupt additional time, within that
time. 88

d of composition within seven days after the Court
approves the composition or, if the Court allows the bankrupt additional time, within that
time. 88

Insolvency Act (Cap. 53) Kenya
(2) If a deadline is not met immediately on the expiry of the deadline—
(a) the bankruptcy proceedings resume as if there had been no confirming resolution; and
(b) none of the periods specified in subsection (1) counts for the purpose of calculating a period
of time for a purpose of this Act. 285. Procedure following approval of composition by the Court
(1) The Registrar of the Court shall, after recording the deed of composition—
(a) endorse on the deed that it has been recorded in the Court registry; and
(b) if requested to do so by the Official Receiver, deliver the deed to the Official Receiver. (2) As soon as practicable after the deed has been recorded in the Court registry, the Official Receiver
shall—
(a) take all steps necessary to have any vesting provided for in the deed registered or recorded in
the appropriate public registry or office; and
(b) then return the deed to the Registrar of the Court.

vided for in the deed registered or recorded in
the appropriate public registry or office; and
(b) then return the deed to the Registrar of the Court.

(3) The Official Receiver shall, subject to the provisions of the deed, give possession to the bankrupt or
the trustee under the composition of—
(a) the bankrupt's property; or
(b) so much of the bankrupt's property as is under the control of the Official Receiver and that
under the composition revests in the bankrupt or the bankruptcy trustee. 286. How composition may be enforced
(1) On the application of any person aggrieved by a failure to pay an amount payable in accordance
with a composition approved by the Court, the Court may order that the failure to pay be remedied. (2) On the application of a person who claims to have an interest in a composition approved by the
Court, the Court may make an order enforcing the provisions of a composition. 287. Jurisdiction of the Court in relation to composition and deed of composition
(1) After the preliminary resolution has been passed, the Court continues to have exclusive jurisdiction
in relation to the composition and the deed of composition, and their administration.

been passed, the Court continues to have exclusive jurisdiction
in relation to the composition and the deed of composition, and their administration.

(2) On an application in relation to the composition, the deed of composition, or their administration,
the Court—
(a) for the purpose of summoning and examining the bankrupt and witnesses, may direct the
proceeding as if it were a proceeding under Division 17; and
(b) may make such order or orders as it considers appropriate, including an order as to the costs
of the application. 288. Law and practice in bankruptcy to apply to deed of composition
The Court shall decide a question arising under a deed of composition according to the law and practice of
bankruptcy, in so far as that law and practice is relevant. Division 25 — Bankruptcy offences
89

d of composition according to the law and practice of
bankruptcy, in so far as that law and practice is relevant. Division 25 — Bankruptcy offences
89

Insolvency Act (Cap. 53) Kenya
289. Offences in relation to debts
(1) A bankrupt commits an offence if the bankrupt did not, when contracting a debt, have the capacity
to pay the debt when it fell due for payment, as well as to pay all the bankrupt's other debts. (2) A bankrupt commits an offence if the bankrupt has materially contributed to, or increased the
extent of, the bankrupt's insolvency—
(a) by gambling;
(b) by engaging in rash and hazardous speculation;
(c) by unjustifiable spending; or
(d) by living extravagantly. (3) In proceedings for an offence under subsection (1) or (2), it is a defence to prove that, at the
relevant time, the bankrupt had no intention to defraud. 290.

edings for an offence under subsection (1) or (2), it is a defence to prove that, at the
relevant time, the bankrupt had no intention to defraud. 290.

Offences in relation to property
(1) A bankrupt commits an offence if the bankrupt—
(a) conceals, or removes from Kenya, any part of the bankrupt's property—
(i) during the two months immediately preceding the date on which an unsatisfied
judgment or order for payment of money was made against the bankrupt; or
(ii) at any time after such a judgment or order was made; or
(b) with intent to defraud any of the bankrupt's creditors—
(i) makes or causes to be made a gift, delivery or transfer of any part of the bankrupt's
property; or
(ii) gives or causes to be given a charge over any part of that property. (2) A bankrupt commits an offence if, during the two years immediately preceding the making of the
application to the Court for a bankruptcy order in respect of the bankrupt, or at any time after the
application was made, the bankrupt—
(a) conceals any part of the bankrupt's property to the value of fifty thousand shillings or more;
(b) conceals any debt due to the bankrupt or due from the bankrupt; or
(c) fraudulently moves any part of the bankrupt's property to the value of fifty thousand
shillings or more.

the bankrupt or due from the bankrupt; or
(c) fraudulently moves any part of the bankrupt's property to the value of fifty thousand
shillings or more.

(3) In proceedings for an offence under subsection (1)(a), it is a defence to prove that, at the relevant
time, the bankrupt had no intention to defraud any of the bankrupt's creditors. (4) In proceedings for an offence under subsection (2)(a) or (b), it is a defence to prove that, at the
relevant time, the bankrupt had no intention to defraud. 291. Offence in relation to written statement to creditor, etc. (1) A bankrupt commits an offence if, during the three years immediately preceding the time when
the bankruptcy order was made in respect of the bankrupt, the bankrupt makes or produces to a
material person a written statement of the bankrupt's financial position that contains information
that is false or misleading. (2) The following persons are material persons for the purposes of subsection (1)—
(a) a person who is at the relevant time the bankrupt's creditor;
90

2) The following persons are material persons for the purposes of subsection (1)—
(a) a person who is at the relevant time the bankrupt's creditor;
90

Insolvency Act (Cap. 53) Kenya
(b) a person who becomes the bankrupt's creditor as a result of the statement being made or
produced to the person. (3) In proceedings for an offence under subsection (1), it is a defence to prove that at the relevant time
the bankrupt had no intention to deceive. 292. Offence in relation to documents, etc.

bsection (1), it is a defence to prove that at the relevant time
the bankrupt had no intention to deceive. 292. Offence in relation to documents, etc.

(1) A bankrupt commits an offence if, during the two years immediately preceding the making of the
application to the Court for a bankruptcy order in respect of the bankrupt, or at any time after the
application was made, the bankrupt—
(a) conceals, destroys, mutilates or falsifies, or is a party to the concealment, destruction,
mutilation or falsification of, any document affecting, or relating to, the bankrupt's conduct,
affairs or property;
(b) makes, or is a party to the making of, any false entry in any document affecting, or relating
to, the bankrupt's conduct, affairs or property;
(c) fraudulently parts with, alters, or makes any omission in, or is a party to fraudulently
parting with, altering, or making an omission in, any document affecting, or relating to, the
bankrupt's conduct, affairs or property; or
(d) prevents the production of any document relating to the bankrupt's conduct, affairs or
property to any person to whom the bankrupt has an obligation under this Part to produce
the document.

relating to the bankrupt's conduct, affairs or
property to any person to whom the bankrupt has an obligation under this Part to produce
the document.

(2) In proceedings for an offence under subsection (1)(a), (b) or (d), it is a defence to prove that, at the
relevant time, the bankrupt had no intention to conceal the state of the bankrupt's affairs or to
defeat the law. 293. Offence in relation to fictitious losses or expenses
A bankrupt commits an offence if, during the twelve months immediately preceding the making of
the application to the Court for a bankruptcy order in respect of the bankrupt, or at any time after the
application was made, the bankrupt attempts to account for any part of the bankrupt’s property by means
of fictitious losses or expenses. 294.

ter the
application was made, the bankrupt attempts to account for any part of the bankrupt’s property by means
of fictitious losses or expenses. 294.

Offences in relation to credit, etc
(1) A bankrupt commits an offence if, during the three years preceding the making of the application to
the Court for a bankruptcy order in respect of the bankrupt, or at any time after the application was
made—
(a) the bankrupt obtains property on credit and has not paid for the property; and
(b) the bankrupt obtains the property—
(i) by making a false representation or doing some other fraudulent act;
(ii) by falsely stating the position of the bankrupt's financial affairs; or
(iii) under the false pretence of carrying on business and dealing in the ordinary course of
trade. (2) A bankrupt commits an offence if, during the three years immediately preceding the making of the
application to the Court for a bankruptcy order in respect of the bankrupt, or at any time after the
application was made, the bankrupt (otherwise than in the ordinary course of business) pawns,
mortgages, creates a security right or disposes of any property that the bankrupt has obtained but
for which the bankrupt has not made payment. 91

ns,
mortgages, creates a security right or disposes of any property that the bankrupt has obtained but
for which the bankrupt has not made payment. 91

Insolvency Act (Cap. 53) Kenya
(3) In proceedings for an offence under subsection (1) or (2), it is a defence to prove that, at the
relevant time, the bankrupt had no intention to defraud. [Act No. 13 of 2017, Sch.]
295. Offences in relation to obtaining consent of creditors
A bankrupt commits an offence if the bankrupt—
(a) makes a false representation; or
(b) does any other fraudulent act,
for the purpose of obtaining the consent of any one or more of the bankrupt's creditors to any agreement
with reference to the bankrupt's affairs or the bankrupt's bankruptcy. 296.

he consent of any one or more of the bankrupt's creditors to any agreement
with reference to the bankrupt's affairs or the bankrupt's bankruptcy. 296.

Offence for bankrupt to leave Kenya without consent
(1) A bankrupt commits an offence if, during the twelve months immediately preceding the making of
the application to the Court for a bankruptcy order in respect of the bankrupt, or at any time after
the application was made, the bankrupt—
(a) leaves Kenya (either temporarily or permanently), together with any part of any property to
the value of one hundred thousand shillings or more that, by law, ought to be distributed
among the bankrupt's creditors;
(b) attempts to leave Kenya with any part of that property; or
(c) prepares to leave Kenya (either temporarily or permanently) while being in possession of any
part of that property. (2) In proceedings for an offence under subsection (1), it is a defence to prove that, at the relevant time,
the bankrupt had no intention to defraud. 297. General penalties for bankruptcy offences
A bankrupt who is found guilty of an offence under a provision of sections 289 to 296 is liable on
conviction to a fine not exceeding two million shillings or to imprisonment for a term not exceeding five
years, or to both. 298.

to 296 is liable on
conviction to a fine not exceeding two million shillings or to imprisonment for a term not exceeding five
years, or to both. 298.

Failure to keep and preserve proper record of transactions
(1) A bankrupt commits an offence if, at any time during the three years immediately preceding the
date on which the bankrupt was adjudged bankrupt—
(a) the bankrupt had failed to record of the bankrupt's period; and keep and preserve a
transactions for the
(b) because of the nature of the bankrupt's business or occupation, the bankrupt might
reasonably be expected to have kept such a record. (2) A bankrupt who is found guilty of an offence under subsection (1) is liable on conviction to a fine
not exceeding one million shillings or to imprisonment for a term not exceeding twelve months, or
to both. 299. Failure to keep proper records with intent to conceal
(1) A bankrupt commits an offence if, with intent to conceal the true state of the bankrupt's affairs, the
bankrupt has failed to keep and preserve a proper record of the bankrupt' s transactions. 92

to conceal the true state of the bankrupt's affairs, the
bankrupt has failed to keep and preserve a proper record of the bankrupt' s transactions. 92

Insolvency Act (Cap. 53) Kenya
(2) A bankrupt who is found guilty of an offence under subsection (1) is liable on conviction to a fine
not exceeding one million shillings or to imprisonment for a term not exceeding two years, or to
both. 300. When bankrupt presumed not to have kept or preserved proper records
(1) For the purposes of sections 298 and 299, a bankrupt is, in the absence of evidence to the contrary,
presumed not to have kept a proper record of the bankrupt's transactions if, being engaged in a
trade or business, the bankrupt has not kept the required records.

to have kept a proper record of the bankrupt's transactions if, being engaged in a
trade or business, the bankrupt has not kept the required records.

(2) For the purpose of subsection (1), the required records are those needed to explain the bankrupt's
transactions and financial position in the bankrupt's trade or business, and includes—
(a) a record containing entries from day to day in sufficient detail of all cash received and cash
paid;
(b) if the bankrupt's trade or business has involved dealing in goods—
(i) a record of all goods sold and purchased; and
(ii) detailed stock sheets of annual and other stock takings showing the quantity and the
valuation made of each item of stock on hand; and
(c) if the bankrupt's trade or business has involved supplying services, details of those services. (3) For the purposes of sections 298 and 299, a bankrupt is, in the absence of evidence to the contrary,
presumed not to have preserved a proper record of the bankrupt's transactions if the bankrupt has
not preserved—
(a) the records listed in subsection (2) (if applicable);
(b) a record of all goods purchased in the course of the bankrupt's business (with the original
invoices); and
(c) a daily record of all goods sold on credit. 301.

of all goods purchased in the course of the bankrupt's business (with the original
invoices); and
(c) a daily record of all goods sold on credit. 301.

Offence by bankrupt in relation to management of companies
(1) A bankrupt who—
(a) acts or purports to act as a director of a company or as a partner of a firm or limited liability
partnership; or
(b) fails without reasonable excuse to comply with section 152,
commits an offence. (2) A person who is found guilty of an offence under subsection (1) is liable on conviction to a fine not
exceeding one million shillings or to imprisonment for a term not exceeding twelve months, or to
both. 302. Other bankruptcy offences
(1) A bankrupt commits an offence if the bankrupt—
(a) in the course of the administration of the bankrupt's affairs, makes to the bankruptcy trustee
or the Official Receiver (if not the bankruptcy trustee) a statement that the bankrupt knows
or has reason to know was false or misleading in a material respect;
(b) after becoming aware that any person has lodged a false proof in the bankruptcy, fails to
disclose that fact immediately to the bankruptcy trustee or to the Official Receiver (if not the
bankruptcy trustee);
93

f in the bankruptcy, fails to
disclose that fact immediately to the bankruptcy trustee or to the Official Receiver (if not the
bankruptcy trustee);
93

Insolvency Act (Cap. 53) Kenya
(c) has, during the two years immediately preceding the date on which the bankrupt was
adjudged bankrupt and while the bankrupt was insolvent, given any undue preference to any
of the bankrupt's creditors with intent to defraud any other of the bankrupt's creditors; or
(d) before the bankrupt obtains a final order or discharge from bankruptcy (either alone or
jointly with one or more other persons)—
(i) obtains credit of one hundred thousand shillings or more; or
(ii) incurs a liability to any person of one hundred thousand shillings or more for the
purpose of obtaining credit for another person. (2) In proceedings for an offence under subsection (1)(d)(ii), it is a defence to prove that, before
obtaining the relevant credit, the bankrupt informed the credit provider that the bankrupt was an
undischarged bankrupt. (3) In proceedings for an offence under subsection (1)(d)(ii), it is a defence to prove that, before
incurring the relevant liability, the credit provider was informed that the person incurring the
liability was an undischarged bankrupt.

that, before
incurring the relevant liability, the credit provider was informed that the person incurring the
liability was an undischarged bankrupt.

(4) A person who is found guilty of an offence under subsection (1) is liable on conviction a fine not
exceeding one million shillings or to imprisonment for a term not exceeding twelve months, or to
both. Part IV – ALTERNATIVES TO BANKRUPTCY: NATURAL PERSONS
Division 1 — Voluntary arrangements
Subdivision I — Ordinary procedure
303. Interpretation: Division 1
(1) In this Division—
"debtor" means a debtor who is a natural person;
"interim order" means an order made under section 306;
"proposal" means a proposal made by a debtor to the debtor's creditors for a composition in
satisfaction of the debtor's debts or a scheme of arrangement of the debtor's financial affairs;
"provisional supervisor", in relation to a proposal, means the person designated as referred to in
section 306(1)(d);
"supervisor", in relation to a voluntary arrangement, means the person who is for the time being
performing the functions imposed as a result of the approval of the arrangement by the creditors of
the debtor under the arrangement;
"voluntary arrangement", in relation to a debtor, means a proposal that has taken effect in
accordance with section 312(1).

tor under the arrangement;
"voluntary arrangement", in relation to a debtor, means a proposal that has taken effect in
accordance with section 312(1).

(2) For the purposes of this Division, a voluntary arrangement approved by a creditors' meeting
convened under section 309 ends prematurely if, when it ceases to have effect, it has not been fully
implemented in respect of all persons bound by the arrangement because of section 312(2)(b). 304. When application for interim order can be made
(1) An application to the Court for an interim order may be made if the debtor intends to make a
proposal to the debtor's creditors under this Division for a composition in satisfaction of the
debtor's debts or a scheme of arrangement of the debtor's financial affairs. 94

creditors under this Division for a composition in satisfaction of the
debtor's debts or a scheme of arrangement of the debtor's financial affairs. 94

Insolvency Act (Cap. 53) Kenya
(2) The debtor shall ensure that the proposal provides for a person to act as supervisor of the voluntary
arrangement to which the proposal relates. (3) Only an authorised insolvency practitioner is eligible to act as supervisor of a voluntary
arrangement. (4) Subject to subsection (2), such an the application may be made—
(a) if the debtor is an undischarged bankrupt, by the debtor, the bankruptcy trustee of the
debtor's estate or the Official Receiver; and
(b) in any other case-by the debtor. (5) An application may be made by a debtor who is an undischarged bankrupt only if the debtor has
given notice of the proposal to the Official Receiver and, if there is one, the bankruptcy trustee of
the debtor's estate. (6) An application may not be made while a bankruptcy application made by the debtor is pending, if
the Court has, under section 33, appointed an authorised insolvency practitioner to inquire into the
debtor's financial affairs and to report on those affairs to the Court. 305.

n 33, appointed an authorised insolvency practitioner to inquire into the
debtor's financial affairs and to report on those affairs to the Court. 305.

Effect of application for interim order
(1) While an application under section 304 for an interim order is pending, the following provisions
apply:
(a) a landlord or other person to whom rent is payable by the debtor may exercise a right of
forfeiture in relation to premises let to the debtor for a failure of the debtor to comply with a
term of the tenancy—
(i) only with the approval of the Court; and
(ii) if in giving approval the Court has imposed conditions, only if those conditions are
complied with;
(b) the Court—
(i) may prohibit distress from being levied on the debtor's property or its subsequent
sale, or both; and
(ii) may stay any action, execution or other legal process against the property or person of
the debtor. (2) A court in which proceedings are pending against the debtor may, on proof that an application has
been made under section 304 in respect of the debtor, either stay the proceedings or allow them to
continue on such terms as it considers appropriate. 306.

made under section 304 in respect of the debtor, either stay the proceedings or allow them to
continue on such terms as it considers appropriate. 306.

Power of the Court to make interim order
(1) On the hearing of an application made under section 304, the Court may make an interim order if
satisfied—
(a) that the debtor intends to make a proposal under this Division;
(b) that on the day of the making of the application the debtor was an undischarged bankrupt or
was able to make an application for the debtor's own bankruptcy;
(c) that no previous application has been made by the debtor for an interim order during the
twelve months immediately preceding that day; and
(d) that the supervisor designated under the debtor's proposal is willing to act in relation to the
proposal. 95

s immediately preceding that day; and
(d) that the supervisor designated under the debtor's proposal is willing to act in relation to the
proposal. 95

Insolvency Act (Cap. 53) Kenya
(2) The Court shall make an interim order if satisfied that it would facilitate the consideration and
implementation of the debtor's proposal. (3) If the debtor is an undischarged bankrupt, the interim order may contain provisions as to the
conduct of the bankruptcy, and the administration of the bankrupt's estate, during the period for
which the order is to have effect. (4) However, an interim order may, in relation to a debtor who is an undischarged bankrupt, include
a provision relaxing or removing a requirement of Part III or of this Division, or of the insolvency
regulations, only if the Court is satisfied that the inclusion of the provision would be unlikely to
result in a significant diminution in, or in the value of, the debtor's estate in relation to the conduct
of the bankruptcy. (5) Except as otherwise provided by this Division, an interim order made on an application made under
section 304 ceases to have effect at the end of fourteen days from the date on which the order was
made. (6) On the making of an interim order, the designated supervisor referred to in subsection (1)(d)
becomes provisional supervisor.

the order was
made. (6) On the making of an interim order, the designated supervisor referred to in subsection (1)(d)
becomes provisional supervisor.

(7) While an interim order has effect in respect of a debtor—
(a) a bankruptcy application relating to the debtor may not be made or proceeded with;
(b) a landlord or other person to whom rent is payable may exercise a right of forfeiture by
peaceable re-entry in relation to premises let to the debtor in respect of a failure by the
debtor to comply with a term or condition of the debtor's tenancy of the premises only with
the approval of the Court; and
(c) any other proceedings (including execution or other legal process) may be begun or
continued, and distress may be levied, against the debtor or the debtor's property only with
the approval of the Court. 307.

process) may be begun or
continued, and distress may be levied, against the debtor or the debtor's property only with
the approval of the Court. 307.

Provisional supervisor to report on debtor's proposal
(1) As soon as practicable after the making of an interim order, the provisional supervisor shall, before
the order ceases to have effect, submit a report to the Court stating—
(a) whether, in that supervisor's opinion, the proposal has a reasonable prospect of being
approved and implemented;
(b) whether, in that supervisor's opinion, a meeting of the debtor's creditors should be convened
to consider the proposal; and
(c) if in that supervisor's opinion is that such a meeting should be convened, the date on which,
and the time and place at which, it is proposed to hold the meeting. (2) For the purpose of enabling the provisional supervisor to prepare that supervisor's report, the
debtor shall submit to that supervisor—
(a) a document setting out the terms of the proposal; and
(b) a statement of the debtor's financial affairs containing—
(i) such particulars of the debtor's creditors and of the debtor's debts and other liabilities
and of the debtor's assets as may be prescribed by the insolvency regulations for the
purposes of this section; and
(ii) such other information as may be so prescribed.

s assets as may be prescribed by the insolvency regulations for the
purposes of this section; and
(ii) such other information as may be so prescribed.

(3) If the provisional supervisor has failed to submit the report required by this section or has died,
the Court may, on an application made by the debtor, make an order directing that supervisor to be
replaced as such by another authorised insolvency practitioner in relation to the proposal. 96

e debtor, make an order directing that supervisor to be
replaced as such by another authorised insolvency practitioner in relation to the proposal. 96

Insolvency Act (Cap. 53) Kenya
(4) If it is impracticable or inappropriate for the provisional supervisor to continue to act as such, the
Court may, on an application made by the debtor or that supervisor, make an order directing that
supervisor to be replaced as such by another authorised insolvency practitioner in relation to the
proposal. (5) If the provisional supervisor has failed to submit the report as required by this section, the Court
may, on an application made by application of the debtor, make an order directing the interim order
to continue, or (if it has ceased to have effect) to be renewed, for such further period as the Court
may specify in the order. (6) On the hearing of an application made by the provisional supervisor, the Court may make an order
extending the period for which the interim order has effect so as to enable that supervisor to have
more time to prepare his or her report.

e an order
extending the period for which the interim order has effect so as to enable that supervisor to have
more time to prepare his or her report.

(7) If, on receiving the provisional supervisor's report, the Court is satisfied that a meeting of the
debtor's creditors should be convened to consider the debtor's proposal, the Court shall make an
order directing the period for which the interim order has effect to be extended (for such further
period as it may specify in the order) so as to enable the debtor's proposal to be considered by the
debtor's creditors in accordance with this Division. (8) The Court may discharge the interim order if it is satisfied, on the application of the provisional
supervisor—
(a) that the debtor has failed to comply with the debtor's obligations under subsection (2); or
(b) that for any other reason it would be inappropriate for a meeting of the debtor's creditors to
be convened to consider the debtor's proposal. 308.

(b) that for any other reason it would be inappropriate for a meeting of the debtor's creditors to
be convened to consider the debtor's proposal. 308.

Debtor's proposal and provisional supervisor's report
(1) This section applies if—
(a) a debtor intends to make a proposal under this Division;
(b) no interim order has been made in relation to the proposal and no application for such an
order is pending; and
(c) where the debtor is an undischarged bankrupt, the debtor has given notice of the proposal to
the Official Receiver and, if there is one, the bankruptcy trustee of the debtor's estate,
unless a bankruptcy application made by the debtor is pending and the Court has, under section 33,
appointed an authorised insolvency practitioner to inquire into the debtor's financial affairs and
report the findings to the Court.

under section 33,
appointed an authorised insolvency practitioner to inquire into the debtor's financial affairs and
report the findings to the Court.

(2) For the purpose of enabling the provisional supervisor to prepare a report to the Court, the debtor
shall submit to that supervisor—
(a) a document setting out the terms of the voluntary arrangement that the debtor is proposing;
and
(b) a statement of the debtor's financial affairs containing—
(i) such particulars of the debtor's creditors and of the debtor's debts and other liabilities
and of the debtor's assets as may be prescribed by the insolvency regulations for the
purposes of this section; and
(ii) such other information as may be so prescribed. (3) If of the opinion that the debtor is an undischarged bankrupt, or is in a position to apply for the
debtor's own bankruptcy, the provisional supervisor shall, within the prescribed period, submit a
report to the Court stating whether in his or her opinion—
(a) the debtor's proposal has a reasonable prospect of being approved and implemented; and
97

port to the Court stating whether in his or her opinion—
(a) the debtor's proposal has a reasonable prospect of being approved and implemented; and
97

Insolvency Act (Cap. 53) Kenya
(b) a meeting of the debtor's creditors should be convened to consider the debtor's proposal. (4) The prescribed period for the purpose of subsection (3) is—
(a) fourteen days after the provisional supervisor has received the document and statement
referred to in subsection (2);
(b) such extended period as the Court may allow. (5) If of the opinion that a meeting of the debtor's creditors should be convened to consider the
debtor's proposal, the provisional supervisor shall fix the date on which, and time and place at
which, it is proposed to hold the meeting and notify those creditors accordingly. (6) If the provisional supervisor has failed to submit the report required by this section or has died,
the Court may, on an application made by the debtor, make an order directing that supervisor to be
replaced as such by another authorised insolvency practitioner. (7) If it is impracticable or inappropriate for the provisional supervisor to continue to act as such, the
Court may, on an application made by the debtor or that supervisor, make an order directing that
supervisor to be replaced as such by another authorised insolvency practitioner.

n made by the debtor or that supervisor, make an order directing that
supervisor to be replaced as such by another authorised insolvency practitioner.

(8) The Court may, on an application made by the provisional supervisor, extend the period within
which that supervisor's report is required to be submitted. 309. When provisional supervisor is to convene creditors' meeting to consider debtor's
proposal
(1) If it has been reported to the Court under section 307 or 308 that a meeting of the debtor's creditors
should be convened, the provisional supervisor shall, unless the Court otherwise directs, convene
that meeting for the time, date and place proposed in that supervisor's report. (2) The persons to be summoned to the meeting are every creditor of the debtor of whose claim and
address the person convening the meeting is aware. (3) For the purpose of subsection (2), the creditors of a debtor who is an undischarged bankrupt include
—
(a) each person who is a creditor of the bankrupt in respect of a bankruptcy debt; and
(b) each person who would be such a creditor if the bankruptcy had commenced on the date on
which notice of the meeting was given. 310.

ptcy debt; and
(b) each person who would be such a creditor if the bankruptcy had commenced on the date on
which notice of the meeting was given. 310.

Conduct of creditors' meeting: consideration of debtor's proposal
(1) The main purpose of a creditors' meeting convened under section 309 is to decide whether to
approve the debtor's proposal (with or without modifications). (2) At the beginning of the meeting, those creditors present shall elect one of their number to be
Chairperson of the meeting. (3) The Chairperson shall then divide the meeting into three groups for voting purposes, with the first
group comprising secured creditors (if any), the second group comprising preferential creditors (if
any) and the third group comprising unsecured creditors. (4) A modification to the debtor's proposal may be approved only if the debtor consents to it. (5) A modification to the debtor's proposal may be one that provides for the provisional supervisor to
be replaced by another authorised insolvency practitioner to perform the functions of supervisor of
that proposal if it is approved and takes effect as a voluntary arrangement. (6) However, a modification to the debtor's proposal may not be one as a result of which it is no longer
a proposal as defined by section 303. 98

ent. (6) However, a modification to the debtor's proposal may not be one as a result of which it is no longer
a proposal as defined by section 303. 98

Insolvency Act (Cap. 53) Kenya
(7) If the proposal or a modification to it affects the right of a secured creditor of the debtor to enforce
the creditor's security, the proposal or modification may not be approved unless—
(a) the creditor consents to it; or
(b) if the creditor does not consent to it, the creditor—
(i) would be in a position no worse than if the debtor were adjudged bankrupt;
(ii) would receive no less from the assets to which the creditor's security relates, or from
their proceeds of sale, than any other secured creditor having a security interest in
those assets that has the same priority as the creditor's; and
(iii) would be paid in full from those assets, or their proceeds of sale, before any payment
from them or their proceeds is made to any other creditor whose security interest in
them is ranked below that of the creditor, or who has no security interest in them. (8) Subject to this section, the meeting is to be conducted in accordance with the rules (if any)
prescribed by the insolvency regulations. (9) The meeting may at any time resolve that it be adjourned, or further adjourned.

with the rules (if any)
prescribed by the insolvency regulations. (9) The meeting may at any time resolve that it be adjourned, or further adjourned.

(10) As soon as practicable after the conclusion of the meeting, the Chairperson—
(a) shall report the result of of the meeting to the Court; and
(b) immediately after doing so, shall give notice of the result of the meeting to all persons to
whom the notice convening the meeting was sent. (11) If the report is to the effect that the meeting has decided not to approve the debtor's proposal
(either with or without modifications), the Court shall discharge any interim order that has effect in
relation to the debtor. 311. Approval of debtor's proposal
(1) This section applies to the decisions taken at the meeting of creditors held in accordance with
section 310 to consider a debtor's proposal (with or without modifications). (2) The debtor's proposal (including any modifications) is approved if it is supported by a majority (in
number and value) of the creditors of each group of creditors present (either in person or by proxy)
at the meeting of creditors.

ed by a majority (in
number and value) of the creditors of each group of creditors present (either in person or by proxy)
at the meeting of creditors.

(3) For the purposes only of deciding whether the requisite majority by value has voted in favour of a
resolution to approve the debtor's proposal, the following provisions apply—
(a) the Chairperson of the meeting may—
(i) admit or reject proofs of debt; and
(ii) adjourn the meeting in order to admit or reject proofs of debt;
(b) a person whose debt is admitted is a creditor. (4) At any time before the deadline for making an application under this subsection, the debtor or
any of the debtor's creditors who attended or was entitled to attend the meeting may make an
application to the Court for an order under subsection (7). (5) The deadline for making an application under subsection (4) is—
(a) the expiry of thirty days after the date on which the meeting of creditors was held; or
(b) if the Court extends that period, the expiry of the extended period. (6) The debtor and any creditor who attended or was entitled to attend the meeting of creditors is
entitled to appear and be heard at the hearing of the application even if not the applicant. The right
99

titled to attend the meeting of creditors is
entitled to appear and be heard at the hearing of the application even if not the applicant. The right
99

Insolvency Act (Cap. 53) Kenya
conferred by this subsection may be exercised by such a creditor irrespective of whether the creditor
supports or has an interest in the implementation of the proposal. (7) On the hearing of an application made under subsection (4), the Court may—
(a) make an order approving the proposal (with or without the modifications (if any) put to the
meeting of creditors in accordance with section 310); or
(b) make such other order as it considers appropriate,
but only if it considers that it would be in the best interests of both the debtor and the debtor's
creditors to so.

rder as it considers appropriate,
but only if it considers that it would be in the best interests of both the debtor and the debtor's
creditors to so.

(8) The Court may make an order under subsection (7)(a) even if the debtor's proposal (or a
modification to it) was not approved at the creditors' meeting by a majority of the preferential
creditors' group or the unsecured creditors' group, but may do so only if the proposal (or
modification)—
(a) has been approved by a majority of the secured creditors' group;
(b) does not discriminate among the members of the dissenting group or groups of creditors
and ensures that they will be no worse off than they would have been if the debtor had been
adjudged bankrupt; and
(c) respects the priorities of preferential creditors over unsecured creditors. (9) Section 93(3) and (4) apply in relation to a resolution purporting to be passed in accordance with
this section. 312. Effect of approval of debtor's proposal by meeting of creditors or by the Court
(1) A debtor's proposal (with or without modifications) takes effect as a voluntary arrangement by the
debtor on the day after the date on which it is approved by the Court by order made under section
311(7)(a) or on such later date as may be specified in the order.

day after the date on which it is approved by the Court by order made under section
311(7)(a) or on such later date as may be specified in the order.

(2) On taking effect as a voluntary arrangement, the approved proposal binds every person (including a
secured creditor and a preferential creditor) who—
(a) was entitled to vote at the meeting (whether present or represented at the meeting or not);
or
(b) would have been so entitled if the person had received notice of the meeting, as if the person
were a party to the arrangement. (3) On the approved proposal taking effect as a voluntary arrangement, the provisional supervisor
becomes the supervisor of the arrangement unless that supervisor has been replaced in accordance
with section 310(5). (4) If—
(a) when the voluntary arrangement ends, any amount payable under the arrangement to a
person bound because of subsection (2)(b)(ii) has not been paid; and
(b) that arrangement did not come to an end prematurely,
the debtor at that time becomes liable to pay to that person the amount payable under that
arrangement.

rrangement did not come to an end prematurely,
the debtor at that time becomes liable to pay to that person the amount payable under that
arrangement.

(5) An interim order having effect in relation to the debtor immediately before the expiry of thirty days
from and including the date on which the report with respect to the creditors' meeting was made to
the Court in accordance with section 310(10) ceases to have effect at the end of that period. (6) Subsection (5) applies except to such extent as the Court may direct for the purposes of any
application made under section 314 (right to challenge decision taken at creditors' meeting). 100

tent as the Court may direct for the purposes of any
application made under section 314 (right to challenge decision taken at creditors' meeting). 100

Insolvency Act (Cap. 53) Kenya
(7) If proceedings on a bankruptcy application have been stayed by an interim order that has ceased to
have effect, the application is, unless the Court otherwise orders, taken to have been dismissed. 313. Additional effect on undischarged bankrupt
(1) If the Court has approved a debtor's proposal in accordance with section 311(7)(a) and the debtor is
an undischarged bankrupt—
(a) the bankrupt; or
(b) if the bankrupt has not made an application within the period prescribed by the insolvency
regulations for the purposes of this section, the Official Receiver,
may make an application to the Court for an order under subsection (3). (2) However, such an application may not be made—
(a) during the period within which the decision of the creditors' meeting can be challenged by
an application made under section 314(1);
(b) while an application under section 314(1) is pending;
(c) while an appeal in respect of an order made under section 313 is pending; or
(d) during the period within which such an appeal may be made.

nding;
(c) while an appeal in respect of an order made under section 313 is pending; or
(d) during the period within which such an appeal may be made.

(3) On the hearing of an application made under subsection (1), the Court shall, subject to subsection
(2), annul the bankruptcy order, unless it is of the opinion that there are compelling reasons not to
do so. (4) In making an order under subsection (3), the Court may give such directions about the conduct
of the bankruptcy and the administration of the bankrupt's estate as it considers appropriate for
facilitating the implementation of the approved proposal. 314. Right to challenge decision taken at creditors’ meeting
(1) Subject to subsection (3), any of the persons specified in subsection (2) may make an application to
the Court on either or both of the following grounds—
(a) that a debtor's proposal approved by a creditors' meeting held in accordance with section 309
unfairly affects the interests of a creditor of the debtor;
(b) that a material irregularity occurred at or in relation to the meeting.

th section 309
unfairly affects the interests of a creditor of the debtor;
(b) that a material irregularity occurred at or in relation to the meeting.

(2) The persons who may make an application for the purposes of subsection (1) are—
(a) the debtor;
(b) a person who—
(i) was entitled to vote at the creditors' meeting; or
(ii) would have been so entitled if the person had had notice of it;
(c) the provisional supervisor or, if the proposal has taken effect as a voluntary arrangement, the
supervisor of the arrangement; and
(d) if the debtor is an undischarged bankrupt, the bankruptcy trustee in respect of the debtor's
estate or the Official Receiver. (3) An application under this section may not be made—
(a) after the end of thirty days from and including the date on which the result of the creditors'
meeting was reported to the Court in accordance with section 309(10); or
101

ty days from and including the date on which the result of the creditors'
meeting was reported to the Court in accordance with section 309(10); or
101

Insolvency Act (Cap. 53) Kenya
(b) in the case of a person who was not given notice of the creditors' meeting, after the end of
thirty days from and including the date on which the person first became aware that the
meeting had taken place,
but, subject to that, an application made by a person referred to in subsection (2)(b)(ii) on the
ground that the voluntary arrangement unfairly affects the person's interests may be made even
after that arrangement has ended, unless it has ended prematurely. (4) If, on the hearing of an application made under subsection (1), the Court is satisfied as to either of
the grounds referred to in that subsection, it may do one or both of the following—
(a) make an order revoking or suspending an approval given by the meeting;
(b) give a direction to any person for the convening of a further meeting of the debtor's creditors
to consider any revised proposal the person may make or, in a case to which subsection (1)(b)
applies, to reconsider the debtor's original proposal.

s
to consider any revised proposal the person may make or, in a case to which subsection (1)(b)
applies, to reconsider the debtor's original proposal.

(5) If, at any time after giving a direction under subsection (4)(b) for convening a meeting to consider
a revised proposal, the Court is satisfied that the debtor does not intend to submit such a proposal,
the Court shall revoke the direction and revoke or suspend any approval given at the previous
meeting. (6) If the Court gives a direction under subsection (4)(b), it may also give a direction continuing or,
as the case requires, renewing, for such period as may be specified in the direction, the effect in
relation to the debtor of any applicable interim order. (7) If, on the hearing of an application made under subsection (1) with respect to a creditors' meeting,
the Court gives a direction under subsection (4)(b) or revokes or suspends an approval under
subsection (4)(a) or (5), it may give such ancillary directions as it considers appropriate and, in
particular, directions with respect to—
(a) action taken since the meeting under any voluntary arrangement approved by the meeting;
and
(b) such action taken since the meeting as could not have been taken if an interim order had had
effect in relation to the debtor when it was taken.

d
(b) such action taken since the meeting as could not have been taken if an interim order had had
effect in relation to the debtor when it was taken.

(8) Except as otherwise provided by this section, an approval given at a creditors' meeting held in
accordance with section 309 is not invalidated by any irregularity occurring at or in relation to the
meeting. 315. Implementation and supervision of voluntary arrangement
(1) The supervisor is responsible for implementing and supervising a voluntary arrangement that
has taken effect under section 312 or 319 and has such powers as are necessary to enable that
responsibility to be carried out. (2) If a voluntary arrangement has effect under section 312 or 319, a debtor or a creditor of the debtor
or any other person who is dissatisfied by any act, omission or decision of the supervisor may apply
to the Court for an order under subsection (3). (3) On the hearing of an application made under subsection (2), the Court—
(a) shall—
(i) if it finds the action or decision of the supervisor to have been unfair or unjustified,
make an order quashing or modifying the act or decision; or
(ii) if it does not so find, make an order confirming the act or decision; and
(b) if it makes an order under paragraph (a)(i), may—
(i) give such directions to the supervisor as it considers appropriate; and
102

or decision; and
(b) if it makes an order under paragraph (a)(i), may—
(i) give such directions to the supervisor as it considers appropriate; and
102

Insolvency Act (Cap. 53) Kenya
(ii) make such ancillary order as it considers appropriate. (4) On the application of the supervisor to the Court for directions in relation to any particular matter
arising under the voluntary arrangement, the Court may give such directions in relation to the
matter as it considers appropriate. (5) Whenever—
(a) it is desirable to appoint a person to perform the functions of the supervisor; and
(b) it is difficult or impracticable for an appointment to be made without the assistance of the
Court,
the Court may make an order appointing an authorised insolvency practitioner to act as supervisor
in relation to the voluntary arrangement, either in substitution for the existing supervisor or to fill
a vacancy. (6) The power conferred by subsection (5) is exercisable so as to increase the number of persons
performing the functions of supervisor or, if there is more than one person performing those
functions, so as to replace one or more of those persons. Subdivision 2 — Expedited Procedure
316.

, if there is more than one person performing those
functions, so as to replace one or more of those persons. Subdivision 2 — Expedited Procedure
316.

Expedited voluntary arrangement procedure: availability
(1) This section applies if a debtor intends to make a proposal to the debtor's creditors for a voluntary
arrangement and—
(a) the debtor is an undischarged bankrupt;
(b) the Official Receiver is specified in the proposal as the provisional supervisor in relation to
the proposal; and
(c) no application for an interim order has been made under section 304. (2) If this section applies, the debtor may submit to the Official Receiver—
(a) a document setting out the terms of the debtor's proposal; and
(b) a statement of the debtor's financial affairs containing—
(i) such particulars as may be prescribed by the insolvency regulations for the purposes
of this section of the debtor's creditors, debts, other liabilities and assets; and
(ii) such other information as may be so prescribed. (3) If satisfied that the proposal has a reasonable prospect of being approved and implemented, the
Official Receiver may make arrangements for the purpose of inviting creditors to decide whether to
approve it.

of being approved and implemented, the
Official Receiver may make arrangements for the purpose of inviting creditors to decide whether to
approve it.

(4) For the purposes of subsection (3), a person is a creditor only if—
(a) the person is a creditor of the debtor in respect of a bankruptcy debt; and
(b) the Official Receiver is aware of the person's claim and the person's address. (5) In making arrangements under subsection (3), the Official Receiver shall ensure that—
(a) each creditor is provided with a copy of the debtor's proposal;
(b) each creditor is provided with information about the criteria by reference to which the
Official Receiver will determine whether the creditors approve or reject that proposal; and
(c) no opportunity is allowed for modifications to that proposal to be suggested or made. 103

ether the creditors approve or reject that proposal; and
(c) no opportunity is allowed for modifications to that proposal to be suggested or made. 103

Insolvency Act (Cap. 53) Kenya
(6) If a debtor submits documents to the Official Receiver in accordance with subsection (2), an
application under section 304 for an interim order may not be made in respect of the debtor unless
the Official Receiver—
(a) has made the arrangements referred to in subsection (3); or
(b) has informed the debtor that the Official Receiver does not intend to make such
arrangements (either because the Official Receiver is not satisfied that the proposal has a
reasonable prospect of being approved and implemented or for any other reason). (7) If a meeting of creditors is convened for the purpose of subsection (3), the provisions of section 310
apply to the holding and conduct of the meeting. 317. Duty of Official Receiver to report result to the Court
As soon reasonably practicable after the arrangements under section 316 have been implemented, the
Official Receiver shall report to the Court whether the proposed voluntary arrangement has been approved
or rejected. 318.

have been implemented, the
Official Receiver shall report to the Court whether the proposed voluntary arrangement has been approved
or rejected. 318.

Approval of expedited voluntary arrangement
(1) If the Official Receiver reports to the Court that the debtor's proposal has been approved, the
proposal takes effect as a voluntary arrangement. (2) On taking effect as a voluntary arrangement, the proposal binds—
(a) the debtor; and
(b) binds every person (including a secured creditor and a preferential creditor) who was entitled
to participate in the arrangements made in accordance with section 316(3),
as if each of them were a party to the arrangement. (2) In addition to submitting the report, the Official Receiver may make an application to the Court to
make an order under subsection (4). (3) However, such an application may not be made—
(a) during the period within which the voluntary arrangement can be challenged by an
application under section 314;
(b) while an application made under that section is pending;
(c) while an appeal in respect of an application made under that section is pending; or
(d) during the period within which such an appeal may be made.

(c) while an appeal in respect of an application made under that section is pending; or
(d) during the period within which such an appeal may be made.

(4) On considering an application made under subsection (2), the Court shall annul the bankruptcy
order in respect of the debtor unless it is of the opinion that there are compelling reasons not to do
so. (5) The Court may give such directions about the conduct of the bankruptcy and the administration of
the bankrupt's estate as it considers will facilitate the implementation of the approved voluntary
arrangement. 319. Power of Official Receiver to make application for annulment of bankruptcy order
where debtor is an undischarged bankrupt
(1) In addition to making the arrangements under section 316(3), the Official Receiver may, if the
debtor is an undischarged bankrupt, make an application to the Court to make an order under
subsection (3). 104

(3), the Official Receiver may, if the
debtor is an undischarged bankrupt, make an application to the Court to make an order under
subsection (3). 104

Insolvency Act (Cap. 53) Kenya
(2) Such an application may not be made—
(a) while an application for an order under section 311(7) is pending;
(b) during the period within which a voluntary arrangement can be challenged by an application
made under section 314;
(c) while an application made under that section is pending; or
(d) while an appeal in respect of an order made under that section is pending; or
(e) during the period within which such an appeal may be made. (3) On considering an application made under subsection (1), the Court shall annul the bankruptcy
order in respect of the debtor unless it is of the opinion that there are compelling reasons not to do
so. (4) The Court may give such directions about the conduct of the bankruptcy and the administration
of the bankrupt's estate as it considers will facilitate the implementation of the voluntary
arrangement. 320.

f the bankruptcy and the administration
of the bankrupt's estate as it considers will facilitate the implementation of the voluntary
arrangement. 320.

Revocation of expedited voluntary arrangement
(1) The Court may make an order revoking a voluntary arrangement that has effect because of section
318(1) on the ground—
(a) that it unfairly affects the interests of a creditor of the debtor; or
(b) that a material irregularity occurred in relation to the arrangements made under section
316(3). (2) An order under subsection (1) may be made only on the application of—
(a) the debtor;
(b) a person who was entitled to participate in the arrangements made under section 316(3);
(c) the bankruptcy trustee (if any); or
(d) the Official Receiver. (3) An application under subsection (2) may not be made after the expiry of thirty days from and
including the date on which the Official Receiver has reported to the Court as required by section
317. (4) However, a creditor who was not made aware of the arrangements under section 316(3) at the time
when they were made may make an application under subsection (2) during the thirty days from
and including the date on which the creditor first became aware of the voluntary arrangement. Subdivision 3 — Criminal Conduct under the Division
321.

and including the date on which the creditor first became aware of the voluntary arrangement. Subdivision 3 — Criminal Conduct under the Division
321.

Offence for debtor to make false representation for purpose of obtaining creditors'
approval
(1) A debtor commits an offence, if for the purpose of obtaining approval to a proposal for a voluntary
arrangement, the debtor—
(a) makes a representation knowing it to be false or misleading; or
(b) fraudulently does, or omits to do, any act. 105

ntary
arrangement, the debtor—
(a) makes a representation knowing it to be false or misleading; or
(b) fraudulently does, or omits to do, any act. 105

Insolvency Act (Cap. 53) Kenya
(2) In subsection (1), the reference to obtaining approval to a proposal for a voluntary arrangement is
to obtaining—
(a) the approval of a proposal for a voluntary arrangement presented to a meeting of the
debtor's creditors held in accordance with section 310; or
(b) the approval of a proposal for a voluntary arrangement submitted to the Official Receiver in
accordance with section 316. (3) Subsection (1) applies even if the proposal is not approved. (4) A person found guilty of an offence under subsection (1) is liable on conviction to a fine not
exceeding two million shillings or to imprisonment for a term not exceeding five years, or to both. 322. Prosecution of delinquent debtors
(1) This section applies to a voluntary arrangement that has taken effect in accordance with section
312(1) or 319(1). (2) As soon as practicable after forming a reasonable suspicion that a debtor has committed an offence
in connection with a voluntary arrangement to which this section applies, the supervisor of
the arrangement shall report the matter to the Attorney-General and to the Director of Public
Prosecutions.

ch this section applies, the supervisor of
the arrangement shall report the matter to the Attorney-General and to the Director of Public
Prosecutions.

(3) On receiving the supervisor's report, the Attorney-General or Director of Public Prosecutions may
request the supervisor to provide—
(a) such information as is specified in the request; and
(b) access to, and facilities for inspecting and taking copies of, such documents as are so
specified. (3) The supervisor shall comply with such a request to the extent that the information or documents
are under the debtor's control and relate to the matter concerned. (4) If the Director of Public Prosecutions takes criminal proceedings following a report made under
subsection (2), the supervisor shall provide that Director with all assistance in connection with the
prosecution that the supervisor is reasonably able to provide. (5) If the supervisor fails to comply with subsection (3) or (4), the Attorney-General or Director of
Public Prosecutions may apply to the Court for an order under subsection (6). (6) On the hearing of an application made under subsection (5), the Court may make an order directing
the supervisor to comply with subsection (3) or (4), as appropriate. Division 2 — Summary instalment orders
323. What is a summary instalment order?

g
the supervisor to comply with subsection (3) or (4), as appropriate. Division 2 — Summary instalment orders
323. What is a summary instalment order?

A summary instalment order is an order made by the Official Receiver directing the debtor to pay the
debtor's debts—
(a) in instalments or in some other way; and
(b) in full or to the extent that the Official Receiver considers practicable in the particular
circumstances of the case. 324. Who can apply for summary instalment order
The Official Receiver may make a summary instalment order on the application of—
(a) a debtor; or
106

324. Who can apply for summary instalment order
The Official Receiver may make a summary instalment order on the application of—
(a) a debtor; or
106

Insolvency Act (Cap. 53) Kenya
(b) a creditor with the debtor's consent. 325. Requirements for applications made by debtors
(1) The Official Receiver may refuse an application for a summary instalment order if the application
does not comply with subsection (2).

by debtors
(1) The Official Receiver may refuse an application for a summary instalment order if the application
does not comply with subsection (2).

(2) An application does not comply with this subsection unless it—
(a) is in the form prescribed by the insolvency regulations for the purposes of this section;
(b) states—
(i) that the debtor proposes to pay the creditors in full; or
(ii) the proportion of the outstanding debt that the debtor proposes to pay;
(c) states the total amount of the weekly or other instalments that the debtor proposes to pay;
(d) states—
(i) the name and address of the debtor's proposed supervisor and annex the written
consent of that person to be supervisor; or
(ii) if the debtor claims that a supervisor is not necessary, the debtor's reasons for making
that claim; and
(e) includes the following information:
(i) the debtor's full name and address;
(ii) details of the debtor's property;
(iii) the names and addresses of each creditor;
(iv) the amount and nature of each of the creditors' debts;
(v) whether any of the debts are secured and the value of the charge or security right;
(vi) whether any of the debts are guaranteed by any person;
(vii) the amount of the debtor's earnings;
(viii) the name and address of the debtor's employer (if any);
(ix) any other matter that may be prescribed by the insolvency regulations for the
purposes of this subsection.

ess of the debtor's employer (if any);
(ix) any other matter that may be prescribed by the insolvency regulations for the
purposes of this subsection.

[Act No. 13 of 2017, Sch.]
326. Official Receiver may make summary instalment order
(1) The Official Receiver may make a summary instalment order if satisfied that—
(a) the debtor's total unsecured debts that would be provable in the debtor's bankruptcy do not
exceed the amount prescribed by the insolvency regulations for the purpose of this section;
and
(b) the debtor is unable immediately to pay those debts. (2) The Official Receiver may not make such an order without having given the debtor and the creditors
an opportunity to make representations with respect to the matter. (3) A summary instalment order is not invalid merely because the total amount of the debts proved
exceeds the amount specified in subsection (1)(a), but if it does, the supervisor appointed under
107

ely because the total amount of the debts proved
exceeds the amount specified in subsection (1)(a), but if it does, the supervisor appointed under
107

Insolvency Act (Cap. 53) Kenya
section 328 shall refer the matter to the Official Receiver, in which case the Official Receiver shall
cancel the order. 327. Power of Official Receiver to make additional orders
In addition to an order for the payment of the debts in instalments, the Official Receiver may make all or
any of the following orders—
(a) an order regarding the debtor's future earnings or income;
(b) an order regarding the disposal of goods that the debtor owns or possesses;
(c) an order giving the supervisor appointed under section 328 power—
(i) to direct the debtor's employer to pay all or part of the debtor's earnings to the supervisor;
and
(ii) to supervise payment, out of the debtor's earnings or income, of the reasonable living
expenses of the debtor and the debtor's relatives and dependants. 328. Appointment of supervisors
(1) Except as provided by subsection (2), a summary instalment order is ineffective if it does not
provide for the appointment of a suitable and willing person to supervise compliance by the debtor
with the terms of the order.

fective if it does not
provide for the appointment of a suitable and willing person to supervise compliance by the debtor
with the terms of the order.

(2) The Official Receiver may dispense with the appointment of a supervisor if the Official Receiver
considers it appropriate to do so. (3) In such a case—
(a) the provisions of this Division apply as if the debtor was the supervisor, except for section
329; and
(b) that section applies as if the Official was the supervisor. (4) The Official Receiver may require a supervisor to provide a bond to secure the supervisor's
performance of the supervisor's obligations under the Act. (5) In imposing such a requirement, the Official Receiver shall specify the amount of the bond and the
person to whom it is to be given. 329. Role of supervisors
(1) The supervisor is responsible for supervising the debtor's compliance with the terms of the
summary instalment order and any other orders made under section 327. (2) The supervisor may charge the debtor remuneration for carrying out the supervisor's
responsibilities as supervisor at the amount or rates not exceeding the amount or rates fixed in
accordance with the insolvency regulations. 330.

or's
responsibilities as supervisor at the amount or rates not exceeding the amount or rates fixed in
accordance with the insolvency regulations. 330.

Power of Official Receiver to require supervisor or past supervisor to provide
documents
(1) The Official Receiver may, by notice, require a supervisor or a past supervisor to provide the Official
Receiver, within not less than seven days from the date of the notice, with any specified documents,
or any documents of a specified class, that relate to the debtor's property, conduct or dealings that
are under the control of the supervisor or past supervisor. (2) A supervisor or past supervisor who fails to comply with a notice given to the supervisor or past
supervisor under subsection (1) commits an offence and on conviction is liable to a fine not
exceeding two hundred and fifty thousand shillings. 108

t
supervisor under subsection (1) commits an offence and on conviction is liable to a fine not
exceeding two hundred and fifty thousand shillings. 108

Insolvency Act (Cap. 53) Kenya
331. Termination of supervisor's appointment for failure to supervise adequately
If of the opinion that the supervisor has failed to supervise the debtor's compliance adequately, the
Official Receiver shall terminate the supervisor's appointment and appoint a replacement supervisor. 332. Period for payment of instalments
The payment of instalments under a summary instalment order can be spread over a period not exceeding
—
(a) three years; or
(b) if justified by special circumstances acceptable to the supervisor—five years. 333. Variation or discharge of summary instalment orders
(1) The debtor, any creditor or the supervisor may at any time apply in writing to the Official Receiver
to vary or discharge a summary instalment order. (2) After considering an application made under subsection (1), the Official Receiver shall vary or
discharge the order as the Official Receiver considers appropriate. 334. Effect of summary instalment orders
(1) The debtor shall pay all instalments payable under a summary instalment in the manner prescribed
by the insolvency regulations.

instalment orders
(1) The debtor shall pay all instalments payable under a summary instalment in the manner prescribed
by the insolvency regulations.

(2) The Official Receiver shall cancel a summary instalments order on being satisfied on reasonable
grounds that the debtor has failed to comply with subsection (1). 335. Restrictions on bringing proceedings against debtors while summary instalment order
has effect
(1) In this section, "proceedings", in relation to a debtor in respect of whom a summary instalment
order has been made, means proceedings brought against the person or property of the debtor in
respect of a debt that has been—
(a) shown in the debtor's application for the summary instalment order;
(b) included in the summary instalment order; or
(c) notified to the supervisor. (2) While a summary instalment order has effect, a person may not begin or continue proceedings
against the debtor unless—
(a) the Official Receiver gives approval for a creditor to begin or continue the proceedings; or
(b) the debtor is in default under the order. (3) In giving any such approval, the Official Receiver may impose such conditions as appear to the
Official Receiver to be fair and reasonable.

order. (3) In giving any such approval, the Official Receiver may impose such conditions as appear to the
Official Receiver to be fair and reasonable.

(4) In the case of proceedings that are pending before a court at the time when the summary
instalment order is made, the Court, unless the conditions specified in subsection (2)(a) or (b) apply
—
(a) shall stay the proceedings on receiving notice of the order; and
109

he Court, unless the conditions specified in subsection (2)(a) or (b) apply
—
(a) shall stay the proceedings on receiving notice of the order; and
109

Insolvency Act (Cap. 53) Kenya
(b) may award all or part of the creditor's costs incurred up to the time of the Court's
notification, and may certify accordingly for the purpose of the creditor proving the debt
under this Division. 336. Supervisor to give notice of summary instalment order to creditors
(1) The supervisor shall send a notice of the summary instalment order to every creditor—
(a) who is known to the supervisor;
(b) whose name is shown on the debtor's application for the order; or
(c) who has proved a debt under section 340. (2) A supervisor who, without reasonable excuse, fails to comply with subsection (1) commits an
offence and on conviction is liable to a fine not exceeding two hundred thousand shillings. 337. Public register of debtors subject to current summary instalment order
(1) The Official Receiver shall establish and maintain a public register of persons who are subject to
current summary instalment orders. (2) The Official Receiver shall maintain the register in accordance with Division 2 of Part XII. 338.

re subject to
current summary instalment orders. (2) The Official Receiver shall maintain the register in accordance with Division 2 of Part XII. 338.

When summary instalment order ceases to be current
A summary instalment order is not current if it has been discharged or all the instalments required to be
paid under the order have been paid in accordance with the order. 339. Claims of creditors when summary instalment has effect
(1) A creditor who has proved the creditor's debt to the satisfaction of the supervisor is entitled to be
included as a creditor in the administration of the debtor's estate under the summary instalment
order for the amount of the debt. (2) A creditor may object to the supervisor's acceptance or rejection of any creditor's claim by applying
to the Official Receiver. (3) If a creditor objects under subsection (2), the Official Receiver may give any directions that the
Official Receiver considers appropriate as to the acceptance or rejection of the claim. (4) A person who becomes a creditor of the debtor after the order has been made, and who proves a
debt before the supervisor, may elect to be included in the administration of the debtor's estate.

tor after the order has been made, and who proves a
debt before the supervisor, may elect to be included in the administration of the debtor's estate.

(5) If such a person so elects, the person may be paid a dividend under the order only after the creditors
who became creditors of the debtor before the order was made and who have been included as a
creditor in the administration have been paid under the order. 340. Payment of debtor's earnings to supervisor
(1) This section applies if the supervisor, under a power conferred by a summary instalment order made
by the Official Receiver, directs the debtor's employer to pay the debtor's earnings, or part of them,
to the supervisor. (2) The amounts that the employer shall pay to the supervisor are recoverable as a debt from the
employer, and the supervisor's receipt is a complete discharge to the employer for the debt. 110

to the supervisor are recoverable as a debt from the
employer, and the supervisor's receipt is a complete discharge to the employer for the debt. 110

Insolvency Act (Cap. 53) Kenya
(3) Payment by the employer in contravention of the supervisor's direction to pay the supervisor
discharges the liability of the employer to the supervisor for the amount of the payment only if it is
made—
(a) with the consent of the supervisor or the Official Receiver; or
(b) to a person who is not the debtor and who has a better legal claim to it than the debtor. 341. Consequences of default by debtor to pay amount due under summary instalment
order
(1) A debtor who fails to pay an amount due under a summary instalment order is presumed, unless the
contrary is proved—
(a) to have been able to pay the amount from the date of the order; and
(b) to have refused or neglected to pay it. (2) If the debtor fails to make a payment in accordance with the order—
(a) proceedings that have been stayed under section 335 may begin or continue;
(b) any period during which a proceeding was stayed under that section are to be added to any
period of limitation that applies to the proceeding. (3) Subsection (2) is subject to any order of the Court to the contrary.

n are to be added to any
period of limitation that applies to the proceeding. (3) Subsection (2) is subject to any order of the Court to the contrary.

(4) As soon as practicable after a debtor fails to make a payment in accordance with a summary
instalment order, the supervisor shall give notice of the failure to the Official Receiver. 342. Offence for debtor to obtain credit while summary instalment order has effect
(1) A debtor in respect of whom a summary instalment order is in effect commits an offence if, before
all creditors have been paid the amounts to which they are entitled under the order, the debtor—
(a) alone or jointly with another person, obtains credit of one hundred thousand shillings or
more;
(b) incurs a liability to another person for one hundred thousand shillings or more for the
purpose of obtaining credit for another person; or
(c) enters into a credit purchase transaction under which the debtor is liable to pay one hundred
thousand shillings or more.

t for another person; or
(c) enters into a credit purchase transaction under which the debtor is liable to pay one hundred
thousand shillings or more.

(2) In proceedings for an offence under subsection (1), it is a defence to prove—
(a) in a case to which subsection (1)(a) applies, that, before obtaining the relevant credit,
informed the credit provider that the debtor was subject to a summary instalment order;
(b) in a case to which subsection (1)(b) applies, that, before the defendant incurred the relevant
liability, the credit provider was informed that the defendant was subject to a summary
instalment order; or
(c) in a case to which subsection (1)(c) applies, that, before the defendant entered into the
relevant agreement, the other parties to the agreement were informed that the defendant
was subject to a summary instalment order. (3) A person who is found guilty of an offence under this section is liable on conviction to a fine not
exceeding one million shillings or to imprisonment for a term not exceeding twelve months, or to
both. Division 3 — No-asset procedure
111

a fine not
exceeding one million shillings or to imprisonment for a term not exceeding twelve months, or to
both. Division 3 — No-asset procedure
111

Insolvency Act (Cap. 53) Kenya
343. Division 3: introduction
This Division prescribes a procedure for dealing with a debtor who has no realisable assets. 344. Application for entry to no-asset procedure
(1) A debtor who meets the criteria set out in section 345 may apply to the Official Receiver for entry to
the no-asset procedure. (2) A debtor can apply for entry to the no-asset procedure by completing the following documents and
lodging them with the Official Receiver—
(a) an application in the form prescribed by the insolvency regulations for the purpose of this
section; and
(b) a statement in the form so prescribed setting out the debtor's financial position. (3) The Official Receiver may reject the debtor's application if the application or statement of the
debtor's financial position is, in the Official Receiver's opinion, incorrect or incomplete. 345.

s application if the application or statement of the
debtor's financial position is, in the Official Receiver's opinion, incorrect or incomplete. 345.

Criteria for entry to no-asset procedure
(1) The Official Receiver shall admit a debtor to the no-asset procedure if satisfied on reasonable
grounds that—
(a) the debtor has no realisable assets;
(b) the debtor has not previously been admitted to the no-asset procedure;
(c) the debtor has not previously been adjudged bankrupt;
(d) the debtor has total debts that are not less than one hundred thousand shillings and not
more than four million shillings; and
(e) the debtor does not have the means to repay any amount towards those debts. (2) In this section, "realisable assets" does not include the assets that a bankrupt is allowed to retain
under section 161, but does include assets (such as gifted assets) that might be recoverable by the
Official Receiver—
(a) if the debtor were to be adjudged bankrupt on the date of application for entry to the no-
asset procedure; and
(b) if Division 19 of Part II applied. 346.

e debtor were to be adjudged bankrupt on the date of application for entry to the no-
asset procedure; and
(b) if Division 19 of Part II applied. 346.

Debtor disqualified from entry to no-asset procedure in certain cases
The Official Receiver shall not admit a debtor to the no-asset procedure if satisfied, on reasonable
grounds, that—
(a) the debtor has concealed assets with the intention of defrauding the debtor's creditors (such as by
transferring property to a trust);
(b) the debtor has engaged in conduct that would, if the debtor were adjudged bankrupt, constitute an
offence under this Act;
(c) the debtor has incurred a debt or debts knowing that the debtor does not have the means to repay
them; or
(d) a creditor intends to apply for the debtor to be adjudged bankrupt and it is likely that, if the debtor
were to be adjudged bankrupt, the outcome for the creditor would be materially better than if the
debtor were admitted to the no-asset procedure. 112

were to be adjudged bankrupt, the outcome for the creditor would be materially better than if the
debtor were admitted to the no-asset procedure. 112

Insolvency Act (Cap. 53) Kenya
347. Official Receiver to notify creditors
As soon as practicable after receiving an application from a debtor for entry to the no-asset procedure, the
Official Receiver shall send a summary of the debtor's assets and liabilities to each known creditor of the
debtor. 348. Restrictions on debtor obtaining credit after application made
(1) A debtor who has applied for entry to the no-asset procedure shall not obtain credit (including
credit under a credit purchase transaction), either alone or jointly with another person, of more
than ten thousand shillings without first informing the credit provider that the debtor has applied
for entry to the no-asset procedure. (2) A debtor who contravenes subsection (1) commits an offence and on conviction is liable to a fine
not exceeding five hundred thousand shillings or to imprisonment for a term not exceeding six
months, or to both. 349. When debtor admitted to no-asset procedure
(1) A debtor is admitted to the no-asset procedure when the Official Receiver sends the debtor a notice
in the form prescribed by the insolvency regulations for the purposes of this section.

procedure when the Official Receiver sends the debtor a notice
in the form prescribed by the insolvency regulations for the purposes of this section.

(2) As soon as practicable after a debtor is admitted to the no-asset procedure, the Official Receiver
shall—
(a) notify that fact to each creditor of the debtor of whom the Official Receiver is aware; and
(b) publish notice of it in a publication and in a manner prescribed by the insolvency
regulations. 350. Public register of persons admitted to no-asset procedure
(1) The Official Receiver shall establish and maintain a public register of persons admitted to the no-
asset procedure and persons discharged from that procedure under section 359. (2) The Official Receiver shall maintain the register in accordance with Division 2 of Part XI. 351. Creditors may not enforce debts of debtor admitted to no-asset procedure
(1) A creditor of a debtor may not, after the debtor has been admitted to the no-asset procedure, begin
or continue any step to recover or enforce a debt—
(a) that the debtor owes to the creditor at the time when the debtor applies for entry to the no-
asset procedure; and
(b) that would be provable in the debtor's bankruptcy if the debtor were to be adjudged
bankrupt.

or applies for entry to the no-
asset procedure; and
(b) that would be provable in the debtor's bankruptcy if the debtor were to be adjudged
bankrupt.

(2) Despite subsection (1), the following debts remain enforceable—
(a) amounts payable under a court order made under the Marriage Act (Cap. 150);
(b) amounts payable under the Children Act (Cap. 141);
(c) amounts owed in respect of a loan to secure the education of a dependent child or step-child
of the debtor. 113

under the Children Act (Cap. 141);
(c) amounts owed in respect of a loan to secure the education of a dependent child or step-child
of the debtor. 113

Insolvency Act (Cap. 53) Kenya
352. Debtor's duties after entry to no-asset procedure
(1) On being required by the Official Receiver to do so, the debtor shall provide the Official Receiver
with such assistance, documents and information as are reasonably necessary in order to apply the
no-asset procedure to the debtor. (2) As soon as practicable after any change occurs in the debtor's circumstances that would allow the
debtor to repay an amount towards the debts referred to in section 351(1), the debtor shall give
written notification of the change to the Official Receiver. (3) The debtor may not obtain credit, either alone or jointly with another person, of more than one
hundred thousand shillings without first informing the credit provider that the debtor is subject to
the no-asset procedure. (4) In subsection (4), "credit" includes credit under a conditional purchase transaction. 353.

r that the debtor is subject to
the no-asset procedure. (4) In subsection (4), "credit" includes credit under a conditional purchase transaction. 353.

Offence for person admitted to no-asset procedure to obtain credit
(1) A person who, while admitted to the no-asset procedure—
(a) alone or jointly with another person, obtains credit of one hundred thousand shillings or
more;
(b) incurs liability to a credit provider for one hundred thousand shillings or more for the
purpose of obtaining credit for another person; or
(c) enters into a credit purchase transaction under which the person is liable to pay one hundred
thousand shillings or more,
commits an offence.

; or
(c) enters into a credit purchase transaction under which the person is liable to pay one hundred
thousand shillings or more,
commits an offence.

(2) In proceedings for an offence under subsection (1), it is a defence to prove—
(a) in a case to which subsection (1)(a) applies, that, before obtaining the relevant credit the
defendant informed the credit provider that the defendant was admitted to the no-asset
procedure;
(b) in a case to which subsection (1)(b) applies, that, before the defendant incurred the relevant
liability, the credit provider was informed that the defendant was admitted to the no-asset
procedure; or
(c) in a case to which subsection (1)(c) applies, that, before the defendant entered into the
relevant agreement, the other parties to the agreement were informed that the defendant
was admitted to the no-asset procedure. (3) A person who is found guilty of an offence under this section is on conviction liable to a fine not
exceeding one million shillings or to imprisonment for a term not exceeding twelve months, or to
both. 354.

tion is on conviction liable to a fine not
exceeding one million shillings or to imprisonment for a term not exceeding twelve months, or to
both. 354.

How debtor's participation in the no-asset procedure is terminated
A debtor's participation in the no-asset procedure terminates when—
(a) the Official Receiver terminates the debtor's participation under section 355;
(b) the debtor is discharged under section 359;
(c) the debtor applies for the debtor's own bankruptcy; or
(d) a creditor who is entitled to do so (for example, because the creditor's debt is enforceable as a debt
specified in section 351(2)) applies for the debtor's bankruptcy and the debtor is adjudged bankrupt. 114

the creditor's debt is enforceable as a debt
specified in section 351(2)) applies for the debtor's bankruptcy and the debtor is adjudged bankrupt. 114

Insolvency Act (Cap. 53) Kenya
355. When Official Receiver may terminate no-asset procedure
(1) The Official Receiver shall terminate a debtor's participation in the no-asset procedure if satisfied—
(a) that the debtor was wrongly admitted to the no-asset procedure (for example, because the
debtor concealed assets) or misled the Official Receiver; or
(b) that the debtor's financial circumstances have changed sufficiently to enable the debtor to
repay an amount towards the debtor's debts. (2) The debtor's participation in the no-asset procedure is terminated by the Official Receiver sending a
notice to that effect to the debtor at the debtor's last known address. (3) The termination takes effect when the notice is sent, whether or not the debtor receives it. (4) As soon as practicable after the termination of a debtor's participation in the no-asset procedure,
the Official Receiver shall send a notice of the termination to each creditor of the debtor known to
the Official Receiver. 356.

e no-asset procedure,
the Official Receiver shall send a notice of the termination to each creditor of the debtor known to
the Official Receiver. 356.

Official Receiver may apply for preservation order on ground of debtor's misconduct
(1) If the Official Receiver terminates a debtor's participation in the no-asset procedure on the
ground that the debtor has concealed assets or misled the Official Receiver, the Court may, on
the application of the Official Receiver, make an order for the preservation of the debtor's assets
pending an application for the debtor's bankruptcy. (2) The Court may make an order under subsection (1) on such terms as it considers appropriate. 357. Effect of termination of debtor's participation in no-asset procedure
(1) On termination of the debtor's participation in the no-asset procedure—
(a) the debtor's debts that became unenforceable on the debtor's entry to the no-asset procedure
become again enforceable; and
(b) the debtor becomes liable to pay any penalties and interest that may have accrued. (2) Subsection (1) does not apply if the debtor's entry to the no-asset procedure is terminated by
discharge under section 359. 358.

may have accrued. (2) Subsection (1) does not apply if the debtor's entry to the no-asset procedure is terminated by
discharge under section 359. 358.

Creditor may apply to Official Receiver for termination of debtor's participation in no-
asset procedure
A creditor may apply to the Official Receiver for termination of the debtor's participation in the no-asset
procedure on the ground—
(a) that the debtor did not meet the criteria for admission to the no-asset procedure; or
(b) that there are reasonable grounds for the Official Receiver to conclude that the debtor was
disqualified under section 346. 359. Discharge of debtor's participation in no-asset procedure
(1) A debtor who is participating in the no-asset procedure is automatically discharged from that
procedure at the end of twelve months after the date when the debtor was admitted to it. (2) Subsection (1) does not apply if the Official Receiver—
(a) is satisfied that the twelve-month period should be extended for the purpose of properly
considering whether the debtor's participation in the no-asset procedure should be
terminated; and
115

should be extended for the purpose of properly
considering whether the debtor's participation in the no-asset procedure should be
terminated; and
115

Insolvency Act (Cap. 53) Kenya
(b) sends a written deferral notice to the debtor's last known address before the end of that
period. (3) The Official Receiver shall specify in the deferral notice an alternative date for automatic discharge,
which may be not later than thirty-five days after the end of the twelve-month period. (4) A deferral notice has effect whether or not the debtor receives it. (5) As soon as practicable after sending a deferral notice to a debtor, the Official Receiver shall send a
copy of the notice to each creditor of the debtor known to the Official Receiver. (6) The debtor is automatically discharged from the no-asset procedure on the date specified in the
deferral notice. (7) The Official Receiver may revoke a deferral notice in the same way in which it was sent, in which
case, the debtor is automatically discharged from the no-asset procedure—
(a) if the notice is revoked on or before the end of the twelve-month period specified in
subsection (1), at the end of that period; or
(b) if it is revoked after the end of that period, on the date of revocation. 360.

h period specified in
subsection (1), at the end of that period; or
(b) if it is revoked after the end of that period, on the date of revocation. 360.

Effect of discharge of debtor's participation in no-asset procedure
(1) On discharge under section 359—
(a) the debtor's debts that became unenforceable on the debtor's entry to the no-asset procedure
are cancelled; and
(b) the debtor is no longer liable to pay any part of the debts, including any penalties and
interest that may have accrued. (2) Subsection (1) does not apply—
(a) to any debt or liability incurred by fraud or fraudulent breach of trust to which the debtor
was a party; or
(b) any debt or liability for which the debtor has obtained forbearance through fraud to which
the debtor was a party. (3) The debts and liabilities referred to in subsection (2) again become enforceable on discharge under
section 359, and the debtor is liable to pay any penalty or interest that may have accrued. 361.

ction (2) again become enforceable on discharge under
section 359, and the debtor is liable to pay any penalty or interest that may have accrued. 361.

Discharge does not release debtor's business partners and others
A discharge under section 359 does not release a person who, at the date of discharge, was—
(a) a business partner of the discharged debtor;
(b) a co-trustee with the discharged debtor;
(c) jointly bound or had made any contract with the discharged debtor; or
(d) a guarantor or in the nature of a guarantor of the discharged debtor. Part V – ADMINISTRATION OF INSOLVENT DECEASEDS' ESTATES
Division 1 — Introductory provision
362. Interpretation: Part V
(1) In this Part—
116

debtor. Part V – ADMINISTRATION OF INSOLVENT DECEASEDS' ESTATES
Division 1 — Introductory provision
362. Interpretation: Part V
(1) In this Part—
116

Insolvency Act (Cap. 53) Kenya
"administrator" has the same meaning as in the Law of Succession Act (Cap. 160);
"beneficiary", in relation to a deceased debtor's estate, means a person who is beneficially interested
in the estate;
"estate" has the same meaning as in the Law of Succession Act and, in relation to a deceased debtor,
means that part of the debtor's estate that is available for distribution under section 376;
"executor" has the same meaning as in the Law of Succession Act;
"trustee" means a trustee appointed under section 370(2). (2) This Part does not affect—
(a) any property of a deceased that does not form part of the deceased debtor's estate; or
(b) the administration of that property. Division 2 — Functions of the Court in respect of administration of insolvent estates
363.

ebtor's estate; or
(b) the administration of that property. Division 2 — Functions of the Court in respect of administration of insolvent estates
363.

Court may order that estate be administered under this Part
(1) The Court may order that the estate of a deceased debtor be administered under this Part on the
application—
(a) under section 364 of the executor or administrator or a person who is applying to the Court
for a grant of probate or letters of administration; or
(b) under section 365 of—
(i) a creditor who has produced evidence establishing a debt due to the creditor; or
(ii) a beneficiary. (2) The Court may not make such an order if it is satisfied that—
(a) there is a reasonable probability that the estate will be sufficient to pay all of the deceased's
debts; and
(b) the creditors will not be detrimentally affected by the estate being administered in the
normal way. 364.

to pay all of the deceased's
debts; and
(b) the creditors will not be detrimentally affected by the estate being administered in the
normal way. 364.

Application by executor or administrator, etc
(1) The executor or administrator, or a person who is applying to the Court for a grant of probate or
letters of administration, may apply to the Court for an order that the estate be administered under
this Part if the executor or administrator or person applying is of the view that the money in the
estate (together with the proceeds of any assets in the estate that can conveniently be converted
into money) will not be, or is not likely to be, sufficient to satisfy the several claims made or likely
to be made on the estate. (2) An application may—
(a) be joined with an application for a grant of probate or letters of administration in respect
of the deceased's will or of the deceased's property that does not form part of the deceased's
estate; or
(b) be made at any time after that grant. (3) In addition to the application, an applicant shall lodge with the Court an account that—
(a) shows the assets, debts and liabilities of the deceased to the extent that the applicant knows
what they are; and
117

h the Court an account that—
(a) shows the assets, debts and liabilities of the deceased to the extent that the applicant knows
what they are; and
117

Insolvency Act (Cap. 53) Kenya
(b) complies with subsection (4). (4) An account complies with this subsection if it—
(a) is verified by statutory declaration; and
(b) is lodged—
(i) when the application is lodged;
(ii) within the prescribed time after the application is lodged; or
(iii) within such additional period (if any) as the Court may allow. (5) The applicant may amend the account with the approval of the Court. 365. Application by creditor or beneficiary for order under this Part
(1) An application to the Court for an order under this Part may also be made—
(a) by a creditor of the deceased's estate, if the creditor's debt has reached the threshold for a
creditor's application for bankruptcy; or
(b) by a beneficiary. (2) A creditor or beneficiary may apply for such an order if—
(a) the executor or administrator has not applied under this Part, and after being requested in
writing to apply, fails to apply within twenty-one days after receiving the request; or
(b) no executor or administrator has been appointed, and no application has been lodged in the
Court under section 364, within four months after the date of the debtor's death.

trator has been appointed, and no application has been lodged in the
Court under section 364, within four months after the date of the debtor's death.

(3) In the case of an application under subsection (2)(a) for an order that the estate be administered
under this Part, the Court may not make the order before the expiry of two months after the date
when probate or letters of administration were granted, but this restriction does not apply if—
(a) the executor or administrator has consented;
(b) the applicant proves that—
(i) the deceased was not insolvent at any time within three months before the death; or
(ii) the executor or administrator has favoured or is about to favour any particular
creditor or creditors; or
(c) in the Court's opinion, the executor administrator is not properly administering estate. (4) The Court may allow an application under subsection (2)(b) to be lodged before the expiry of four
months after the date of the debtor's death if satisfied that—
(a) the deceased was insolvent at any time within the three months preceding the death; or
(b) the estate that should have been available for the deceased's creditors is rapidly diminishing. 366.

thin the three months preceding the death; or
(b) the estate that should have been available for the deceased's creditors is rapidly diminishing. 366.

Notice of application by creditor or beneficiary
If an application has been lodged by a creditor or beneficiary under section 365, the applicant shall give
notice of the application—
(a) to the executor or administrator; or
(b) if there is no executor or administrator, to the person specified by the Court. 118

e of the application—
(a) to the executor or administrator; or
(b) if there is no executor or administrator, to the person specified by the Court. 118

Insolvency Act (Cap. 53) Kenya
367. Court may order administration by Official Receiver or the Public Trustee instead of
executor or administrator
(1) This section applies if—
(a) an application has been made to the Court for an order to administer an estate under this
Part; and
(b) the Court believes that the estate is likely to be better administered by the Official Receiver
or the Public Trustee rather than by the person who is or may become the executor or
administrator. (2) The Court may, as part of its original order on the application or by any subsequent order, make an
order directing—
(a) the executor or administrator (if there is one) to stop administering the estate; and
(b) the Official Receiver or the Public Trustee to assume responsibility for its administration. 368. Certificate lodged by the Public Trustee has effect as application and order
(1) If the Public Trustee is the executor or administrator of, or would be entitled to obtain a grant of
administration for, an apparently insolvent estate, the Public Trustee may lodge a certificate under
this section.

ld be entitled to obtain a grant of
administration for, an apparently insolvent estate, the Public Trustee may lodge a certificate under
this section.

(2) The lodging of a certificate in the prescribed form has the effect both of an application and an order
that the estate be administered under this Part. (3) The certificate is to be lodged in the Court registry from which the grant of probate or letters of
administration was issued. 369. Estate vests in trustee
(1) The whole of the estate at the date when the application for the order under this Part was lodged
vests in the person appointed by the Court to administer it as trustee. (2) In its order that the estate be administered under this Part or in a subsequent order, the Court shall
appoint as trustee—
(a) the executor or administrator;
(b) the Official Receiver;
(c) Public Trustee; or
(d) any other person who, in its opinion, is competent to act trustee. 370. Trustee to realise, administer and distribute estate
The trustee shall, as soon as practicable after the estate vests in the trustee, realise, administer, and
distribute the assets in accordance with the law and practice of bankruptcy, subject to any modifications in
this Part. 371.

realise, administer, and
distribute the assets in accordance with the law and practice of bankruptcy, subject to any modifications in
this Part. 371.

Entitlement of surviving spouse to household furniture and effects
(1) This section applies if the estate that vests in the trustee includes any of the deceased's necessary
household furniture and effects that would have passed to the deceased's surviving spouse if the
estate had not been insolvent. (2) The surviving spouse may select and retain as the spouse's own property so much of the furniture
and effects referred to in subsection (1) as the trustee determines. 119

e may select and retain as the spouse's own property so much of the furniture
and effects referred to in subsection (1) as the trustee determines. 119

Insolvency Act (Cap. 53) Kenya
(3) The surviving spouse shall make the selection within the time that the trustee allows. (4) The surviving spouse's selection does not affect any rights under a valid charge or security right or a
credit purchase transaction in respect of the goods selected. (5) The fact that the goods available for selection are subject to a charge or credit purchase transaction
does not give the surviving spouse any rights to any other part of the deceased's property. [Act No. 13 of 2017, Sch.]
372. Trustee may make allowance to surviving spouse
(1) The trustee may make an allowance out of the estate to the surviving spouse or to any of the
relatives or dependants of the deceased or the surviving spouse for the support of any of them. (2) However, the trustee shall first obtain the consent of the creditors, which is to be expressed in the
form of an ordinary resolution. Division 3 — Trustee's responsibilities with respect to administration of insolvent deceased's estate
373. Application of Division 3
This Division applies if the Court has made an order that the estate of a deceased person be administered
under this Part. 374.

lication of Division 3
This Division applies if the Court has made an order that the estate of a deceased person be administered
under this Part. 374.

Trustee's functions and powers in respect of insolvent deceased's estate
The trustee has, in relation to the estate, the same functions and powers as a bankruptcy trustee has in
relation to the property of a bankrupt. 375. Distribution of insolvent deceased's estate
(1) The trustee shall distribute the estate in the following order—
(a) firstly, payment of all proper costs, charges, debts and expenses of the due administration of
the estate, whether incurred before or after the order is made;
(b) secondly, payment of the deceased's reasonable funeral expenses;
(c) thirdly, payment of the following expenses of the deceased incurred during the three months
immediately before the deceased's death—
(i) medical expenses; and
(ii) reasonable expenses for hospital care provided for the deceased, so far as those
expenses are lawfully recoverable;
(d) fourthly, payment of other claims and interest in accordance with the Second Schedule. (2) For the purposes of subsection (1)(d), a reference in the Second Schedule to the commencement of
the bankruptcy is to be read as a reference to the date of the deceased's death. 376.

1)(d), a reference in the Second Schedule to the commencement of
the bankruptcy is to be read as a reference to the date of the deceased's death. 376.

How any surplus is to be paid
(1) In this section, "surplus" means the surplus of assets that remains with the trustee after the trustee
has paid in full—
(a) the debts due by the deceased debtor;
(b) the costs of the administration under this Part; and
(c) any other money that would be payable in a case of bankruptcy. 120

y the deceased debtor;
(b) the costs of the administration under this Part; and
(c) any other money that would be payable in a case of bankruptcy. 120

Insolvency Act (Cap. 53) Kenya
(2) The trustee shall—
(a) if there is an executor or administrator of the deceased's property that does not form part of
the deceased's estate under this Part, pay the surplus to that executor or administrator; or
(b) if there is no such executor or administrator, distribute the surplus in accordance with the
directions of the Court. (3) In giving any such directions, the Court shall have regard to the persons who are entitled to the
surplus. (4) The Court may make an order approving the distribution of the surplus as part of the order that the
estate be administered under this Part, or at any time afterwards. (5) If the Court has made such an order, it may from time to time vary it in relation to any part of the
surplus that remains under the control of the trustee at the date of the variation. 377.

may from time to time vary it in relation to any part of the
surplus that remains under the control of the trustee at the date of the variation. 377.

Creditor's notice to executor or administrator
If an order that a deceased's estate be administered under this Part is notified to the deceased's executor
or administrator, the executor or administrator may obtain a proper discharge for any payment of money
or disposition of property by the executor or administrator only if the payment or disposition is consistent
with the terms of the order. 378. Power of trustee to act in relation to deceased's irregular transactions
(1) A trustee may take a step that a bankruptcy trustee could have taken under Division 19 of Part III
(for example, by cancelling an irregular transaction) as if the deceased had been bankrupt at the
time of death. (2) When a trustee takes such a step, the following further additional restrictions apply—
(a) the trustee may not issue a notice cancelling a gift or voluntary settlement without first
obtaining the approval of the Court;
(b) the Court may make an order under section 212 only if it is satisfied that recovery of the
deceased's contribution to the property of another is necessary to pay the debts of the estate
in full (including interest).

fied that recovery of the
deceased's contribution to the property of another is necessary to pay the debts of the estate
in full (including interest).

(3) The Court may give approval for the purpose of subsection (2)(a) only if it is satisfied that recovery
of the gift or settlement is necessary to pay the debts of the estate in full (including interest). 379. Trustee may cancel execution against insolvent deceased debtor's estate
The trustee may cancel an execution against the deceased debtor's estate unless it was completed more
than three months before the date of the order that the estate be administered under this Part. 380. Certain acts of executor or administrator valid if done in good faith
A payment made, or an act done or omitted to be done, in good faith by an executor or administrator in
respect of a deceased's estate before the executor or administrator had notice of an intention to apply for
an order that the estate be administered under this Part is not invalidated by any other provision of this
Act. Part VI – LIQUIDATION OF COMPANIES
Division 1 — Introductory Provisions
121

red under this Part is not invalidated by any other provision of this
Act. Part VI – LIQUIDATION OF COMPANIES
Division 1 — Introductory Provisions
121

Insolvency Act (Cap. 53) Kenya
381. Scheme of Part VI
(1) This Part applies to the liquidation of a company registered under the Companies Act (Cap. 486). (2) A liquidation may be either—
(a) voluntary in accordance with Divisions 2 to 5; or
(b) by the Court in accordance with Division 6. (3) This Division and Divisions 7 to 10 relate to liquidation generally, except when otherwise stated. 382. Distinction between "members" and "creditors" voluntary liquidation
In this Part—
(a) a liquidation in the case of which a directors' statutory declaration under section 398 has been
made is a "members' voluntary liquidation"; and
(b) a liquidation in the case of which such a declaration has not been made is a "creditors' voluntary
liquidation". 383.

voluntary liquidation"; and
(b) a liquidation in the case of which such a declaration has not been made is a "creditors' voluntary
liquidation". 383.

Interpretation: Part VI
(1) In this Part—
"contributories"—
(a) means all persons liable to contribute to the assets of a company if it is liquidated; and
(b) for the purposes of all proceedings for determining, and all proceedings before the final
determination of, the persons who are to be treated as contributories for the purposes of this
Part—includes all persons alleged to be contributories;
"inability to pay its debts", in relation to a company, has the meaning given by section 384;
"liquidation committee meeting", in relation to a company, means a committee appointed by the
creditors of the company in accordance with section 409;
"official rate", in relation to interest payable under this Part, is the rate fixed in accordance with
subsection (3);
"resolution for voluntary liquidation" means a resolution passed under section 393(1)(a) or (b). (2) The reference in subsection (1) to persons liable to contribute to the assets of a company does not
include a person so liable because of a declaration by the Court under section 506 or 507.

ns liable to contribute to the assets of a company does not
include a person so liable because of a declaration by the Court under section 506 or 507.

(3) The Cabinet Secretary may, by order published in the Gazette, fix from time to time the official rate
of interest for the purpose of any provision of this Part in respect of which the expression "official
rate" is used. 384. The circumstances in which a company is unable to pay its debts
(1) For the purposes of this Part, a company is unable to pay its debts—
(a) if a creditor (by assignment or otherwise) to whom the company is indebted for hundred
thousand shillings or more has served on the company, by leaving it at the company's
registered office, a written demand requiring the company to pay the debt and the company
has for twenty—one days afterwards failed to pay the debt or to secure or compound for it to
the reasonable satisfaction of the creditor;
(b) if execution or other process issued on a judgment, decree or order of any court in favour of a
creditor of the company is returned unsatisfied in whole or in part; or
122

process issued on a judgment, decree or order of any court in favour of a
creditor of the company is returned unsatisfied in whole or in part; or
122

Insolvency Act (Cap. 53) Kenya
(c) if it is proved to the satisfaction of the Court that the company is unable to pay its debts as
they fall due. (2) A company is also unable to pay its debts for the purposes of this Part if it is proved to the
satisfaction of the Court that the value of the company's assets is less than the amount of its
liabilities (including its contingent and prospective liabilities). (3) The insolvency regulations may increase or reduce the amount specified in subsection (1)(a). 385. Liability as contributories of present and former members
(1) When a company is being liquidated, every present and former member is liable to contribute to
its assets to any amount sufficient for payment of its debts and liabilities, and the expenses of the
liquidation, and for the adjustment of the rights of the contributories among themselves.

ayment of its debts and liabilities, and the expenses of the
liquidation, and for the adjustment of the rights of the contributories among themselves.

(2) Subsection (1) is subject to the following provisions—
(a) a person who was formerly a member of the company is not liable to contribute if the person
has ceased to be a member for twelve months or more before the commencement of the
liquidation;
(b) a person who was formerly a member of the company is not liable to contribute in respect of
any debt or liability of the company contracted after the person ceased to be a member;
(c) a former member is not liable to contribute, unless it appears to the Court that the existing
members are unable to satisfy the contributions required to be made by them;
(d) in the case of a company limited by shares, a contribution is not required from a member
exceeding the amount (if any) unpaid on the shares for which the member is liable as a
present or former member;
(e) nothing in the Companies Act (Cap.

xceeding the amount (if any) unpaid on the shares for which the member is liable as a
present or former member;
(e) nothing in the Companies Act (Cap.

486) or this Act invalidates any provision contained in
a policy of insurance or other contract whereby the liability of individual members on the
policy or contract is restricted, or because of which the funds of the company are alone made
liable in respect of the policy or contract;
(f) an amount due to a member of the company as dividends, profits or otherwise is taken not
to be a debt of the company, that is payable to the member in a case of competition between
the member and any other creditor who is not a member of the company, but any such
amount can be taken into account for the purpose of the final adjustment of the rights of the
contributories among themselves. (3) In the case of a company limited by guarantee, a member is not liable to contribute more than the
amount that that the member has undertaken to contribute under the company's guarantee. 386. Liability of past directors and shareholders
(1) In this section, "relevant payment" means a payment made out of capital in respect of the
redemption or purchase by a company of any of its own shares. (2) This section applies if a company is in liquidation and—
(a) it has, under the Companies Act (Cap.

purchase by a company of any of its own shares. (2) This section applies if a company is in liquidation and—
(a) it has, under the Companies Act (Cap.

486), made a payment out of capital in respect of the
redemption or purchase of any of its own shares; and
(b) the aggregate amount of the company's assets and the amounts paid as a contribution to
its assets (apart from under this section) are not sufficient for payment of its debts and
liabilities and the expenses of the liquidation. 123

ion to
its assets (apart from under this section) are not sufficient for payment of its debts and
liabilities and the expenses of the liquidation. 123

Insolvency Act (Cap. 53) Kenya
(3) If the liquidation commenced within twelve months after the date on which the relevant payment
was made—
(a) the person from whom the shares were redeemed or purchased; and
(b) the directors who prepared the statement that the company will be able to continue to
carry on business as a going concern under the Companies Act (Cap. 486) for purposes of
the redemption or purchase, except a director who shows that the director had reasonable
grounds for forming the opinion set out in the declaration,
are, to the extent necessary to satisfy the insufficiency, liable to contribute to the company's assets
as provided by subsections (4) and (5). (4) A person from whom any of the shares were redeemed or purchased is liable to contribute an
amount not exceeding so much of the relevant payment as was made by the company in respect of
the person's shares; and the directors are jointly and severally liable with that person to contribute
that amount.

made by the company in respect of
the person's shares; and the directors are jointly and severally liable with that person to contribute
that amount.

(5) A person who has contributed an amount to the assets in accordance with this section may apply
to the Court for an order directing any other person jointly and severally liable in respect of that
amount to pay to the person such amount as the Court considers appropriate and equitable. (6) Section 385 does not apply to a liability accruing under this section. 387. Position of limited companies that were formerly unlimited
(1) This section applies to a company that is in liquidation if it was previously registered as unlimited
but has since become re-registered as a limited company. (2) Despite section 385(2)(a), a former member who was a member of the company at the time of its re-
registration is, if the liquidation commences within the three years from and including the date on
which the company was re-registered, liable to contribute to the assets of the company in respect of
debts and liabilities contracted before that time.

hich the company was re-registered, liable to contribute to the assets of the company in respect of
debts and liabilities contracted before that time.

(3) If no persons who were members of the company at that time are existing members of it, a person
who at that time was a present or former member is liable to contribute as required by subsection
(2) even though the existing members have paid the contributions required to be made by them. (4) Subsection (3) applies subject to section 385(2)(a) and to subsection (2) of this section, but despite
section 38(2)(c). (4) Despite section 385(2)(d) and (3), there is no limit on the amount that a person who, at that time,
was a past or present member of the company is liable to contribute. 388. Position of unlimited companies that were formerly limited
(1) This section applies to a company in liquidation that has previously been registered as limited but
has since become re-registered as unlimited. (2) A person who, at the time when the application for the company to be re-registered was lodged, was
a former member of the company and did not after that time again become a member of it is not
liable to contribute to the assets of the company any more than would have been the case had the
company not been re-registered. 389.

ber of it is not
liable to contribute to the assets of the company any more than would have been the case had the
company not been re-registered. 389.

Nature of contributory's liability
The liability of a contributory creates an ordinary contract debt due from the contributory at the time
when the contributor's liability began, but payable at the times when calls are made to enforce the
liability. 124

e from the contributory at the time
when the contributor's liability began, but payable at the times when calls are made to enforce the
liability. 124

Insolvency Act (Cap. 53) Kenya
390. Death of contributories not to affect their liability
(1) If a contributory dies either before or after being placed on the list of contributories, the
contributory's personal representatives are, in administering the contributory's estate, liable to
contribute to the assets of the company in discharge of the contributory's liability and are therefore
contributories. (2) If the personal representatives fail to pay money ordered to be paid by them, proceedings may be
taken for administering the estate of the deceased contributory and for compelling payment from it
of the money due. 391.

by them, proceedings may be
taken for administering the estate of the deceased contributory and for compelling payment from it
of the money due. 391.

Liability of contributories who are adjudged bankrupt
If a contributory is adjudged bankrupt, either before or after being placed on the list of contributories, the
following provisions apply—
(a) the contributory's bankruptcy trustee represents the contributory for all purposes of the liquidation
and is therefore a contributory for the purposes of this Part;
(b) that trustee may be required—
(i) to admit to proof against the contributory's estate; or
(ii) otherwise to permit the payment from the contributory's assets in due course of law,
any money due from the contributory in respect of the contributory's liability to contribute to the
company's assets;
(c) there may be proved against the contributory's estate the estimated value of the contributory's
liability to future calls as well as to calls already made. 392. Liability of contributories to contribute to debts of company registered but not formed
under Companies Act
(1) This section applies to a company in liquidation that is registered but was not formed under the
Companies Act (Cap. 486).

med
under Companies Act
(1) This section applies to a company in liquidation that is registered but was not formed under the
Companies Act (Cap. 486).

(2) A person is, in respect of the company's debts and liabilities contracted before registration, a
contributory if the person is liable—
(a) to pay, or contribute to the payment of, any debt or liability so contracted;
(b) to pay, or contribute to the payment of, any amount for the adjustment of the rights of the
members among themselves in respect of any such debt or liability; or
(c) to pay, or contribute to the amount of, the expenses of liquidating the company, so far as
relates to those debts or liabilities. (3) A contributory is liable to contribute to the assets of the company, in the course of the liquidation,
all amounts due from the contributory in respect of any such liability. (4) If a contributory dies or becomes bankrupt, the provisions of this Act relating to the personal
representatives of deceased contributories and to the bankruptcy trustees of bankrupt
contributories respectively apply. Division 2 — Voluntary liquidation (introductory and general)
125

tories and to the bankruptcy trustees of bankrupt
contributories respectively apply. Division 2 — Voluntary liquidation (introductory and general)
125

Insolvency Act (Cap. 53) Kenya
393. Circumstances in which company may be liquidated voluntarily
(1) A company may be liquidated voluntarily—
(a) when the period (if any) fixed for the duration of the company by the articles expires, or the
event (if any) occurs, on the occurrence of which the articles provide that the company is to
be dissolved, and the company in general meeting has passed a resolution providing for its
voluntary liquidation; or
(b) if the company resolves by special resolution that it be liquidated voluntarily. (2) Before passing a resolution for voluntary liquidation, the company shall give notice of the
resolution to the holder of any qualifying floating charge in respect of the company's property. (3) If notice is given proposing a resolution for the voluntary liquidation of a company, such a
resolution may be passed only—
(a) after the expiry of seven days from and including the date on which the notice was given; or
(b) if the person to whom the notice was given has consented in writing to the passing of the
resolution. (4) The provisions of the Companies Act (Cap.

b) if the person to whom the notice was given has consented in writing to the passing of the
resolution. (4) The provisions of the Companies Act (Cap.

486) which deal with resolutions affecting a company's
constitution apply to a resolution under paragraph (a) of subsection (1) as well as a special
resolution under paragraph (b) of that subsection. (5) For the purposes of this section, a person is the holder of a qualifying floating charge in respect of a
company's property if the person holds one or more debentures of the company secured—
(a) by a qualifying floating charge that relates to the whole or substantially the whole of the
company's property;
(b) by a number of qualifying floating charges that together relate to the whole or substantially
the whole of the company's property; or
(c) by charges and other forms of security that together relate to the whole or substantially the
whole of the company's property and at least one of which is a qualifying floating charge. 394.

that together relate to the whole or substantially the
whole of the company's property and at least one of which is a qualifying floating charge. 394.

Notice of resolution to liquidate
(1) Within fourteen days after a company has passed a resolution for its voluntary liquidation, it shall
publish a notice setting out the resolution—
(a) once in the Gazette;
(b) once in at least two newspapers circulating in the area in which the company has its
principal place of business in Kenya; and
(c) on the company's website (if any). (2) If a company fails to comply with subsection (1), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding five
hundred thousand shillings. (3) If, after a company or any of its officers is convicted of an offence, the company continues to fail to
take any of the steps specified in subsection (1), the company, and each officer of the company who
is in default, commit a further offence on each day on which the failure continues and on conviction
are each liable to a fine not exceeding fifty thousand shillings for each such offence. (4) For purposes of subsections (2) and (3), the liquidator is an officer of the company. 126

xceeding fifty thousand shillings for each such offence. (4) For purposes of subsections (2) and (3), the liquidator is an officer of the company. 126

Insolvency Act (Cap. 53) Kenya
395. When liquidation commences
The voluntary liquidation of a company commences when the resolution for voluntary liquidation is
passed. 396. Consequences of resolution to liquidate
(1) On and after the commencement of voluntary liquidation of a company, the company shall cease to
carry on its business, except in so far as may be necessary for its beneficial liquidation. (2) However, the corporate status and corporate powers of the company continue to have effect until
the company is dissolved, even if the company's articles provide otherwise. 397. Share transfers and attempts to alter member's status after liquidation resolution to
be void
The following are void if made after the commencement of a voluntary liquidation of a company—
(a) any transfer of the company's shares (other than a transfer made to or with the sanction of the
liquidator);
(b) an alteration in, or an attempt to alter, the status of the company's members. 398.

an a transfer made to or with the sanction of the
liquidator);
(b) an alteration in, or an attempt to alter, the status of the company's members. 398.

Making and effect of declaration of solvency by directors of company
(1) If it is proposed to liquidate a company voluntarily, the directors (or, in the case of a company
having more than two directors, the majority of them) may at a directors' meeting make a statutory
declaration to the effect—
(a) that they have made a full inquiry into the company's affairs; and
(b) that, having done so, they have formed the opinion that the company will be able to pay its
debts in full, together with interest at the official rate, within such period (not exceeding
twelve months from the commencement of the liquidation) as may be specified in the
declaration. (2) Such a declaration by the directors has no effect for purposes of this Act unless—
(a) it is made within the five weeks immediately preceding the date of the passing of the
resolution for liquidation, or on that date but before the passing of the resolution; and
(b) it includes a statement of the company's assets and liabilities as at the latest practicable date
before the making of the declaration.

ution; and
(b) it includes a statement of the company's assets and liabilities as at the latest practicable date
before the making of the declaration.

(3) Within fourteen days after the date on which the resolution for liquidation is passed, the company
shall lodge a copy of the declaration with the Registrar for registration. (4) A director who makes a declaration under this section without having reasonable grounds for
the opinion that the company will be able to pay its debts in full, together with interest at the
official rate, within the specified period commits an offence and on conviction is liable to a fine not
exceeding two million shillings or to imprisonment for a term not exceeding five years, or to both. (5) For the purpose of subsection (4), it is to be presumed, unless the contrary is established, that the
director did not have reasonable grounds for his or her opinion if—
(a) the company is liquidated in accordance with a resolution passed within five weeks after the
making of the declaration; and
(b) its debts (together with interest at the official rate) are not paid or provided for in full within
the specified period. 127

the declaration; and
(b) its debts (together with interest at the official rate) are not paid or provided for in full within
the specified period. 127

Insolvency Act (Cap. 53) Kenya
(6) If a company fails to comply with subsection (3), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings. (7) If, after a company or any of its officers is convicted of an offence under subsection (6), the
company continues to fail to lodge the required declaration, the company, and each officer of the
company who is in default, commit a further offence on each day on which the failure continues
and on conviction are each liable to a fine not exceeding twenty thousand shillings for each such
offence. Division 3 — Members' voluntary liquidation
399. Appointment of liquidator in members' voluntary liquidation
(1) In a members' voluntary liquidation, the company in general meeting shall appoint one or more
liquidators for the purpose of liquidating the company's affairs and distributing its assets. (2) On the appointment of a liquidator, all the powers of the directors cease, except in so far as the
company in general meeting or the liquidator sanctions their continuance.

a liquidator, all the powers of the directors cease, except in so far as the
company in general meeting or the liquidator sanctions their continuance.

(3) Only an authorised insolvency practitioner is eligible for appointment under subsection (1). 400. Power to fill vacancy in office of liquidator
(1) If a vacancy occurs (whether by death, resignation or otherwise) in the office of liquidator
appointed by the company, the company in general meeting shall, subject to any arrangement with
its creditors, appoint another authorised insolvency practitioner to fill the vacancy. (2) For the purposes of subsection (1), a general meeting may be convened—
(a) by a contributory; or
(b) if there was more than one liquidators, by the continuing liquidator or liquidators. (3) The company shall hold the meeting—
(a) in the manner provided by this Act or by its articles; or
(b) in such manner as the Court determines on an application made by a contributory or by
continuing liquidator or liquidators. 401. General company meeting at each year's end
(1) If the liquidation of a company continues for a period of twelve months or more, the liquidator shall
convene a general meeting of the company—
(a) within three months after the end of that period of twelve months; and
(b) within three months after the end of each subsequent period of twelve months.

thin three months after the end of that period of twelve months; and
(b) within three months after the end of each subsequent period of twelve months.

(2) The liquidator shall lay before the meeting an account of the liquidator's acts and dealings, and of
the conduct of the liquidation, during the preceding year. (3) A liquidator who fails to comply with this section commits an offence and on conviction is liable to
a fine not exceeding five hundred thousand shillings. (4) The Cabinet Secretary may extend the period of three months referred to in subsection (1)(a) or
(b) if satisfied that there are extenuating circumstances for doing so, and if the Cabinet Secretary
grants such an extension, that subsection is to be interpreted accordingly. (5) This section is subject to sections 404 and 410. 128

Cabinet Secretary
grants such an extension, that subsection is to be interpreted accordingly. (5) This section is subject to sections 404 and 410. 128

Insolvency Act (Cap. 53) Kenya
402. Final meeting prior to dissolution: members' voluntary liquidation
(1) As soon practicable after the liquidation of the company's affairs is complete, the liquidator—
(a) shall prepare an account of the liquidation showing how it has been conducted and how the
company's property has been disposed of; and
(b) shall then convene a general meeting of the company for the purpose of laying before it the
account and giving an explanation of it. (2) The liquidator—
(a) shall convene the meeting by publishing, at least thirty days before the meeting, an
advertisement—
(i) once in the Gazette;
(ii) once in at least two newspapers circulating in the area in which the company has its
principal place of business in Kenya; and
(iii) on the company's website (if any); and
(b) shall specify the time, date, place and purpose of the meeting. (3) Within seven days after the meeting, the liquidator shall lodge with the Registrar a copy of the
account, together with a return giving details of the holding of the meeting and of its date.

liquidator shall lodge with the Registrar a copy of the
account, together with a return giving details of the holding of the meeting and of its date.

(4) If the copy and return are not lodged in accordance with subsection (3), the liquidator commits an
offence and on conviction is liable to a fine not exceeding five hundred thousand shillings. (5) If, after being convicted of an offence under subsection (4), a liquidator continues to fail to lodge
the copy and the return, the liquidator commits a further offence on each day on which the failure
continues and on conviction is liable to a fine not exceeding fifty thousand shillings for each such
offence. (6) If a quorum is not present at the meeting, the liquidator shall, instead of the return referred to in
subsection (3), make a return that the meeting was duly convened and that no quorum was present;
and on such a return being made, subsection (3) as to the lodging of the return is taken to have
been satisfied. (7) If the liquidator fails to convene a general meeting of the company as required by subsection (1),
the liquidator commits an offence and on conviction is liable to a fine not exceeding five hundred
thousand shillings. 403.

equired by subsection (1),
the liquidator commits an offence and on conviction is liable to a fine not exceeding five hundred
thousand shillings. 403.

Effect of company’s insolvency
(1) This section applies if the liquidator is of the opinion that the company will be unable to pay its
debts in full (together with interest at the official rate) within the period stated in the directors'
declaration under section 398. (2) On forming the view that the company is or will be unable to pay its debts, the liquidator shall—
(a) convene a meeting of creditors for a date not later than thirty days after the day on which the
contributory formed that opinion;
(b) send notices of the creditors' meeting to the creditors by post at least seven days before the
day on which that meeting is to be held;
(c) publish notice of the creditors' meeting—
(i) once in the Gazette;
129

ost at least seven days before the
day on which that meeting is to be held;
(c) publish notice of the creditors' meeting—
(i) once in the Gazette;
129

Insolvency Act (Cap. 53) Kenya
(ii) once in at least two newspapers circulating in the area in which the company has its
principal place of business in Kenya; and
(iii) on the company's website (if any); and
(d) advertise the meeting in such other manner and place as the liquidator considers desirable in
the interests of the creditors;
(e) during the period before the day on which the creditors' meeting is to be held, provide
creditors, free of charge, with such information concerning the affairs of the company as
they may reasonably require; and
(f) specify in the notice of the creditors' meeting the duty imposed by paragraph (e). (3) The liquidator shall also—
(a) prepare a statement setting out the financial position of the company that complies with
subsection (4);
(b) lay that statement before the creditors' meeting; and
(c) attend and preside at that meeting.

on of the company that complies with
subsection (4);
(b) lay that statement before the creditors' meeting; and
(c) attend and preside at that meeting.

(4) A statement complies with this subsection if it—
(a) specifies—
(i) the prescribed details of the company's assets, debts and liabilities;
(ii) the names and addresses of the company's creditors;
(iii) the securities (if any) respectively held by them and the dates on which they were
respectively given; and
(iv) such other information (if any) as may be prescribed by the insolvency regulations;
and
(b) is verified by a statutory declaration signed by the liquidator. (5) If the company's principal place of business was located in different places at different times during
the relevant period, the duty imposed by subsection (2)(c) applies separately in relation to each of
those places. (6) If the company had no place of business in Kenya during the relevant period, the references in
subsections (2)(c) and (5) to the company's principal place of business are taken to be references to
its registered office. (7) In this section, "the relevant period" means the period of six months immediately preceding the day
on which were sent the notices convening the company meeting at which it was resolved that the
company be liquidated voluntarily.

ly preceding the day
on which were sent the notices convening the company meeting at which it was resolved that the
company be liquidated voluntarily.

(8) A liquidator who, without reasonable excuse, fails to comply with this section commits an offence
and on conviction is liable to a fine not exceeding five hundred thousand shillings. 404. Conversion to creditors' voluntary liquidation
As from and including the date on which the creditors' meeting is held in accordance with section 403—
(a) this Part has effect as if—
(i) the directors' declaration under section 398 had not been made; and
(ii) the creditors' meeting and the company meeting at which it was resolved that the company
be liquidated voluntarily were the meetings referred to in section 406; and
130

ting and the company meeting at which it was resolved that the company
be liquidated voluntarily were the meetings referred to in section 406; and
130

Insolvency Act (Cap. 53) Kenya
(b) the liquidation becomes a creditors' voluntary liquidation. Division 4 — Creditors' voluntary liquidation
405. Application of Division 4
(1) Except as provided by subsection (2), this Division applies in relation to a creditors' voluntary
liquidation. (2) Sections 406 and 407 do not apply if, under section 404, a members' voluntary liquidation has
become a creditors' voluntary liquidation. 406. Meeting of creditors to be convened by company
(1) A company that is in the course of liquidation shall—
(a) convene a meeting of the company's creditors for a day not later than the fourteenth day
after the day on which there is to be held the company meeting at which the resolution for
voluntary liquidation is to be proposed;
(b) send the notices of the creditors' meeting to the creditors not less than seven days before the
day on which that meeting is to be held; and
(c) ensure that notice of the creditors' meeting is published—
(i) once in the Gazette;
(ii) once in at least two newspapers circulating in the area in which the company has its
principal place of business in Kenya; and
(iii) on the company's website (if any).

two newspapers circulating in the area in which the company has its
principal place of business in Kenya; and
(iii) on the company's website (if any).

(2) The company shall ensure that the notice of the creditors' meeting states either—
(a) the name and address of a person authorised to act as an insolvency practitioner in relation
to the company who, during the period before the day on which that meeting is to be held,
will provide creditors free of charge with such information concerning the company's affairs
as the creditors may reasonably require; or
(b) a place in the area in which the company has its principal place of business in Kenya where,
on the two business days occurring immediately before the day on which that meeting is to
be held, a list of the names and addresses of the company's creditors will be available for
inspection free of charge. (3) If the company's principal place of business was located in different places at different times during
the relevant period, the duties imposed by subsections (1)(c) and (2)(b) apply separately in relation
to each of those places. (4) If the company had no place of business in Kenya during the relevant period, the references in
subsections (1)(c) and (3) to the company's principal place of business are taken to be references to
its registered office.

period, the references in
subsections (1)(c) and (3) to the company's principal place of business are taken to be references to
its registered office.

(5) In this section, "the relevant period" means the period of six months immediately preceding the day
on which were sent the notices convening the company meeting at which it was resolved that the
company be liquidated voluntarily. (6) If the company without reasonable excuse fails to comply with a requirement of subsection (1)
or (2), the company, and each officer of the company who is in default, commit an offence and on
conviction are each liable to a fine not exceeding five hundred thousand shillings. (7) If, after a company or any of its officers is convicted of an offence under subsection (6), the
company continues to fail to comply with the relevant requirement, the company, and each officer
131

convicted of an offence under subsection (6), the
company continues to fail to comply with the relevant requirement, the company, and each officer
131

Insolvency Act (Cap. 53) Kenya
of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each
such offence. 407. Directors to lay statement of financial position before creditors
(1) The directors of the company shall—
(a) prepare a statement setting out the financial position of the company that complies with
subsection (3);
(b) lay that statement before the creditors' meeting under section 406; and
(c) appoint one of their number to preside at that meeting. (2) It is the duty of the appointed director to attend the meeting and preside over it.

nd
(c) appoint one of their number to preside at that meeting. (2) It is the duty of the appointed director to attend the meeting and preside over it.

(3) A statement complies with this subsection if it—
(a) specifies—
(i) the details of the company's assets, debts and liabilities prescribed by the insolvency
regulations for the purposes of this section;
(ii) the names and addresses of the company's creditors;
(iii) the securities held by them respectively;
(iv) the dates when the securities were respectively given; and
(v) such further or other information as may be so prescribed; and
(b) is verified by a statutory declaration signed by two or more of the company's directors. (4) If the directors, without reasonable excuse, fail to comply with subsection (1)(a), (b) or (c), each of
them commits an offence and on conviction is liable to a fine not exceeding five hundred thousand
shillings. (5) A director who, without reasonable excuse, fails to comply with a duty imposed by subsection
(2) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand
shillings. 408.

mply with a duty imposed by subsection
(2) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand
shillings. 408.

Creditors' voluntary liquidation: appointment of liquidator
(1) The creditors and the company at their respective meetings may nominate an authorised insolvency
practitioner to be liquidator for the purpose of liquidating the company's affairs and distributing its
assets. (2) The liquidator is the insolvency practitioner nominated by the creditors unless they fail to make a
nomination, in which case the liquidator is the insolvency practitioner (if any) nominated by the
company. (3) If different insolvency practitioners are nominated, any director, member or creditor of the
company may, within seven days after the date on which the nomination was made by the creditors,
make an application to the Court for an order under subsection (4). (4) On the hearing of an application made under subsection (3), the Court may make an order either—
(a) directing the insolvency practitioner nominated as liquidator by the company to be
liquidator instead of, or jointly with, the insolvency practitioner nominated by the creditors;
or
(b) appointing some other person to be liquidator instead of the insolvency practitioner
nominated by the creditors. 132

ominated by the creditors;
or
(b) appointing some other person to be liquidator instead of the insolvency practitioner
nominated by the creditors. 132

Insolvency Act (Cap. 53) Kenya
409. Creditors may appoint liquidation committee
(1) The creditors at the meeting to be held in accordance with section 406 or at any subsequent
meeting may, if they think appropriate, appoint a liquidation committee of not more than five
persons to perform the functions imposed or conferred on such committees by or under this Act. (2) If such a committee has been appointed, the company may, either at the meeting at which the
resolution for voluntary liquidation is passed or at any time subsequently in general meeting,
appoint a number of persons, not exceeding five, to be members of the committee. (3) However, the creditors may resolve that all or any of the persons so appointed by the company are
disqualified from being members of the liquidation committee. (4) If the creditors so resolve, the persons referred to in the resolution cease to be members of the
committee, unless the Court, on the application of any of those persons, quashes the resolution.

erred to in the resolution cease to be members of the
committee, unless the Court, on the application of any of those persons, quashes the resolution.

(5) On the hearing of an application to the Court made by any of the creditors, the Court may appoint
other persons to act as members of the committee in place of the persons mentioned in the
resolution. 410. Creditors' meeting if liquidation converted under section 404
If, in the case of a liquidation that was under section 404 converted to a creditors' voluntary liquidation,
a creditors' meeting is held in accordance with section 403, any appointment made or committee
established by that meeting is taken to have been made or established by a meeting held in accordance
with section 406 (meetings of creditors). 411. Cessation of directors' powers
On the appointment of a liquidator, all the powers of the directors cease, except so far as the liquidation
committee, or if there is no such committee, the creditors, sanction their continuance. 412. Vacancy in office of liquidator: creditors' voluntary liquidation
(1) If a vacancy occurs in the office of liquidator, the creditors may fill the vacancy. (2) Subsection (1) does not apply to a liquidator appointed by, or by the direction of, the Court. 413.

iquidator, the creditors may fill the vacancy. (2) Subsection (1) does not apply to a liquidator appointed by, or by the direction of, the Court. 413.

Meetings of company and company's creditors to be held every twelve months
(1) A liquidator who continues in office for more than twelve months shall convene a general meeting
of the company and a meeting of the creditors to be held—
(a) within three months after the end of that period of twelve months; and
(b) within three months after the end of each subsequent period of twelve months. (2) The liquidator shall lay before each of the meetings an account of the liquidator's acts and dealings
and of the conduct of the liquidation during the preceding year. (3) A liquidator is not required to convene a meeting of creditors as provided by subsection (1)(a) if—
(a) under section 404, a members' voluntary liquidation has become a creditors' voluntary
liquidation; and
(b) the creditors' meeting under section 403 is held three months or less before the end of the
twelve months after the commencement of the liquidation. (4) The Cabinet Secretary may extend the period of three months referred to in subsection (1)(a) or (b)
if satisfied that there are extenuating circumstances for doing so, and such an extension is granted,
that subsection is to be interpreted accordingly. 133

tisfied that there are extenuating circumstances for doing so, and such an extension is granted,
that subsection is to be interpreted accordingly. 133

Insolvency Act (Cap. 53) Kenya
(5) A liquidator who, without reasonable excuse, fails to comply with a requirement of this section
commits an offence and on conviction is liable to a fine not exceeding one million shillings. 414. Final meeting prior to dissolution: creditors' voluntary liquidation
(1) As soon practicable after the liquidation of the company's affairs has been completed, the liquidator
shall prepare an account of the liquidation and an explanation showing how it has been conducted
and how the company's property has been disposed of. (2) Within thirty days after preparing the account, the liquidator shall, by a notice published in
accordance with subsection (3), convene a general meeting of the company and a meeting of the
creditors to enable those attending the meetings to consider the account and explanation. (3) The liquidator shall ensure—
(a) that the notice is published—
(i) once in the Gazette;
(ii) once in at least two newspapers circulating in the area in which the company has its
principal place of business in Kenya; and
(iii) on the company's website (if any); and
(b) that the notice specifies the time, date, place and purpose of the meeting.

of business in Kenya; and
(iii) on the company's website (if any); and
(b) that the notice specifies the time, date, place and purpose of the meeting.

(4) Within seven days—
(a) after the date on which the meetings are held; or
(b) if they are not held on the same date, after the date on which the later one is held,
the liquidator shall lodge with the Registrar a copy of the account, together with a return giving
details of the holding of the meetings and the dates on which they were held. (5) A liquidator who fails to lodge the copy and return as required by subsection (3) commits an offence
and on conviction is liable to a fine not exceeding two hundred thousand shillings. (6) If, after being convicted of an offence under subsection (5), a liquidator continues to fail to lodge
the required copy and return, the liquidator commits a further offence on each day on which the
failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for
each such offence. (7) If a quorum is not present at either of the meeting, the liquidator shall, instead of the return
required by subsection (3), make a return to the effect that the meeting was duly convened but no
quorum was present.

tor shall, instead of the return
required by subsection (3), make a return to the effect that the meeting was duly convened but no
quorum was present.

(8) On such return being made, the provisions of subsection (3) relating to the making of the return
are, in respect of that meeting, taken to have been complied with. (9) A liquidator who, without reasonable excuse, fails to convene a general meeting of the company or
a meeting of the creditors as required by this section commits an offence and on conviction is liable
to a fine not exceeding one million shillings. Division 5 — Provisions applying to both kinds of voluntary liquidation
415. Property of company to be distributed among members after satisfaction of liabilities
(1) On the liquidation, the company's property in the voluntary liquidation—
(a) are to be applied in satisfaction of the company's liabilities equally and without preference;
and
134

ny's property in the voluntary liquidation—
(a) are to be applied in satisfaction of the company's liabilities equally and without preference;
and
134

Insolvency Act (Cap. 53) Kenya
(b) subject to that application, are, unless the company's articles otherwise provide, to be
distributed among the members according to their rights and interests in the company. (2) Subsection (1) is subject to the provisions of this Act relating to preferential payments. 416. Appointment or removal of liquidator by the Court
(1) The Court may appoint a liquidator if for any reason there is no liquidator or the liquidator is
unable to act. (2) The Court may, on cause shown, remove a liquidator and appoint another one. (3) Only an authorised insolvency practitioner is eligible for appointment under this section. (4) The acts of a person appointed by the Court as a liquidator of a company are valid despite any
defect in the person's appointment or qualifications. 417. Notice of appointment to be published by liquidator
(1) Within seven days after being appointed as liquidator of a company, the liquidator shall publish a
notice of the liquidator's appointment—
(a) once in the Gazette;
(b) once in at least two newspapers circulating in the area in which the company has its
principal place of business in Kenya; and
(c) on the company's website (if any).

t two newspapers circulating in the area in which the company has its
principal place of business in Kenya; and
(c) on the company's website (if any).

(2) Within fourteen days after publishing (or first publishing) the notice of the liquidator's
appointment, the liquidator shall lodge a copy of the notice with the Registrar for registration. (3) A liquidator who fails to comply with subsection (1) commits an offence and on conviction is liable
to a fine not exceeding five hundred thousand shillings. (4) If, after being convicted of an offence under subsection (3), a liquidator continues to fail to lodge
the required notice, the liquidator commits a further offence on each day on which the failure
continues and on conviction is liable to a fine not exceeding fifty thousand shillings for each such
offence. (5) A liquidator who fails to comply with subsection (1) commits an offence and on conviction is liable
to a fine not exceeding two hundred thousand shillings. (6) If, after being convicted of an offence under subsection (5), a liquidator continues to fail to lodge
the required notice, the liquidator commits a further offence on each day on which the failure
continues and on conviction is liable to a fine not exceeding twenty thousand shillings for each such
offence. 418.

e on each day on which the failure
continues and on conviction is liable to a fine not exceeding twenty thousand shillings for each such
offence. 418.

Power of liquidator to accept shares or membership rights as consideration for sale of
company's property
(1) In this section—
(a) the transferor company is a company to which this section applies; and
(b) a transferee company, or a transferee limited liability partnership, is the company or
partnership to which the property of the transferor company is proposed to be, or is to be,
transferred or sold. 135

ty partnership, is the company or
partnership to which the property of the transferor company is proposed to be, or is to be,
transferred or sold. 135

Insolvency Act (Cap. 53) Kenya
(2) This section applies to a company that is proposed to be, or is being, liquidated voluntarily if the
whole or part of the company's business or property is proposed to be transferred or sold—
(a) to a transferee company; or
(b) to a transferee limited liability partnership. (3) With the required approval, the liquidator of the transferor company may receive, in compensation
or part compensation for the transfer or sale—
(a) in the case of the transferee company, shares, policies or other similar interests in the
transferee company for distribution among the members of the transferor company; or
(b) in the case of the transferee limited liability partnership—membership rights in the
transferee limited liability partnership for distribution among the members of the transferor
company.

liability partnership—membership rights in the
transferee limited liability partnership for distribution among the members of the transferor
company.

(4) The approval required under subsection (3) is—
(a) in the case of a members' voluntary liquidation, a special resolution of the company,
conferring either a general authority on the liquidator or an authority in respect of any
particular arrangement; and
(b) in the case of a creditors' voluntary liquidation, the approval of either the Court or the
liquidation committee (if any). (5) As an altenative to subsection (3), the liquidator may, with the required approval, enter into any
other arrangement under which the members of the transferor company may—
(a) in the case of the transferee company, instead of receiving cash, shares, policies or similar
interests (or in addition to them), participate in the profits of, or receive any other benefit
from, the transferee company; or
(b) in the case of the transferee limited liability partnership, instead of receiving cash or
membership rights (or in addition to them), participate in some other way in the profits of, or
receive any other benefit from, that partnership. (6) A sale or arrangement in accordance with this section is binding on members of the transferor
company.

e any other benefit from, that partnership. (6) A sale or arrangement in accordance with this section is binding on members of the transferor
company.

(7) A special resolution is not invalid for purposes of this section only because it is passed before or
concurrently with a resolution for voluntary liquidation or for appointing a liquidator, but, if an
order for the liquidation of the company is made by the Court within twelve months after the date
on which the resolution was passed, the special resolution is valid only if approved by the Court. (8) This section applies to a transferee company even if it is not a company registered under the
Companies Act (Cap. 486). 419. Dissenting member may require liquidator to refrain from giving effect to
arrangement under section 418 or to purchase member's shares
(1) This section applies to a voluntary liquidation in relation to which the transferor company has
passed a special resolution, for the purposes of section 418(3) or (5), providing the approval
required for the liquidator under that section.

any has
passed a special resolution, for the purposes of section 418(3) or (5), providing the approval
required for the liquidator under that section.

(2) If a member of the transferor company who did not vote in favour of the special resolution
expresses the member's dissent from it in writing, addressed to the liquidator and left at the
company's registered office within seven days after the passing of the resolution, the member may
require the liquidator either—
(a) to refrain from giving effect to the resolution; or
136

en days after the passing of the resolution, the member may
require the liquidator either—
(a) to refrain from giving effect to the resolution; or
136

Insolvency Act (Cap. 53) Kenya
(b) to purchase the member's interest at a price to be determined by agreement or by arbitration
in accordance with the Arbitration Act (Cap. 49). (3) If the liquidator elects to purchase the member's interest, the liquidator shall—
(a) pay the purchase money before the company is dissolved; and
(b) raise the money in such manner as may be determined by special resolution. (4) If the member requires the liquidator to purchase the member's interest and no agreement is
reached as to the price to be paid for the interest, the requirement to purchase the interest is, for
the purposes of the Arbitration Act (Cap. 49), taken to be an arbitration agreement to determine
that price. 420. Questions relating to liquidation may be referred to the Court for determination
(1) The liquidator, or a contributory or creditor, may apply to the Court to determine any question
arising in the liquidation of a company, or to exercise, with respect to the enforcing of calls or any
other matter, all or any of the powers that the Court might exercise if the company were being
liquidated by the Court.

the enforcing of calls or any
other matter, all or any of the powers that the Court might exercise if the company were being
liquidated by the Court.

(2) If satisfied that the determination of the question or the required exercise of power will be fair and
beneficial, the Court may make an order acceding wholly or partially to the application on such
terms as it considers appropriate, or may make such other order on the application as it considers
appropriate. (3) On the making of an order under subsection (2), the Registrar of the Court shall without delay
forward a copy of the order to the Registrar of Companies for registration. 421. Restrictions on directors' powers to appoint or nominate liquidator of company in
voluntary liquidation
(1) If, in the case of a company that is in voluntary liquidation, a liquidator has not been appointed or
nominated by the company, the directors may exercise their powers only—
(a) with the approval of the Court; or
(b) in the case of a creditors' voluntary liquidation, so far as may be necessary to secure
compliance with sections 406 and 407, during the period before the appointment or
nomination of a liquidator of the company.

ay be necessary to secure
compliance with sections 406 and 407, during the period before the appointment or
nomination of a liquidator of the company.

(2) Subsection (1) does not prevent the directors from exercising their powers—
(a) to dispose of perishable goods and other goods the value of which is likely to diminish if they
are not immediately disposed of; and
(b) to do all such other things as may be necessary for the protection of the company's assets. (3) If the directors of the company, without reasonable excuse, fail to comply with subsection (1), each
of them who is in default commits an offence and on conviction is liable to a fine not exceeding five
hundred thousand shillings. 422. Saving for certain rights
The voluntary liquidation of a company does not prevent a creditor or contributory from seeking to have
the company liquidated by the Court, but in the case of an application by a contributory, the Court is
required to be satisfied that the rights of the other contributories will not be detrimentally affected by
such a liquidation. Division 6 — Liquidation by the Court
137

isfied that the rights of the other contributories will not be detrimentally affected by
such a liquidation. Division 6 — Liquidation by the Court
137

Insolvency Act (Cap. 53) Kenya
423. Jurisdiction of High Court to supervise liquidation of companies
(1) Only the High Court has jurisdiction to supervise the liquidation of companies registered in Kenya. (2) Subsection (1) does not apply to a company that is in voluntary liquidation in accordance with
Divisions 2 to 5. 424. Circumstances in which company may be liquidated by the Court
(1) A company may be liquidated by the Court if—
(a) the company has by special resolution resolved that the company be liquidated by the Court;
(b) being a public company that was registered as such on its original incorporation—
(i) the company has not been issued with a trading certificate under the Companies Act
(Cap.

hat was registered as such on its original incorporation—
(i) the company has not been issued with a trading certificate under the Companies Act
(Cap.

486); and
(ii) more than twelve months has elapsed since it was so registered;
(c) the company does not commence its business within twelve months from its incorporation or
suspends its business for a whole year;
(d) except in the case of a private company limited by shares or by guarantee, the number of
members is reduced below two;
(e) the company is unable to pay its debts;
(f) at the time at which a moratorium for the company ends under section 645—a voluntary
arrangement made under Part IX does not have effect in relation to the company; or
(g) the Court is of the opinion that it is just and equitable that the company should be
liquidated. (2) A company may also be liquidated by the Court on an application made by the Attorney-General
under section 425(6). 425.

pany should be
liquidated. (2) A company may also be liquidated by the Court on an application made by the Attorney-General
under section 425(6). 425.

Applications to the Court for liquidation of companies
(1) An application to the Court for the liquidation of a company may be made any or all of the following
—
(a) the company or its directors;
(b) a creditor or creditors (including any contingent or prospective creditor or creditors);
(c) a contributory or contributories of the company;
(d) a provisional liquidator or an administrator of the company;
(e) if the company is in voluntary liquidation, the liquidator. (2) However, except as otherwise provided by this section, a contributory is not entitled to make a
liquidation application unless either—
(a) the number of members is reduced below two; or
(b) the relevant shares (or some of them) either—
(i) were originally allotted to the contributory, or have been held by the contributory,
and registered in the contributory's' name, for at least six months during the eighteen
months preceding the commencement of the liquidation; or
(ii) have devolved on the contributory through the death of a former holder. 138

the eighteen
months preceding the commencement of the liquidation; or
(ii) have devolved on the contributory through the death of a former holder. 138

Insolvency Act (Cap. 53) Kenya
(3) A person who is liable under section 386 to contribute to a company's assets on its in liquidation
may make an application on either of the grounds specified in section 424(1)(e) and (g), in which
case subsection (2) does not apply, but, unless the person is a contributory otherwise than under
section 386, the contributory may not as such make a liquidation application on any other ground. (4) A liquidation application on the ground specified in section 424(1)(f) may only be made by one or
more creditors. (5) The Attorney-General may make a liquidation application if—
(a) the ground of the application is that specified in section 424(1)(b); or
(b) it is a case to which section 426 applies. (6) The Attorney-General may also make an application for the liquidation of a company if, after
receiving from an inspector appointed to conduct an investigation into the affairs of a company
under the Companies Act (Cap. 486) a copy of a report of the investigation, the Attorney-General
considers that, as a result of the report, the company should be liquidated.

(Cap. 486) a copy of a report of the investigation, the Attorney-General
considers that, as a result of the report, the company should be liquidated.

(7) Subject to subsection (8), the Official Receiver or by any other person authorised under the other
provisions of this section may make a liquidation application to the Court in respect of a company
that is in voluntary liquidation. (8) The Court may make a liquidation order on such an application only if it is satisfied that the
voluntary liquidation cannot be continued with due regard to the interests of the creditors or
contributories. 426. Application for liquidation of company on grounds of public interest
(1) If, in relation to a company, it appears to the Attorney-General—
(a) from a report made or information obtained from investigations carried out or inspection of
documents produced under the Companies Act (Cap. 486).

(a) from a report made or information obtained from investigations carried out or inspection of
documents produced under the Companies Act (Cap. 486).

(b) from a report made, or information obtained, by the Capital Markets Authority under the
Capital Markets Act;
(c) from information provided by the Registrar; or
(d) as a result of the company or its directors having been convicted of an offence involving
fraudulent conduct,
that it would be in the public interest for the company to be liquidated, the Attorney-General may
make an application to the Court to make a liquidation order in respect of the company for its
liquidation on the ground that it would be just and equitable for it to be so. (2) Subsection (1) does not apply if the company is already in the process of liquidation by the Court. 427. Powers of Court on hearing of liquidation application
(1) On the hearing of a liquidation application, the Court may make such of the following orders as it
considers appropriate—
(a) an order dismissing the application;
(b) an order adjourning the hearing, conditionally or unconditionally;
(c) an interim liquidation order; or
(d) any other order that, in its opinion, the circumstances of the case require. 139

tionally or unconditionally;
(c) an interim liquidation order; or
(d) any other order that, in its opinion, the circumstances of the case require. 139

Insolvency Act (Cap. 53) Kenya
(2) However, the Court may not refuse to make a liquidation order on the ground only that the
company's assets have been mortgaged to an amount equal to or in excess of those assets, or that
the company has no assets. (3) If the application is made by members of the company as contributories on the ground that it is just
and equitable that the company should be liquidated, the Court shall make a liquidation order, but
only if of the opinion that—
(a) that the applicants are entitled to relief either by liquidating the company or by some other
means; and
(b) that, in the absence of any other remedy, it would be just and equitable that the company
should be liquidated. (4) Subsection (3) does not apply if the Court is also of the opinion that—
(a) some other remedy is available to the applicants; and
(b) they are acting unreasonably in seeking to have the company liquidated instead of pursuing
that other remedy. 428.

vailable to the applicants; and
(b) they are acting unreasonably in seeking to have the company liquidated instead of pursuing
that other remedy. 428.

Power to stay or restrain proceedings against company when liquidation application
has been made
(1) At any time after the making of a liquidation application, and before a liquidation order has been
made, the company, or any creditor or contributory, may—
(a) if legal proceedings against the company are pending in the Court, apply to the Court for the
proceedings to be stayed; and
(b) if proceedings relating to a matter are pending against the company in another court, apply
to the Court to restrain further proceedings in respect of that matter in the other court. (2) On the hearing of an application under subsection (1)(a) or (b), the Court may make an order
staying or restraining the proceedings on such terms as it considers appropriate. (3) If, in relation to a company registered (but not formed) under the Companies Act (Cap. 486), the
application is made by a creditor, this section extends to any contributory of the company. 429.

t not formed) under the Companies Act (Cap. 486), the
application is made by a creditor, this section extends to any contributory of the company. 429.

Dispositions of property by company after commencement of liquidation to be void
unless the Court otherwise orders
(1) In a liquidation ordered by the Court—
(a) any disposition of the company's property; and
(b) any transfer of shares, or alteration in the status of the company's members,
made after the commencement of the liquidation is void, unless the Court otherwise orders. (2) Subsection (1) does not apply to action taken by an administrator of a company while a liquidation
application is suspended under section 558(1)(b) (effect of administration order on pending
liquidation application). 430. Attachments and other forms of execution against company in liquidation to be void
If a company is being liquidated by the Court, any attachment, sequestration, distress or execution
instigated against the assets of the company after the commencement of the liquidation is void. 140

y attachment, sequestration, distress or execution
instigated against the assets of the company after the commencement of the liquidation is void. 140

Insolvency Act (Cap. 53) Kenya
431. When liquidation of company by the Court commences
(1) If, before the making of an application for the liquidation of a company by the Court, a resolution
has been passed by the company for liquidating the company voluntarily—
(a) the liquidation commences at the time of the passing of the resolution; and
(b) unless the Court, on proof of fraud or mistake, directs otherwise, all proceedings taken in the
voluntary liquidation are to be regarded as having have been validly taken. (2) If the Court makes a liquidation order under section 534, the liquidation commences on the making
of the order. (3) In any other case, the liquidation of a company by the Court commences when the application for
liquidation order is made. 432. Consequences of liquidation order
(1) Within seven days after a liquidation order is made in respect of a company, the company shall
lodge a copy of the order with the Registrar for registration and also lodge a copy of it with the
Official Receiver.

of a company, the company shall
lodge a copy of the order with the Registrar for registration and also lodge a copy of it with the
Official Receiver.

(2) When a liquidation order has been made or a provisional liquidator has been appointed, legal
proceedings against the company may be begun or continued only with the approval of the Court
and subject to such conditions as the Court considers appropriate. (3) An order for liquidating a company operates in favour of all the creditors and of all contributories of
the company as if made on the joint application of all of them. 433. Official Receiver may require certain persons to submit statement relating to
company's affairs
(1) If the Court has made a liquidation order or appointed a provisional liquidator in respect of a
company, the Official Receiver may require some or all of the prescribed persons to make out and
submit to the Official Receiver a statement of affairs relating to the company.

iver may require some or all of the prescribed persons to make out and
submit to the Official Receiver a statement of affairs relating to the company.

(2) Those prescribed persons who are required to make out such a statement shall do so without delay
and shall include in it—
(a) such particulars of the company's assets, debts and liabilities as are prescribed by the
insolvency regulations for the purposes of this section;
(b) the names and addresses of the company's creditors;
(c) the securities (if any) held by them respectively;
(d) the dates when the securities were respectively given; and
(e) such further or other information as the Official Receiver may reasonably require. (3) The prescribed persons are—
(a) those who are or have been officers of the company;
(b) those who have taken part in the formation of the company at any time during the twelve
months before the relevant date;
(c) those who—
(i) are in the company's employment, or have been in its employment during that period;
and
(ii) are in the Official Receiver's opinion capable of giving the information required;
141

nt, or have been in its employment during that period;
and
(ii) are in the Official Receiver's opinion capable of giving the information required;
141

Insolvency Act (Cap. 53) Kenya
(d) those who are or have been within that period officers of, or in the employment of, a
company that is, or within that period was, an officer of the company. (4) Prescribed persons who under this section are required under this section to submit a statement
of affairs to the Official Receiver shall, subject to subsection (5), do so within twenty-one days
from and including the date on which notice of the requirement was given to those persons by the
Official Receiver and verify the statement by statutory declaration. (5) The Official Receiver may—
(a) at any time release a person from an obligation imposed on the person under subsection (1)
or by subsection (2); or
(b) either when giving the notice referred to in subsection (4) or subsequently, extend the period
referred to in that subsection. (6) If the Official Receiver has declined to exercise a power conferred by subsection (5), the Court
may, on the application of the Attorney-General or a person who is dissatisfied with the Official
Receiver's decision, exercise the power if it considers it appropriate to do so.

he Attorney-General or a person who is dissatisfied with the Official
Receiver's decision, exercise the power if it considers it appropriate to do so.

(7) In this section—
"employment" includes employment under a contract for the supply of services; and
"the relevant date" means—
(a) if a provisional liquidator is appointed, the date of the appointment; and
(b) if no such appointment is made, the date of the liquidation order. (8) A person who, without reasonable excuse, fails to comply with an obligation imposed by or under
this section commits an offence and on conviction is liable to a fine not exceeding five hundred
thousand shillings. (9) If, after being convicted of an offence under subsection (8), a person, without reasonable excuse,
continues to fail to comply with the relevant obligation, the person commits a further offence on
each day on which the failure continues and on conviction is liable to a fine not exceeding fifty
thousand shillings for each such offence. 434.

ce on
each day on which the failure continues and on conviction is liable to a fine not exceeding fifty
thousand shillings for each such offence. 434.

Duty of Official Receiver to conduct investigation into failure of company
(1) On the making of a liquidation order, the Official Receiver shall conduct an investigation—
(a) if the company has failed,to discover why the company failed; and
(b) generally, to investigate the promotion, formation, business, dealings and affairs of the
company,
and to make such report (if any) to the Court as the Official Receiver considers appropriate,
(2) In any legal proceedings, the Official Receiver's report is evidence of the matters stated in it until
the contrary is proved. 435. Public examination of officers and former officers of company
(1) If a company is being liquidated by the Court, the Official Receiver may, at any time before the
dissolution of the company, apply to the Court for the public examination of any person who—
(a) is or has been an officer of the company;
(b) has acted as provisional liquidator, liquidator or administrator of the company; or
(c) not being a person referred to in paragraph (a) or (b), is or has been concerned, or has taken
part, in the promotion, formation or management of the company. 142

person referred to in paragraph (a) or (b), is or has been concerned, or has taken
part, in the promotion, formation or management of the company. 142

Insolvency Act (Cap. 53) Kenya
(2) Unless the Court otherwise orders, the Official Receiver shall make an application under subsection
(1) on receiving a written request to do so from—
(a) creditors of the company holding not less than one-half in value of the total amount of the
company's debts; or
(b) contributories of the company holding not less than three-quarters of the voting rights at
general meetings of the company. (3) If, on the hearing of an application made under subsection (1), the Court is satisfied that a public
examination of the person to whom the application relates is warranted, it shall make an order
directing such an examination to be held on a date and at a time and place specified in the order. (4) On being served with a copy of an order made under subsection (3), the person concerned shall
attend on the date and at the time and place specified in the order and be publicly examined—
(a) about the promotion, formation or management of the company; or
(b) about the conduct of its affairs, or conduct or dealings in relation to the company.

out the promotion, formation or management of the company; or
(b) about the conduct of its affairs, or conduct or dealings in relation to the company.

(5) The persons specified in subsection (6) may—
(a) participate in the public examination of a person under this section; and
(b) may question the person concerning the matters referred to in subsection (4). (6) The following persons are specified for the purpose of subsection (5)—
(a) the Official Receiver;
(b) the liquidator of the company;
(c) any person who has been appointed as special manager of the company's property or
business;
(d) any creditor of the company who has submitted a proof;
(e) any contributory of the company. 436. Consequences of failure to attend public examination
(1) A person who, without reasonable excuse, fails at any time to attend the person's public
examination under section 435 is guilty of a contempt of Court and is liable to be punished
accordingly (in addition to any other punishment to which the person may be subject).

35 is guilty of a contempt of Court and is liable to be punished
accordingly (in addition to any other punishment to which the person may be subject).

(2) If a person fails without reasonable excuse to attend the person's examination under section 434,or
there are reasonable grounds for believing that a person has absconded, or is about to abscond,
with a view to avoiding or delaying the examination, the Court may issue a warrant to be issued to a
police officer or a prescribed officer of the Court—
(a) for the arrest of that person; and
(b) for the seizure of any documents or property in that person's possession. (3) In such a case, the Court may authorise the person arrested under the warrant to be detained in
custody, and anything seized under it to be kept, in accordance with the directions of the Court,
until such time as the Court orders. 437. Appointment and powers of provisional liquidator
(1) The Court may appoint a provisional liquidator either on or after, or at any time before, the making
of a liquidation order in respect of a company. 143

e Court may appoint a provisional liquidator either on or after, or at any time before, the making
of a liquidation order in respect of a company. 143

Insolvency Act (Cap. 53) Kenya
(2) Only the Official Receiver or an authorised insolvency practitioner is eligible for appointment as a
provisional liquidator. (3) A provisional liquidator shall perform such functions and may exercise such powers as the Court
may specify in the order appointing the provisional liquidator. (4) The acts of a person appointed as provisional liquidator of a company are valid despite any defect in
the person's appointment or qualifications. 438. Functions and powers of Official Receiver in relation to office of liquidator
(1) Subsections (2) to (7) have effect, subject to section 441 when the Court makes an order for the
company to be liquidated. (2) The Official Receiver becomes the liquidator of the company and continues in office until some
other person becomes liquidator under this Part. (3) The Official Receiver is the liquidator during any vacancy in the office of liquidator. (4) At any time while liquidator of the company, the Official Receiver may convene separate meetings
of the company's creditors and the company's contributories for the purpose of choosing a person to
be liquidator of the company in place of the Official Receiver.

y's creditors and the company's contributories for the purpose of choosing a person to
be liquidator of the company in place of the Official Receiver.

(5) The Official Receiver shall—
(a) as soon as practicable during the three months from and including the date on which the
liquidation order was made, decide whether to exercise the power under subsection (4) to
convene meetings;
(b) if in accordance with paragraph (a), the Official Receiver decides not to exercise that power—
give notice of the decision, before the end of that period, to the Court and to the company's
creditors and contributories; and
(c) (whether or not a decision to exercise that power has been made) exercise the power to
convene meetings under subsection (4) if requested to do so by creditors who hold not less
than one quarter in value of the total amount of the company's debts. (6) If the duty imposed by subsection (5)(c) arises before the Official Receiver has performed the duty
imposed by subsection (5)(a) or (b), the Official Receiver is not required to perform the latter duty. (7) The Official Receiver shall include in a notice given under subsection (5)(b) an explanation of the
creditors' power under subsection (5)(c) to require the Official Receiver to convene meetings of the
company's creditors and contributories. 439.

the
creditors' power under subsection (5)(c) to require the Official Receiver to convene meetings of the
company's creditors and contributories. 439.

Power of Official Receiver to appoint liquidator in certain cases
(1) In the case of a liquidation ordered by the Court, the Official Receiver (being the liquidator) may, at
any time, appoint a qualified person as liquidator instead. (2) If meetings are held in accordance with a decision under section 438(5)(a), but no person is chosen
to be liquidator as a result of those meetings, the Official Receiver shall decide whether a liquidator
should be appointed in respect of the company. (3) On deciding that such an appointment should be made, the Official Receiver shall appoint a
qualified person as liquidator. (4) Immediately after making an appointment under subsection (1) or (3), the Official Receiver shall
notify the appointment to the Court. 144

uidator. (4) Immediately after making an appointment under subsection (1) or (3), the Official Receiver shall
notify the appointment to the Court. 144

Insolvency Act (Cap. 53) Kenya
(5) The person appointed shall, as soon as practicable (and not later than seven days) after being
appointed—
(a) send a notice of the appointment to the company's creditors; or
(b) if, on application made to the Court, the Court so allows, advertise the appointment in
accordance with the directions of the Court. (6) If appointed under subsection (3), the person appointed shall state in the notice or advertisement—
(a) whether it is proposed to convene a general meeting of the company's creditors under
section 442 for the purpose of determining (together with any meeting of contributories)
whether a liquidation committee should be established under that section; and
(b) if it is not proposed to convene such a meeting, that the creditors are entitled under that
section to require one to be convened. 440.

ction; and
(b) if it is not proposed to convene such a meeting, that the creditors are entitled under that
section to require one to be convened. 440.

Creditors' choice to prevail if meetings of creditors and contributors nominate
different liquidators
(1) If a company is being liquidated by the Court and separate meetings of the company's creditors and
the company's contributories are convened for the purpose of choosing a person to be liquidator
of the company, the creditors and the contributories at their respective meetings may nominate a
person to be the liquidator of the company. (2) The liquidator is—
(a) the person nominated by the creditors; or
(b) if no person is so nominated, the person (if any) nominated by the contributories. (3) If different persons are nominated, a contributory or creditor may, within seven days after the date
on which the nomination was made by the creditors, apply to the Court for an order either—
(a) appointing the person nominated as liquidator by the contributories to be a liquidator
instead of, or jointly with, the person nominated by the creditors; or
(b) appointing some other person to be liquidator instead of the person nominated by the
creditors. 441.

th, the person nominated by the creditors; or
(b) appointing some other person to be liquidator instead of the person nominated by the
creditors. 441.

Appointment of liquidator by the Court following administration or voluntary
arrangement
(1) If a liquidation order is made immediately on the appointment of an administrator ceasing to
have effect, the Court may appoint as liquidator of the company the person whose appointment as
administrator has ceased to have effect. (2) If a liquidation order is made at a time when there is a supervisor of a voluntary arrangement
approved in relation to the company under Part IX, the Court may appoint as liquidator of the
company the person who is the supervisor at the time when the liquidation order is made. (3) If the Court makes an appointment under this section, the Official Receiver—
(a) does not become the liquidator as provided by section 437(2); and
(b) has no duty under section 437(5)(a) or (b) to convene meetings of creditors or contributories. 442. Creditors' meeting may appoint liquidation committee
(1) If, after a liquidation order has been made, separate meetings of creditors and contributories have
been convened for the purpose of choosing a person to be liquidator, those meetings may establish
145

te meetings of creditors and contributories have
been convened for the purpose of choosing a person to be liquidator, those meetings may establish
145

Insolvency Act (Cap. 53) Kenya
a liquidation committee to perform the functions imposed and to exercise the powers conferred on
it by or under this Act. (2) The liquidator (not being the Official Receiver) may at any time, if of the opinion that it is
appropriate to do so, convene separate general meetings of the company's creditors and
contributories for the purpose of—
(a) determining whether a liquidation committee should be established; and
(b) if it is so determined, of establishing it. (3) The liquidator (not being the Official Receiver) shall convene such a meeting if requested to do so
by creditors of the company holding not less than one-tenth in value of the total amount of the
company's debts. (4) If meetings of creditors and contributories are convened—
(a) under this section; or
(b) for the purpose of choosing a person to be liquidator,
and either the meeting of creditors or the meeting of contributories decides that a liquidation
committee should be established, but the other meeting does not so decide, or decides that a
committee should not be established, such a committee is nevertheless required to be established,
unless the Court otherwise orders.

or decides that a
committee should not be established, such a committee is nevertheless required to be established,
unless the Court otherwise orders.

(5) Except to the extent that the insolvency regulations otherwise provide, a liquidation committee
may not, and may not be required to, perform its functions while the Official Receiver is liquidator. (6) If, at the relevant time—
(a) there is no liquidation committee; and
(b) the liquidator is a person other than the Official Receiver,
the Cabinet Secretary shall perform the functions of such a committee except in so far as the
insolvency regulations otherwise provide. 443. General functions of liquidator when company is liquidated by the Court
(1) The functions of the liquidator of a company that is being liquidated by the Court are—
(a) to ensure that the assets of the company are realised and distributed to the company's
creditors; and
(b) if there is a surplus, to distribute the surplus to the persons entitled to it.

mpany are realised and distributed to the company's
creditors; and
(b) if there is a surplus, to distribute the surplus to the persons entitled to it.

(2) If the liquidator of a company that is being liquidated is not the Official Receiver, the liquidator
shall—
(a) provide the Official Receiver with such information;
(b) produce to the Official Receiver, and permit inspection by the Official Receiver of, such
records and other documents; and
(c) give to the Official Receiver such other assistance,
as the Official Receiver may reasonably require for the purposes of performing the Official
Receiver's functions in relation to the liquidation. (3) A liquidator who, without reasonable excuse, fails to comply with a requirement made by the
Official Receiver under subsection (2) commits an offence and on conviction is liable to a fine not
exceeding five hundred thousand shillings. 146

the
Official Receiver under subsection (2) commits an offence and on conviction is liable to a fine not
exceeding five hundred thousand shillings. 146

Insolvency Act (Cap. 53) Kenya
444. Liquidator to assume control of company's property when liquidation order made
When—
(a) a liquidation order has been made; or
(b) a provisional liquidator has been appointed,
in respect of a company, the liquidator or the provisional liquidator shall assume control of all the
property to which the company is or appears to be entitled. 445. Company's property to vest in liquidator
(1) When a company is being liquidated by the Court, the Court may, on the application of the
liquidator, by order direct all or any part of the property belonging to the company or held by
trustees on its behalf to vest in the liquidator in that capacity. (2) On the making of such an order, the property to which the order relates vests in the liquidator. (3) After giving such indemnity (if any) as the Court may direct, the liquidator may begin or defend, or
continue any legal proceedings that relate to that property or that it is necessary to begin or defend,
or continue, for the purpose of effectively liquidating the company and recovering its property. 446.

erty or that it is necessary to begin or defend,
or continue, for the purpose of effectively liquidating the company and recovering its property. 446.

Duty of liquidator to convene final general meeting of company's creditors
(1) If, in the case of a company that is being liquidated by the Court, the liquidator (not being the
Official Receiver) is satisfied that the liquidation of the company is for all practical purposes
complete, the liquidator shall convene a final general meeting of the company's creditors. (2) At the final meeting, those present shall—
(a) consider the liquidator's report of the liquidation; and
(b) determine whether the liquidator should be released under section 471. (3) If appropriate, the liquidator may give the notice convening the final general meeting at the same
time as giving notice of any final distribution of the company's property. (4) The liquidator shall ensure that sufficient funds from the company's property are retained to cover
the expenses of convening and holding the meeting required by this section. 447.

at sufficient funds from the company's property are retained to cover
the expenses of convening and holding the meeting required by this section. 447.

Power of the Court to stay liquidation
(1) On the application of the liquidator, the Official Receiver or any creditor or contributory, and on
proof to the satisfaction of the Court that all proceedings in the liquidation ought to be stayed,
the Court may, at any time after an order for liquidation is made, make an order staying the
proceedings, either permanently or for a specified period, on such terms as the Court considers
appropriate. (2) Before making an order under subsection (1), the Court may require the Official Receiver to provide
it with a report on any facts or matters that appear to the Official Receiver to be relevant to the
application. (3) The Official Receiver shall comply with such a requirement within such period as the Court
specifies. (4) Within seven days after the Court has made an order under this section, the company shall lodge a
copy of the order with the Registrar for registration. 147

seven days after the Court has made an order under this section, the company shall lodge a
copy of the order with the Registrar for registration. 147

Insolvency Act (Cap. 53) Kenya
(5) If a company fails to comply with subsection (4), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings. (6) If, after a company or any of its officers is convicted of an offence under subsection (5), the
company continues to fail to lodge the required copy, the company, and each officer of the company
who is in default, commit a further offence on each day on which the failure continues and on
conviction are each liable to a fine not exceeding twenty thousand shillings for each such offence. 448. Settlement of list of contributories and application of assets
(1) As soon as practicable after making a liquidation order, the Court shall—
(a) settle a list of contributories, with power to rectify the register of members in all cases in
which rectification is required; and
(b) take all practicable steps to have the company's assets collected, and applied in discharge of
its liabilities.

ich rectification is required; and
(b) take all practicable steps to have the company's assets collected, and applied in discharge of
its liabilities.

(2) If it appears to the Court that it will not be necessary to make calls on, or adjust the rights of
contributories, the Court may dispense with the settlement of a list of contributories. (3) In settling the list, the Court shall distinguish between persons who are contributories in their
own right and persons who are contributories as being representatives of or liable for the debts of
others. 449. Recovery of debts due from contributory to company
(1) At any time after making a liquidation order, the Court may make an order in respect of any
contributory who is for the time being on the list of contributories requiring the contributory to
pay, in accordance with the order, an amount due from the contributory (or from the estate of the
person whom the contributor represents) to the company, exclusive of any amount payable by the
contributor or the estate because of a call.

ate of the
person whom the contributor represents) to the company, exclusive of any amount payable by the
contributor or the estate because of a call.

(2) In making such an order, the Court may—
(a) in the case of an unlimited company, allow to the contributory as a set-off money due to
the contributory or the estate that the contributory represents from the company on any
independent dealing or contract with the company (but not money due to the contributory as
a member of the company in respect of a dividend or profit); and
(b) in the case of a limited company, make to a director or manager whose liability is unlimited,
or to the estate of the director or manager, the same allowance. (3) If, in the case of a company (whether limited or unlimited), all the creditors have been paid in full
(together with interest at the official rate), money due on an account to a contributory from the
company may be allowed to the contributory as a set off against any subsequent call. 450.

al rate), money due on an account to a contributory from the
company may be allowed to the contributory as a set off against any subsequent call. 450.

Power of the Court to make calls from contributories
(1) At any time after making a liquidation order, and either before or after the Court has ascertained
the sufficiency of the company's assets, it may—
(a) make calls on all or any of the contributories for the time being settled on the list of the
contributories (to the extent of their liability) for payment of any money that the Court
considers necessary—
(i) to satisfy the company's debts and liabilities and the expenses of liquidation; and
(ii) for the adjustment of the rights of the contributories among themselves; and
148

any's debts and liabilities and the expenses of liquidation; and
(ii) for the adjustment of the rights of the contributories among themselves; and
148

Insolvency Act (Cap. 53) Kenya
(b) make an order for payment of any calls so made. (2) In making a call, the Court may take into consideration the probability that some of the
contributories may partly or wholly fail to pay it. 451. Power of the Court to order money due to company to be paid into Central Bank
(1) The Court may order any contributory, purchaser or other person from whom money is due to the
company to pay the amount due into the Central Bank of Kenya to the account of the liquidator
instead of to the liquidator. (2) Such an order may be enforced in the same manner as if it had directed payment to the liquidator. (3) All money and securities paid or delivered into the Central Bank of Kenya in relation to a
liquidation by the Court are subject in all respects to the orders of the Court. 452. Order made by the Court against contributory to be conclusive evidence that money
ordered to be paid is due
(1) An order made by the Court on a contributory is conclusive evidence that any money appearing to
be due or ordered to be paid by the contributory is due. (2) Subsection (1) is subject to the exercise of any available right of appeal.

appearing to
be due or ordered to be paid by the contributory is due. (2) Subsection (1) is subject to the exercise of any available right of appeal.

(3) All other pertinent matters stated in the order are to be taken as truly stated as against all persons
and in all legal proceedings. 453. Power of the Court to fix deadlines for proving claims
The Court may fix deadlines by which creditors are required to prove their debts or claims or are to be
excluded from the benefit of any distribution made before those debts are proved. 454. Court to adjust rights of contributories
The Court shall adjust the rights of the contributories among themselves and distribute any surplus among
the persons entitled to it. 455. Power of the Court to make orders enabling creditors and contributories to inspect
company's records
(1) At any time after making a liquidation order, the Court may make such order for inspection of the
company's records by creditors and contributories as the Court considers appropriate. (2) The creditors and contributories of the company are entitled to inspect all records in the company's
possession or under its control, but except as provided by or under the authority of any other
written law, no other persons are entitled to inspect those records. 456.

r its control, but except as provided by or under the authority of any other
written law, no other persons are entitled to inspect those records. 456.

Payment of expenses of liquidation
(1) If the assets of a company are insufficient to satisfy its liabilities, the Court may—
(a) make an order for the expenses incurred in the liquidation to be paid out of the company's
assets; and
(b) direct that that payment be given such of priority as the Court considers appropriate. (2) An order made under subsection (1) has effect irrespective of the provisions of this Act relating to
preferential debts. 149

onsiders appropriate. (2) An order made under subsection (1) has effect irrespective of the provisions of this Act relating to
preferential debts. 149

Insolvency Act (Cap. 53) Kenya
457. Power to arrest absconding contributory
(1) If, at any time either before or after making a liquidation order, the Court is satisfied on reasonable
grounds that a contributory is—
(a) about to leave Kenya or otherwise to abscond; or
(b) has concealed or removed, or is about to conceal or remove, any of the contributory's
property for the purpose of evading payment of calls,
it may issue a warrant authorising the contributory to be arrested and the contributory's documents
and moveable personal property to be seized. (2) In such a case, the Court may authorise the person arrested under the warrant to be detained in
custody, and anything seized under the warrant to be kept, in accordance with the directions of the
Court, until such time as the Court orders. 458. Powers of the Court to be cumulative
Powers conferred on the Court by this Part are in addition to any existing powers to bring legal
proceedings against a contributory or debtor of the company, or the assets of a contributory or debtor, for
the recovery of calls or other amounts. 459.

oceedings against a contributory or debtor of the company, or the assets of a contributory or debtor, for
the recovery of calls or other amounts. 459.

Power of the Court to delegate its powers to liquidator
(1) The insolvency regulations may enable or require all or any of the functions imposed or powers
conferred on the Court with respect to the matters specified in subsection (2) to be performed or
exercised by the liquidator as an officer of the Court and in accordance with its directions. (2) The following matters are specified for the purpose of subsection (1)—
(a) the convening and conducting of meetings to ascertain the wishes of creditors and
contributories;
(b) the settling of lists of contributories and the rectification of the register of members if
required;
(c) the collection and application of the assets;
(d) the payment, delivery, transfer of money, property or documents to the liquidator;
(e) the making of calls;
(f) the fixing of a period within which debts and claims have to be proved. (3) This section does not authorise the liquidator—
(a) to rectify the company's register of members without the special approval of the Court; or
(b) if there is a liquidation committee, to make a call without its approval. Division 7 — Liquidators
460.

hout the special approval of the Court; or
(b) if there is a liquidation committee, to make a call without its approval. Division 7 — Liquidators
460.

Style and title of liquidators
(1) The liquidator of a company is in all documents and communications relating to the liquidation of
the company to be referred to—
(a) if a person other than the Official Receiver is liquidator, as "the liquidator" of the company;
or
(b) if the Official Receiver is liquidator, as "the Official Receiver and liquidator" of the company. 150

ator, as "the liquidator" of the company;
or
(b) if the Official Receiver is liquidator, as "the Official Receiver and liquidator" of the company. 150

Insolvency Act (Cap. 53) Kenya
(2) In neither case is the liquidator to be referred to by the liquidator's personal name. (3) A liquidator who fails to take all reasonably practicable steps to ensure that that subsections (1)
and (2) are complied with commits an offence and on conviction is liable to a fine not exceeding one
hundred thousand shillings. 461. Offence to make corrupt inducement affecting appointment of liquidator
A person who gives, or agrees or offers to give, to any member or creditor of a company any valuable
consideration with a view to obtaining the person's own appointment or nomination, or to obtaining or
preventing the appointment or nomination of some other person, as the company's liquidator commits an
offence and on conviction is liable to a fine not exceeding two million shillings. 462. Liquidator's functions: voluntary liquidation
(1) This section has effect if a company is in voluntary liquidation, but subject to section 463
(liquidator's functions, creditors' voluntary liquidation) in the case of a creditor's voluntary
liquidation.

liquidation, but subject to section 463
(liquidator's functions, creditors' voluntary liquidation) in the case of a creditor's voluntary
liquidation.

(2) The liquidator may—
(a) in the case of a members' voluntary liquidation, with the approval of a special resolution of
the company; and
(b) in the case of a creditors' voluntary liquidation, with the sanction of the Court or the
liquidation committee (or, if there is no such committee, a meeting of the company's
creditors),
exercise any of the powers specified in Part 1 of the Third Schedule (payment of debts, compromise
of claims, etc.). (3) The liquidator may, without approval, exercise either of the powers specified in Part 2 of the Third
Schedule (institution and defence of proceedings; carrying on the business of the company) and any
of the general powers specified in Part 3 of that Schedule. (4) The liquidator may—
(a) exercise the Court's power of settling a list of contributories;
(b) exercise the Court's power of making calls;
(c) convene general meetings of the company for the purpose of obtaining its approval by
special resolution or for such other purpose as the liquidator considers appropriate. (5) The liquidator shall pay the company's debts and adjust the rights of the contributories among
themselves.

s the liquidator considers appropriate. (5) The liquidator shall pay the company's debts and adjust the rights of the contributories among
themselves.

(6) If, in exercise of the powers conferred by this Act, the liquidator disposes of property of the
company to a person who is connected with the company, the liquidator shall, if there is a
liquidation committee, give notice to the committee of that exercise of the liquidator's powers. (7) A liquidator who, without reasonable excuse, fails to comply with subsection (6) commits an
offence and on conviction is liable to a fine not exceeding two hundred thousand shillings. (8) A list of contributories settled by a liquidator in accordance with the power conferred by subsection
(4)(a) is evidence of the liability of the persons named in it as contributories, until the contrary is
proved. 463. Liquidator's functions: creditors' voluntary liquidation
(1) If, in the case of a creditors' voluntary liquidation, a liquidator has been nominated by the company,
the powers conferred on the liquidator by section 462 may not be exercised, except with the
151

ation, a liquidator has been nominated by the company,
the powers conferred on the liquidator by section 462 may not be exercised, except with the
151

Insolvency Act (Cap. 53) Kenya
sanction of the Court, during the period before the holding of the creditors' meeting under section
406. (2) Subsection (1) does not apply to the power of the liquidator—
(a) to assume control of all the property to which the company is or appears to be entitled;
(b) to dispose of perishable goods and other goods the value of which is likely to diminish if they
are not immediately disposed of; or
(c) to take all such other action as may be necessary for the protection of the company's assets. (3) The liquidator shall—
(a) attend the creditors' meeting; and
(b) shall report to the meeting on any exercise by the liquidator of the liquidator's powers
(whether or not under this section or under section 420 (questions relating to liquidation
may be referred to the Court for determination) or section 471 (release of liquidator in the
case of company liquidated by the Court). (4) If—
(a) the company fails to comply with section 406(1) or (2); or
(b) the directors fail to comply with section 407(1) or (2),
the liquidator shall, within seven days after the relevant day, apply to the Court for directions as to
the manner in which that default is to be remedied.

iquidator shall, within seven days after the relevant day, apply to the Court for directions as to
the manner in which that default is to be remedied.

(5) In subsection (4), the relevant day is the day on which the liquidator was nominated by the
company or the day on which the liquidator first became aware of the default, whichever is the
later. (6) A liquidator who, without reasonable excuse, fails to comply with a requirement of this section
commits an offence and on conviction is liable to a fine not exceeding five hundred thousand
shillings. 464. Liquidator's functions: liquidation by the Court
(1) If a company is being liquidated by the Court, the liquidator may—
(a) with the approval of the Court or the liquidation committee (if there is one), exercise any of
the powers specified in Parts 1 and 2 of the Third Schedule; and
(b) with or without that approval, exercise any of the general powers specified in Part 3 of that
Schedule.

n Parts 1 and 2 of the Third Schedule; and
(b) with or without that approval, exercise any of the general powers specified in Part 3 of that
Schedule.

(2) If, in exercising the powers conferred on the liquidator by this Act, the liquidator—
(a) disposes of property of the company to a person who is connected with the company; or
(b) employs an advocate to assist the liquidator in performing the liquidator' s functions,
the liquidator shall, if there is a liquidation committee, give notice to the committee of that exercise
of the liquidator's powers. (3) Subsection (2) does not apply if the Official Receiver is the liquidator. (4) In a liquidation ordered by the Court, the exercise of the powers conferred by this section by the
liquidator is subject to the control of the Court, and any creditor or contributory may apply to the
Court with respect to any exercise or proposed exercise of any of those powers. (5) A liquidator who, without reasonable excuse, fails to comply with subsection (2) commits an
offence and on conviction is liable to a fine not exceeding two hundred thousand shillings. 152

excuse, fails to comply with subsection (2) commits an
offence and on conviction is liable to a fine not exceeding two hundred thousand shillings. 152

Insolvency Act (Cap. 53) Kenya
465. Liquidator's functions: supplementary powers
(1) If a company is being liquidated by the Court, the liquidator may convene general meetings of the
creditors or contributories for the purpose of ascertaining their wishes. (2) The liquidator shall convene meetings at such times on such dates as the creditors or contributories
by resolution (either at the meeting appointing the liquidator or otherwise) may direct, or whenever
requested in writing to do so by a requisition signed by or on behalf of—
(a) creditors holding not less than one tenth of the total amount of the company's debts;
(b) contributories of the company holding not less than one-tenth of the voting rights at general
meetings of the company. (3) The liquidator may at any time apply to the Court for directions in relation to any particular matter
arising in the liquidation. (4) In accordance with this Part, the liquidator is required to use the liquidator's own discretion in the
management of the assets and their distribution among the creditors. (5) A person who is dissatisfied with an act or decision of the liquidator may apply to the Court for an
order under subsection (6).

ng the creditors. (5) A person who is dissatisfied with an act or decision of the liquidator may apply to the Court for an
order under subsection (6).

(6) On the hearing of an application made under subsection (5), the Court may—
(a) make an order confirming, reversing or modifying the act or decision complained of; and
(b) make such other order in the case as it considers appropriate. (7) If, at any time after a liquidation application has been made to the Court against a person, the
attention of the Court is drawn to the fact that the person is a member of an insolvent partnership
or a partner of a limited liability partnership, the Court may make an order as to the future conduct
of the insolvency proceedings. (8) The reference in subsection (7) to a person includes an insolvent partnership or other body that
may be liquidated under Part VII as an unregistered company. (9) An order made under subsection (7)—
(a) may be made or given on the application of the Official Receiver, any authorised insolvency
practitioner, the bankruptcy trustee of the partnership or any other interested person; and
(b) may include provisions as to the administration of the joint estate of the partnership, and in
particular how it and the separate estate of any member are to be administered. 466.

the administration of the joint estate of the partnership, and in
particular how it and the separate estate of any member are to be administered. 466.

Enforcement of liquidator's duties to lodge, deliver and make returns, accounts and
other documents
(1) If a liquidator has—
(a) in lodging, delivering or making a return, account or other document—
(i) failed to prepare, make or lodge a return, account or other document as required by a
provision of this Part; or
(ii) failed to give, publish or lodge a notice as required by such a provision; or
(b) in giving a notice that the liquidator is by law required to deliver, make or give—
(i) failed to prepare, make or lodge a return, account or other document as required by a
provision of this Part; or
153

red to deliver, make or give—
(i) failed to prepare, make or lodge a return, account or other document as required by a
provision of this Part; or
153

Insolvency Act (Cap. 53) Kenya
(ii) failed to give, publish or lodge a notice as required by such a provision,
and has failed to rectify the failure within fourteen days after the service on the liquidator of
a notice requiring the liquidator to do so, any creditor or contributory of the company, or the
Registrar, may make an application to the Court for an order under subsection (2). (2) On the hearing of an application made under subsection (1), the Court may make an order directing
the liquidator to rectify the failure within such period as may be specified in the order. (3) The Court's order may provide for all costs of and incidental to the application to be borne by the
liquidator. (4) This section does not limit the operation of any enactment that provides for the imposition of fines
or other penalties on a liquidator in respect of a failure referred to in this section. 467. Circumstances in which liquidator may be removed from office in the case of a
voluntary liquidation
(1) This section applies to the removal from office and vacation of office of the liquidator of a company
that is in voluntary liquidation.

iquidation
(1) This section applies to the removal from office and vacation of office of the liquidator of a company
that is in voluntary liquidation.

(2) Subject to subsection (2), a liquidator may be removed from office only by an order of the Court or—
(a) in the case of a members' voluntary liquidation, by a general meeting of the company
convened specially for that purpose; or
(b) in the case of a creditors' voluntary liquidation, by a general meeting of the company's
creditors convened specially for that purpose. (3) If the liquidator was appointed by the Court under section 416, a meeting such as is referred to in
subsection (2) may be convened for the purpose of replacing the liquidator only if the liquidator
considers it appropriate to do so or the Court so directs or the meeting is requested—
(a) in the case of a members' voluntary liquidation, by members representing not less than one
—half of the total voting rights of all the members having at the date of the request a right to
vote at the meeting; or
(b) in the case of a creditors' voluntary liquidation, by creditors holding not less than one, half
in value of the total amount of the company's debts. (4) A liquidator (not being the Official Receiver) automatically vacates office if the liquidator ceases to
hold an authorisation to act as an insolvency practitioner.

(not being the Official Receiver) automatically vacates office if the liquidator ceases to
hold an authorisation to act as an insolvency practitioner.

(5) A liquidator may, in the circumstances prescribed by the insolvency regulations, resign office by
lodging with the Registrar a notice of resignation. (6) If—
(a) in the case of a members' voluntary liquidation, a final meeting of the company has been
held in accordance with section 402; or
(b) in the case of a creditors' voluntary liquidation, final meetings of the company and of the
creditors have been held in accordance with section 463,
the liquidator whose report was considered at the meeting or meetings vacates office as soon as the
liquidator has lodged with the Registrar a notice that the meeting has, or the meetings have, been
held and of the decisions (if any) made at the meeting or meetings. 154

d with the Registrar a notice that the meeting has, or the meetings have, been
held and of the decisions (if any) made at the meeting or meetings. 154

Insolvency Act (Cap. 53) Kenya
468. Liquidator may be removed only by the Court or by general meeting of creditors in the
case of company being liquidated by the Court
(1) This section applies with respect to the removal from office and vacation of office of—
(a) the liquidator of a company that being liquidated by the Court; or
(b) a provisional liquidator. (2) A liquidator may be removed from office only—
(a) by an order of the Court; or
(b) by a general meeting of the company's creditors convened specially for that purpose. (3) A provisional liquidator may be removed from office only by an order of the Court. (4) If—
(a) the Official Receiver is liquidator otherwise than as successor in accordance with section
438(3) to a person who held office as a result of a nomination by a meeting of the company's
creditors or contributories; or
(b) the liquidator—
(i) was appointed by the Court otherwise than under section 440(3) or 441(1); or
(ii) was appointed by the Cabinet Secretary,
a general meeting of the company's creditors is to be convened for the purpose of replacing the
liquidator in the circumstances specified in subsection (5).

ral meeting of the company's creditors is to be convened for the purpose of replacing the
liquidator in the circumstances specified in subsection (5).

(5) The circumstances referred to in subsection (4) are that—
(a) the liquidator considers it appropriate to convene a meeting of creditors;
(b) the Court directs such a meeting to be held; or
(c) the meeting is requested by creditors holding not less than one-quarter in value of the total
amount of the company's debts. (6) A liquidator or provisional liquidator (not being the Official Receiver) automatically vacates office
on ceasing to be the holder of an authorisation to act as an insolvency practitioner. (7) A liquidator may resign office by giving notice of the resignation to the Court. (8) If a final meeting has been held in accordance with section 446, the liquidator whose report was
considered at the meeting vacates office immediately after giving notice to the Court that the
meeting has been held and of the decisions (if any) of the meeting. (9) Within seven days after giving notice to the Court in accordance with subsection (8), the former
liquidator shall lodge a copy of the notice with the Registrar for registration.

ing notice to the Court in accordance with subsection (8), the former
liquidator shall lodge a copy of the notice with the Registrar for registration.

(10) A former liquidator who, without reasonable excuse, fails to comply with subsection (9) commits an
offence and on conviction is liable to a fine not exceeding two hundred thousand shillings. 469. Release of liquidator in the case of company liquidated voluntarily
(1) This section applies with respect to the release of the liquidator of a company that is in voluntary
liquidation. 155

mpany liquidated voluntarily
(1) This section applies with respect to the release of the liquidator of a company that is in voluntary
liquidation. 155

Insolvency Act (Cap.

Insolvency Act (Cap.

53) Kenya
(2) A person who has ceased to be a liquidator is entitled to be released from the liquidator's
obligations with respect to the company with effect from the following time—
(a) in the case of a person who has been removed from office by a general meeting of the
company or by a general meeting of the company's creditors that has not resolved against the
liquidator's release or who has died—the time at which notice is lodged with the Registrar
that the person has ceased to hold office as liquidator;
(b) in the case of a person who—
(i) has been removed from office by a general meeting of the company's creditors that has
resolved against the liquidator's release, or by the Court; or
(ii) has vacated office under section 467(4),
such time as the Cabinet Secretary may, on the application of the person, determine;
(c) in the case of a person who has resigned, such time as may be prescribed by the insolvency
regulations for the purposes of this paragraph;
(d) in the case of a person who has vacated office under section 467(6)(a), the time at which that
person vacated office;
(e) in the case of a person who has vacated office under section 467 (6)(b)—
(i) if the final meeting of the creditors referred to in that subsection has resolved against
that person's release, such time as the Cabinet Secretary may, on an application by
that person, determine; and
(ii) if that meeting has not resolved against that person's release, the time at which that
person vacated office.

tion by
that person, determine; and
(ii) if that meeting has not resolved against that person's release, the time at which that
person vacated office.

(3) If a liquidator is released in accordance with subsection (2), the liquidator is, with effect from
whichever time specified in that subsection is relevant, discharged from all liability both in respect
of acts or omissions of the liquidator's in the liquidation and otherwise in relation to conduct as
liquidator. (4) However, nothing in this section prevents the exercise, in relation to a person who has been
released that under subsection (2), of the Court's powers under section 504 (power of Court to make
orders against delinquent directors, liquidators, etc). 470. Release of liquidator in the case of company liquidated by the Court
(1) This section applies with respect to the release of the liquidator of a company that is in liquidation
by the Court, or of a provisional liquidator.

) This section applies with respect to the release of the liquidator of a company that is in liquidation
by the Court, or of a provisional liquidator.

(2) On ceasing to be liquidator and being succeeded by another person as liquidator, the Official
Receiver is released from the responsibilities a liquidator with effect from—
(a) if the successor was nominated by a general meeting of creditors or contributories, or was
appointed by the Cabinet Secretary, the time at which the Official Receiver gives notice to
the Court that the Official Receiver has been succeeded by another person; or
(b) if the successor is appointed by the Court, such time as the Court may determine. (3) If the Official Receiver while a liquidator gives notice to the Cabinet Secretary that the liquidation
is for all practical purposes complete, the Official Receiver is released with effect from such time as
the Cabinet Secretary may determine. 156

ation
is for all practical purposes complete, the Official Receiver is released with effect from such time as
the Cabinet Secretary may determine. 156

Insolvency Act (Cap.

Insolvency Act (Cap.

53) Kenya
(4) A person other than the Official Receiver who has ceased to be a liquidator is released with effect
from whichever of the following times is relevant to the person—
(a) if the person has been removed from office by a general meeting of creditors that has not
resolved against the person's release, or the person has died, the time at which notice is
given to the Court that the person has been removed from office or has died;
(b) if the person has been removed from office—
(i) by a general meeting of creditors that has resolved against the person's release; or
(ii) by the Court or the Cabinet Secretary,
such time as the Cabinet Secretary may, on an application made by the person, determine;
(c) if the person has vacated office under section 468(7), such time as the Cabinet Secretary may,
on an application made by the person, determine;
(d) if the person has resigned as liquidator, such time as may be prescribed by the insolvency
regulations for the purposes of this paragraph;
(e) if the person has vacated office under section 468(9) and the final meeting referred to in that
subsection has resolved against the person's release, such time as the Cabinet Secretary may,
on an application by the person, determine;
(f) if the person has vacated office under section 468(9) and the final meeting referred to in
that subsection has not resolved against the person's release, the time at which the person
vacated office.

68(9) and the final meeting referred to in
that subsection has not resolved against the person's release, the time at which the person
vacated office.

(5) On the hearing of application to the Court of a person who has ceased to hold office as a provisional
liquidator, the person is released with effect from such time as the Court may determine. (6) On being released under this section, the Official Receiver or a liquidator or provisional liquidator
is, with effect from the time specified in subsection (2), (3), (4) or (5), discharged from all liability
both in respect of acts or omissions in the liquidation and otherwise in relation to conduct as
liquidator or provisional liquidator. (7) However, nothing in this section prevents the exercise, in relation to a person who has been
released under this section, of the Court's powers under section 504 (power of Court to make orders
against delinquent directors, liquidators, etc.). Division 8 — Provisions applying to all kinds of liquidation
471. Preferential debts (general provision)
(1) The liquidator of a company that is in liquidation shall distribute the assets of the company
available for the payment of creditors in accordance with the Second Schedule. (2) Subsection (1) is subject to the provisions of this Part. 472.

pany
available for the payment of creditors in accordance with the Second Schedule. (2) Subsection (1) is subject to the provisions of this Part. 472.

Preferential charge on property of company distrained within three months before
making of liquidation order
(1) This section applies to a company that is being liquidated by the Court. (2) If a person (whether or not a landlord or person entitled to rent) has distrained on the property of
the company during the three months immediately preceding the date of the liquidation order, that
property, or the proceeds of its sale, is charged for the benefit of the company with the preferential
debts of the company to the extent that the company's assets are for the time being insufficient to
satisfy them. 157

he company with the preferential
debts of the company to the extent that the company's assets are for the time being insufficient to
satisfy them. 157

Insolvency Act (Cap. 53) Kenya
(3) If, because of a charge under subsection (2), a person surrenders property to a company or pays
money to a company, the person ranks, in respect of the amount of the proceeds of sale of the
property by the liquidator, or the amount money paid, as a preferential creditor of the company,
except as against so much of the company's property as is available for the payment of preferential
creditors because of the surrender or payment. (4) This section does not limit the effect of section 430. 473. Expenses of liquidation to have priority over claims under floating charge
(1) The expenses of liquidating a company, so far as the assets of the company available for payment of
general creditors are insufficient to meet those expenses, have priority over any claims to property
comprised in or subject to any floating charge created by the company and are to be paid out of any
such property accordingly.

any claims to property
comprised in or subject to any floating charge created by the company and are to be paid out of any
such property accordingly.

(2) In subsection (1)—
(a) the reference to assets of the company available for payment of general creditors does not
include an amount made available under section 474(2)(a);
(b) the reference to claims to property comprised in or subject to a floating charge is to the
claims of—
(i) the holders of debentures secured by, or holders of, the floating charge; and
(ii) any preferential creditors entitled to be paid out of that property in priority to them. (3) Provision may be made restricting the application of subsection (1), in such circumstances as may
be prescribed by the insolvency regulations, to expenses authorised or approved—
(a) by the holders of debentures secured by, or holders of, the floating charge and by any
preferential creditors entitled to be paid in priority to them; or
(b) by the Court. (4) References in this section to the expenses of the liquidation are to all expenses properly incurred in
the liquidation, including the remuneration of the liquidator. 474.

ection to the expenses of the liquidation are to all expenses properly incurred in
the liquidation, including the remuneration of the liquidator. 474.

Share of assets to be made available for unsecured creditors where floating charge
relates to company's property
(1) This section applies to a company in respect of which a floating charge relates to its property—
(a) if the company is in liquidation or under administration; or
(b) if a provisional liquidator is appointed in respect of it. (2) If this section applies to a company, the liquidator, administrator or provisional liquidator—
(a) shall make available for the satisfaction of unsecured debts such portion of the company's
net assets as is prescribed by the insolvency regulations for the purposes of this subsection;
and
(b) may not distribute that part to the proprietor of a floating charge except to the extent that it
exceeds the amount required for the satisfaction of unsecured debts. (3) Subsection (2) does not apply to a company if—
(a) the company's net assets are less than the minimum prescribed by the insolvency regulations
for the purposes of this subsection; and
(b) the liquidator, administrator or provisional liquidator believes that the cost of making a
distribution to unsecured creditors would be disproportionate to the benefits. 158

trator or provisional liquidator believes that the cost of making a
distribution to unsecured creditors would be disproportionate to the benefits. 158

Insolvency Act (Cap. 53) Kenya
(4) Subsection (2) also does not apply to a company if, or in so far as, it is disapplied by—
(a) a voluntary arrangement in respect of the company in accordance with Part IX; or
(b) a compromise or arrangement agreed under the Companies Act (Cap. 486). (5) Subsection (2) also does not apply to a company if—
(a) the liquidator, administrator or provisional liquidator applies to the Court for an order under
this subsection on the ground that the cost of making a distribution to unsecured creditors
would be disproportionate to the benefits;
(b) a holder of a floating charge applies to the Court on the grounds that the effect of subsection
(2) unfairly harms its interests; and
(c) as a result of such an application, the Court orders that subsection (2) is not to apply or is to
apply subject to the conditions the Court considers just. (6) In subsections (2) and (3) a company's net assets is the amount of its assets that would, but for this
section, be available for satisfaction of claims of holders of debentures secured by, or holders of, any
floating charge created by the company.

this
section, be available for satisfaction of claims of holders of debentures secured by, or holders of, any
floating charge created by the company.

(7) The regulations referred to in subsection (2) prescribing part of a company's net assets may, in
particular, provide for its calculation—
(a) as a percentage of the company's net assets; or
(b) as an aggregate of different percentages of different parts of the company's net assets. (8) In this section, "floating charge" means a charge that is a floating charge on its creation and that is
created after the regulations referred to in subsection (2)(a) take effect. [Act No. 1 of 2021, s. 11]
475. Power of the Court to appoint special manager of company's business or property
when company is in liquidation or provisional liquidator appointed
(1) If a company is in liquidation or a provisional liquidator is appointed in respect of the company,
the Court may, on an application made under subsection (2), appoint a person to be the special
manager of the business or property of the company.

ny,
the Court may, on an application made under subsection (2), appoint a person to be the special
manager of the business or property of the company.

(2) An application to the Court to appoint a special manager may be made by the liquidator or
provisional liquidator if it appears to the applicant that the nature of the business or property of
the company, or the interests of the company's creditors or contributories or members generally,
require the appointment of another person to manage the company's business or property. (3) A special manager has such powers as the Court specifies in the special manager's appointment or
in directions given as a result of an application by that manager. (4) The Court's power to confer powers to the special manager includes power to direct that any
provision of this Act that has effect in relation to a provisional liquidator or liquidator of a company
has the same effect in relation to the special manager for the purposes of performing any of the
functions of the provisional liquidator or liquidator.

as the same effect in relation to the special manager for the purposes of performing any of the
functions of the provisional liquidator or liquidator.

(5) A special manager shall—
(a) give such security as may be prescribed by the insolvency regulations for the purposes of this
section;
(b) prepare and keep such accounting records as may be so prescribed; and
(c) produce those records in accordance with the insolvency regulations to the Court or to such
other persons as may be so prescribed. 159

cribed; and
(c) produce those records in accordance with the insolvency regulations to the Court or to such
other persons as may be so prescribed. 159

Insolvency Act (Cap. 53) Kenya
(6) A special manager's appointment does not take effect until the security referred to in subsection (5)
(a) has been given. (7) A special manager who fails to comply with subsection (5)(b) or (c) is guilty of contempt of the
Court and is liable to be punished accordingly (in addition to any other punishment to which the
person may be subject). 476. Power of liquidator to disclaim onerous property
(1) The liquidator may, by the giving such notice as is prescribed by the insolvency regulations,
disclaim any onerous property and may do so even if the liquidator has taken control of it, tries to
sell it, or otherwise exercised rights of ownership in relation to it. (2) The following is onerous property for the purposes of this section—
(a) an unprofitable contract;
(b) other property of the company that is unsalable or not readily saleable or is such that it may
give rise to a liability to pay money or perform any other onerous act.

f the company that is unsalable or not readily saleable or is such that it may
give rise to a liability to pay money or perform any other onerous act.

(3) A disclaimer under this section—
(a) operates so as to determine, as from the date of the disclaimer, the rights, interests and
liabilities of the company in or in respect of the property disclaimed; but
(b) does not, except so far as is necessary for the purpose of releasing the company from any
liability, affect the rights or liabilities of any other person. (4) A notice of disclaimer may not be given under this section in respect of any property if—
(a) a person interested in the property has applied in writing to the liquidator, or a predecessor
of the liquidator, requiring the liquidator or liquidator's predecessor to decide whether the
property will be disclaimed or not; and
(b) thirty days from and including the date on which that application was made (or such
extended period as the Court may allow) has expired without a notice of disclaimer having
been given under this section in respect of the property. (5) A person who has sustained loss or damage in consequence of the operation of a disclaimer under
this section is a creditor of the company to the extent of the loss or damage and accordingly may
prove for the loss or damage in the liquidation. 477.

his section is a creditor of the company to the extent of the loss or damage and accordingly may
prove for the loss or damage in the liquidation. 477.

Special provisions relating to disclaimer of leaseholds
(1) The disclaimer under section 476 of any property comprising a leasehold interest does not take
effect unless a copy of the disclaimer has been served on every person claiming under the company
as under-lessee or mortgagee whose address is known to the liquidator and either—
(a) an application under section 479 has not been made with respect to that property within
fourteen days from and including the date on which the last notice served under this
subsection was served; or
(b) if such an application is made, the Court makes an order directing the disclaimer to take
effect. (2) If the Court makes an order under subsection (1)(b), it may also, instead of or in addition to any
order it makes under section 479, make such orders with respect to fixtures, tenant's improvements
and other matters arising out of the lease as it considers appropriate. 160

tion 479, make such orders with respect to fixtures, tenant's improvements
and other matters arising out of the lease as it considers appropriate. 160

Insolvency Act (Cap. 53) Kenya
478. Effect of disclaimer in relation to land subject to rentcharge
(1) If, as a result of the disclaimer under section 476 of land subject to a rentcharge, the land vests
by operation of law in a person, the person is not subject to any liability in respect of amounts
becoming due under the rentcharge except amounts that become due after the proprietor, or some
person claiming under or through the proprietor, has taken possession or control of the land or has
occupied it. (2) The reference in subsection (1) to a person includes the State and to any a successor in title to the
person. 479. General powers of the Court in respect of disclaimed property
(1) This section and section 480 apply to property that the liquidator has disclaimed in accordance with
section 476. (2) An application to the Court for an order under subsection (3) may be made by—
(a) any person who claims an interest in the disclaimed property; or
(b) any person who is under a liability in respect of the disclaimed property, other than a liability
discharged by the disclaimer.

aimed property; or
(b) any person who is under a liability in respect of the disclaimed property, other than a liability
discharged by the disclaimer.

(3) On the hearing of an application made under subsection (2), the Court may make an order, on such
terms as it considers appropriate, for the vesting of the disclaimed property in, or for its delivery to
—
(a) a person entitled to it or a trustee for such a person; or
(b) a person subject to such a liability as is referred to in subsection (2)(b) or a trustee for such a
person. (4) The Court may make an order under subsection (3)(b) only if it appears to the Court that it would
be just to do so for the purpose of compensating the person subject to the liability in respect of the
disclaimer. (5) The effect of an order made under this section is to be taken into account in assessing for the
purpose of section 476(6) the extent of any loss or damage sustained by a person in consequence of
the disclaimer. (6) It is not necessary for an order under this section vesting property in a person to be completed by
transfer. 480.

consequence of
the disclaimer. (6) It is not necessary for an order under this section vesting property in a person to be completed by
transfer. 480.

Powers of the Court in respect of leaseholds held by company in liquidation
(1) The Court may not make an order under section 479 vesting a leasehold interest in a person
claiming under the company as underlessee or mortgagee except on terms making the person—
(a) subject to the same liabilities and obligations as the company was subject to under the lease
at the commencement of the liquidation; or
(b) if the Court considers appropriate, subject to the same liabilities and obligations as
the person would be subject to if the lease had been assigned to the person at the
commencement of the liquidation. (2) For the purposes of an order under section 479 relating only to the part of the property comprising
a lease, the requirements of subsection (1) apply as if the lease was the only property to which the
order relates. (3) If subsection (1) applies and no person claiming under the company as underlessee or mortgagee
is willing to accept an order under section 479 on the terms required under that subsection, the
161

ing under the company as underlessee or mortgagee
is willing to accept an order under section 479 on the terms required under that subsection, the
161

Insolvency Act (Cap. 53) Kenya
Court may make an order vesting the company's interest in the lease in any person who is liable
(whether personally or in a representative capacity, and whether alone or jointly with the company)
to perform the lessee's covenants under the lease. (4) The Court may vest that estate and interest in such a person freed and discharged from all estates,
encumbrances and interests created by the company. (5) If subsection (1) applies and a person claiming under the company as underlessee or mortgagee
declines to accept an order under section 479, the person is excluded from all interest in the
property. 481. Creditor not entitled to retain benefit of execution or attachment against liquidator
unless creditor completes execution or attachment before commencement of
liquidation
(1) If—
(a) a creditor—
(i) has issued execution against the goods or land of a company; or
(ii) has attached any debt due to it; and
(b) the company is subsequently liquidated,
the creditor is not entitled to retain the benefit of the execution or attachment against
the liquidator unless the creditor has completed the execution or attachment before the
commencement of the liquidation.

ecution or attachment against
the liquidator unless the creditor has completed the execution or attachment before the
commencement of the liquidation.

(2) However—
(a) if a creditor has had notice of a meeting having been convened at which a resolution for
voluntary liquidation is to be proposed, the date on which the creditor had notice is, for the
purpose of subsection (1), substituted for the date of commencement of the liquidation;
(b) a person who, under a sale conducted by the enforcement officer or other officer charged
with the execution of the writ goods of a company on which execution has been levied,
purchases the goods in good faith acquires a good title to them as against the liquidator; and
(c) the Court may set aside the rights conferred on the liquidator by subsection (1) in favour of
the creditor to such extent and subject to such terms as it considers just. (3) For purposes of this Act—
(a) an execution against goods is completed by seizure and sale;
(b) an attachment of a debt is completed by receipt of the debt; and
(c) an execution against land is completed by its seizure or by any other event prescribed by the
insolvency regulations for the purposes of this section. 482.

ecution against land is completed by its seizure or by any other event prescribed by the
insolvency regulations for the purposes of this section. 482.

Duties of judicial enforcement officers charged with execution of writs and other
processes involving companies in liquidation
(1) This section applies if—
(a) a company's goods are taken in execution; and
(b) before their sale or the completion of the execution (whether by the receipt or recovery of
the full amount of the levy), notice is served on the judicial enforcement officer charged with
execution of the writ or other process—
(i) that a provisional liquidator has been appointed;
162

ved on the judicial enforcement officer charged with
execution of the writ or other process—
(i) that a provisional liquidator has been appointed;
162

Insolvency Act (Cap. 53) Kenya
(ii) that a liquidation order has been made; or
(iii) that a resolution for voluntary liquidation has been passed. (2) If so required, the judicial enforcement officer concerned shall deliver the goods and any money
seized or received in part satisfaction of the execution to the liquidator. (3) However, the costs of execution are a first charge or security right on the goods or money so
delivered, and the liquidator may sell the goods, or a sufficient part of them for the purpose of
satisfying the charge or security right. (4) If, under an execution in respect of a judgement for an amount exceeding fifty thousand shillings,
a company's goods are sold or money is paid in order to avoid sale, the judicial enforcement shall
deduct the costs of the execution from the proceeds of sale or the money paid and retain the
balance for not less than fourteen days.

nforcement shall
deduct the costs of the execution from the proceeds of sale or the money paid and retain the
balance for not less than fourteen days.

(5) If, within that period—
(a) notice is served on the judicial enforcement officer to the effect that—
(i) an application for the liquidation of the company has been made; or
(ii) a meeting has been convened at which there is to be proposed a resolution for
voluntary liquidation; and
(b) an order is made or a resolution passed,
that officer shall pay the balance to the liquidator, who is entitled to retain it as against the
execution creditor. (6) The rights conferred by this section on the liquidator may be set aside by the Court in favour of the
creditor to such extent and subject to such terms as the Court considers appropriate. (7) The insolvency regulations may increase or reduce the amount specified in subparagraph (4). [Act No. 13 of 2017, Sch.]
483. Power of the Court to rescind contracts entered into by company in liquidation
(1) A person who is, as against the liquidator, entitled to the benefit or subject to the burden of a
contract made with the company, may make an application for an order under subsection (2).

ator, entitled to the benefit or subject to the burden of a
contract made with the company, may make an application for an order under subsection (2).

(2) On the hearing of an application made under subsection (1), the Court may make an order
rescinding the contract on such terms as to payment by or to either party of damages for the non-
performance of the contract, or otherwise, as the Court considers appropriate. (3) Damages payable to a person under the order are provable by the person as a debt in the
liquidation. 484. Power of liquidator to transfer assets of company to its employees
(1) On the liquidation of a company (whether by the Court or voluntarily), the liquidator may, in
accordance with this section, make any payment that the company has, before the commencement
of the liquidation, decided to make under the Companies Act (Cap. 486) to employees or former
employees on cessation or transfer of business. (2) After the liquidation has commenced, the liquidator may make any such provision to employees or
former employees on cessation or transfer of business under the Companies Act (Cap. 486) only if—
(a) the company's liabilities have been fully satisfied and provision has been made for the
expenses of the liquidation;
(b) the exercise of the power has been authorised by a resolution of the company; and
163

provision has been made for the
expenses of the liquidation;
(b) the exercise of the power has been authorised by a resolution of the company; and
163

Insolvency Act (Cap. 53) Kenya
(c) the requirements of the company's articles (if any) as to the exercise of the power conferred
by that section are complied with. (3) A payment that can be made by a company under this section after the commencement of its
liquidation may be made only out of the company's assets that are available for distribution to the
company's members at the conclusion of the liquidation. (4) If the company is being liquidated by the Court, the exercise by the liquidator of a power under this
section is subject to the Court's control, and any creditor or contributory may apply to the Court for
an order giving directions with respect to any exercise or proposed exercise of the power. (5) Subsections (1) and (2) have effect irrespective of what is stated in any rule of law or in section 415. 485.

e or proposed exercise of the power. (5) Subsections (1) and (2) have effect irrespective of what is stated in any rule of law or in section 415. 485.

Company in liquidation required to state that it is in liquidation in all invoices, letters
and other communications
(1) A company that is in liquidation shall ensure that the following documents state that the company
is in liquidation:
(a) every invoice, order for goods or services, business letter or order form (whether in hard
copy, electronic or any other form) issued by or on behalf of the company, or a liquidator of
the company or a receiver or manager of the company's property;
(b) each of the company's websites (if any). (2) If the company fails to comply with a requirement under subsection (1), the company, and each
officer who is in default, commit an offence and on conviction are each liable to a fine not exceeding
two hundred thousand shillings. (3) If, after a company or any of its officers is convicted of an offence under subsection (2), the
company continues to fail to comply with the relevant requirement, the company, and each officer
of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction is liable to a fine not exceeding twenty thousand shillings for each such
offence. 486.

e on each day on which the failure
continues and on conviction is liable to a fine not exceeding twenty thousand shillings for each such
offence. 486.

Interest on debts to be paid if surplus permits
(1) In a company liquidation, interest is payable in accordance with this section on any debt proved in
the liquidation, including so much of any such debt as represents interest on the remainder. (2) The liquidator shall, before applying any surplus remaining after the payment of the debts proved
in a liquidation for any other purpose, apply the surplus in paying interest on those debts in respect
of the periods during which they have been outstanding since the liquidation commenced. (3) All interest under this section ranks equally (whether or not the debts on which it is payable rank
equally). (4) The rate of interest payable under this section in respect of any debt is the rate for the time being
prescribed by the insolvency regulations for the purposes of this section. (5) Interest payable under this section in respect of a debt is payable at the official rate. 487.

vency regulations for the purposes of this section. (5) Interest payable under this section in respect of a debt is payable at the official rate. 487.

Certain documents relating to company in liquidation to be exempt from stamp duty
(1) If a company is in liquidation, the following documents are exempt from stamp duty—
(a) every transfer relating solely to freehold or leasehold property, or to any interest in, any real
or movable property, that forms part of the company's assets and that, after the execution of
the transfer, either at law of in equity, is or remains part of those assets; and
164

ms part of the company's assets and that, after the execution of
the transfer, either at law of in equity, is or remains part of those assets; and
164

Insolvency Act (Cap. 53) Kenya
(b) every writ, order or other document relating solely to—
(i) property of the company referred to in paragraph (a); or
(ii) any legal proceeding arising under the liquidation. (2) Subsection (1) does not apply if the liquidation is a members' voluntary liquidation. [Act No. 13 of 2017, Sch.]
488. Records of company in liquidation to be evidence
When a company is in liquidation, all records of the company and of the liquidator are (as between the
contributories of the company) evidence of the truth of all matters purporting to be recorded in them,
until the contrary is proved. 489. Liquidator to lodge periodic statements with Registrar of Companies with respect to
current position of liquidation
(1) If the liquidation of a company is not completed within twelve months after its commencement,
the liquidator shall, at such intervals as are prescribed by the insolvency regulations and until
the liquidation is completed, lodge with the Registrar a statement containing the particulars so
prescribed with respect to the proceedings in, and position of, the liquidation.

d, lodge with the Registrar a statement containing the particulars so
prescribed with respect to the proceedings in, and position of, the liquidation.

(2) A liquidator who fails to lodge a statement as required by subsection (1) commits an offence and on
conviction is liable to a fine not exceeding five hundred thousand shillings. (3) If, after being convicted of an offence under subsection (2), a liquidator continues to fail to lodge
a statement as required by subsection (1), the liquidator commits a further offence on each day
on which the failure continues and on conviction is liable to a fine not exceeding fifty thousand
shillings for each such offence. 490. Effect of resolutions passed at adjourned meetings of company's creditors and
contributories
If a resolution is passed at an adjourned meeting of a company's creditors or contributories, the resolution
is for all purposes taken to have been passed on the date on which it was in fact passed, and not as having
been passed on any earlier date. 491.

tion
is for all purposes taken to have been passed on the date on which it was in fact passed, and not as having
been passed on any earlier date. 491.

Court may order meetings to be held to ascertain wishes of creditors or contributories
(1) The Court may—
(a) as to all matters relating to the liquidation of a company, have regard to the wishes of the
creditors or contributories (as proved to it by any sufficient evidence); and
(b) if it considers appropriate, for the purpose of ascertaining those wishes—
(i) direct meetings of the creditors or contributories to be convened, held and conducted
in such manner as the Court directs; and
(ii) appoint a person to act as Chairperson of any such meeting and report the result of it
to the Court. (2) In the case of creditors, the Court shall take into account the value of each creditor's debt. (3) In the case of contributories, the Court shall take into account the number of votes conferred on
each contributory. 165

of each creditor's debt. (3) In the case of contributories, the Court shall take into account the number of votes conferred on
each contributory. 165

Insolvency Act (Cap. 53) Kenya
492. Judicial notice to be taken of documents of the Court
In all proceedings under this Part, all courts and tribunals, all judges and persons acting judicially, and all
officers of a court or tribunal, or employed in enforcing the process of a court or tribunal, are required to
take judicial notice of—
(a) the signature of an officer of the High Court; and
(b) the official seal or stamp of that Court affixed to or impressed on any document made, issued or
signed under a provision of this Act or the Companies Act (Cap. 486), or any official copy of such a
document. 493. Affidavits required to be sworn for purposes of this Part
(1) An affidavit required to be sworn under or for the purposes of this Part may be sworn in Kenya—
(a) before any court, tribunal, judge or person lawfully authorised to take and receive affidavits;
or
(b) before any diplomat representing the Government of Kenya in any place outside Kenya.

person lawfully authorised to take and receive affidavits;
or
(b) before any diplomat representing the Government of Kenya in any place outside Kenya.

(2) All courts, tribunals, judges and other persons acting judicially are required to take judicial notice
of the seal or stamp or signature of any such court, tribunal, judge, person or diplomat affixed
to, impressed on, or subscribed to any such affidavit, or to any other document to be used for the
purposes of this Part. Division 9 — Dissolution of companies after liquidation
494. Dissolution (voluntary liquidation)
(1) This section applies to a company in voluntary liquidation if the liquidator has sent to the Registrar
the liquidator's final account and return in accordance with section 402 or 414. (2) As soon as practicable after receiving the account and return, the Registrar shall register them. (3) At the end of three months from the registration of the account and return, the company is
dissolved. (4) However, the Court may, on the application of the liquidator or any other person who appears to
the Court to have a legitimate interest in the matter, make an order deferring the date at which the
dissolution of the company is to take effect for such period as the Court considers appropriate.

matter, make an order deferring the date at which the
dissolution of the company is to take effect for such period as the Court considers appropriate.

(5) Within seven days after an order is made under subsection (4), the person on whose application the
order was made shall lodge with the Registrar a copy of the order for registration. (6) A person who, without reasonable excuse, fails to comply with subsection (5) commits an offence
and on conviction is liable to a fine not exceeding two hundred thousand shillings. (7) If, after being convicted of an offence under subsection (6), a person continues to fail to lodge the
required copy with the Registrar, the person commits a further offence on each day on which the
failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for
each such offence. 495. Early dissolution of company
(1) This section applies when an order for the liquidation of a company has been made by the Court
and the Official Receiver is the liquidator of the company. 166

tion applies when an order for the liquidation of a company has been made by the Court
and the Official Receiver is the liquidator of the company. 166

Insolvency Act (Cap. 53) Kenya
(2) On being satisfied—
(a) that the realisable assets of the company are insufficient to cover the expenses of the
liquidation; and
(b) that the affairs of the company do not require any further investigation,
the Official Receiver may apply to the Registrar for the early dissolution of the company. (3) The Official Receiver may make such an application only if at least thirty days' notice of the
Official Receiver's intention to make the application has been given to the company's creditors and
contributories. (4) On giving that notice, the Official Receiver is, subject to any directions given under section 496,
no longer required to perform any functions imposed on the Official Receiver in relation to the
company, its creditors or contributories because of any provision of this Act, apart from a duty to
make an application under subsection (2). (5) As soon as practicable after receiving the Official Receiver's application, the Registrar shall register
it. (6) At the end of the three months from and including the date of the registration of the application
the company is dissolved. 496.

hall register
it. (6) At the end of the three months from and including the date of the registration of the application
the company is dissolved. 496.

Consequence of notice given under section 495(3)
(1) If a notice has been given in accordance with section 495(3), the Official Receiver or any creditor or
contributory of the company may apply to the Court for directions under this section. (2) The grounds on which such an application may be made are—
(a) that the realisable assets of the company are sufficient to cover the expenses of the
liquidation;
(b) that the affairs of the company do require further investigation; or
(c) that for any other reason the early dissolution of the company is inappropriate. (3) Directions under this section—
(a) are directions making such provision as the Court considers appropriate for enabling the
liquidation of the company to proceed as if no notice had been given under section 495(3);
and
(b) may, in the case of an application under section 495(7), include a direction deferring the
date at which the dissolution of the company is to take effect for such period as the Court
considers appropriate.

, include a direction deferring the
date at which the dissolution of the company is to take effect for such period as the Court
considers appropriate.

(4) Within seven days after directions are given under this section, the person on whose application
directions were given, shall lodge with the Registrar for registration a copy of the directions or
determination. (5) A person who, without reasonable excuse, fails to lodge a copy as required by subsection (4)
commits an offence and on conviction is liable to a fine not exceeding two hundred thousand
shillings. (6) If, after being convicted of an offence under subsection (5), the person continues to fail to lodge the
relevant copy with the Registrar for registration, the person commits a further offence on each day
on which the failure continues and on conviction is liable to a fine not exceeding twenty thousand
shillings for each such offence. 167

ce on each day
on which the failure continues and on conviction is liable to a fine not exceeding twenty thousand
shillings for each such offence. 167

Insolvency Act (Cap. 53) Kenya
497. Dissolution otherwise than under sections 494 - 496
(1) This section applies to a notice that is—
(a) served for the purposes of section 468(9); or
(b) from the Official Receiver that the liquidation of a company by the Court is complete. (2) As soon as practicable after such a notice is lodged for registration, the Registrar shall register it. (3) At the end of the three months from and including date of registration of the notice, the company is
dissolved. (4) However, on the application of the Official Receiver or any other person who appears to the Court
to have a legitimate interest in the matter, the Court may make an order deferring the date at
which the dissolution of the company is to take effect to such other date as the Court considers
appropriate. (5) Within seven days after an order is made under subsection (4), the person on whose application the
order was made shall lodge with the Registrar a copy of the order for registration.

is made under subsection (4), the person on whose application the
order was made shall lodge with the Registrar a copy of the order for registration.

(6) A person who, without reasonable excuse, fails to lodge a copy of the order as required by
subsection (5) commits an offence and on conviction is liable to a fine not exceeding two hundred
thousand shillings. (7) If, after being convicted of an offence under subsection (6), a person continues to fail to lodge the
required copy with the Registrar, the person commits a further offence on each day on which the
failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for
each such offence. Division 10 — Offences relating to conduct before and during
liquidation and criminal proceedings relating to those offences
498. Offence involving commission of fraudulent acts in anticipation of liquidation
(1) This section applies in relation to a company—
(a) in respect of which the Court has made a liquidation order; or
(b) that has passed a resolution for the voluntary liquidation of the company.

any—
(a) in respect of which the Court has made a liquidation order; or
(b) that has passed a resolution for the voluntary liquidation of the company.

(2) An officer or former officer of the company commits an offence if, within the twelve months
immediately preceding the commencement of the liquidation of the company, the officer or former
officer—
(a) concealed any part of the company's property to the value of fifty thousand shillings or more;
or concealed any debt due to or from the company;
(b) fraudulently removed any part of the company's property to the value of fifty thousand
shillings or more;
(c) concealed, destroyed, mutilated or falsified any document affecting or relating to the
company's affairs or property;
(d) made any false entry in any document affecting or relating to the company's affairs or
property;
(e) fraudulently parted with, altered or made any omission in any document affecting or relating
to the company's affairs or property; or
(f) pawned, created a security right or disposed of any property of the company that has been
obtained on credit and has not been paid for. 168

ty; or
(f) pawned, created a security right or disposed of any property of the company that has been
obtained on credit and has not been paid for. 168

Insolvency Act (Cap. 53) Kenya
(3) Subsection (3)(f) does not apply if the pawning, creation of a security right or disposal was done in
the ordinary course of the company's business. (4) An officer or former officer of the company also commits offence—
(a) if, within the twelve months period referred to in subsection (2), the officer or former officer
has been privy to the doing by others of any of the acts referred to in paragraphs (c), (d) and
(e) of that subsection; or
(b) if, at any time after the commencement of the liquidation, the officer or former officer—
(i) does any of the acts referred to in paragraphs (a) to (f) of that subsection; or
(ii) is privy to the doing by others of any of the acts referred to in paragraphs (c) to (e) of
that subsection. (5) In a prosecution for an offence under—
(a) paragraph (a) or (f) of subsection (2); or
(b) subsection (4) in respect of an act referred to in either of those paragraphs,
it is a defence to prove that the officer or former officer had no intention to defraud.

respect of an act referred to in either of those paragraphs,
it is a defence to prove that the officer or former officer had no intention to defraud.

(6) In a prosecution for an offence under—
(a) paragraph (c) or (d) of subsection (2); or
(b) subsection (4) in respect of an act referred to in either of those paragraphs,
it is a defence to prove that the officer or former officer had no intention to conceal the state of
affairs of the company or to defeat the law. (7) If property is pawned, encumbered by a security right or disposed of in circumstances that
constitute an offence under subsection(2)(f), a person who takes in pawn or security right, or
otherwise receives, the property knowing it to have been pawned, encumbered by a security right or
disposed of in such circumstances, commits an offence. (8) A person found guilty of an offence under this section is liable on conviction to a fine not exceeding
two million shillings or to imprisonment for a term not exceeding five years, or to both. (9) The insolvency regulations may increase or reduce the amounts specified in subsection (2)(a) and
(b). [Act No. 13 of 2017, Sch.]
499.

or to both. (9) The insolvency regulations may increase or reduce the amounts specified in subsection (2)(a) and
(b). [Act No. 13 of 2017, Sch.]
499.

Offence involving misconduct committed in course of liquidation of company
(1) This section applies in relation to a company—
(a) in respect of which the Court has made a liquidation order; or
(b) that has passed a resolution for the voluntary liquidation of the company. (2) An officer or former officer of the company commits an offence if the officer or former officer—
(a) has made or caused to be made a gift or transfer of, or charge on, or has caused or connived
at the levying of execution against, the company's property; or
(b) has concealed or removed any part of the company's property since, or within the two
months preceding, the date of any unsatisfied judgment or order for the payment of money
obtained against the company. (3) A person is not liable to be charged with an offence under subsection (2) if the conduct alleged to
constitute the offence occurred more than five years before the commencement of the liquidation. 169

ce under subsection (2) if the conduct alleged to
constitute the offence occurred more than five years before the commencement of the liquidation. 169

Insolvency Act (Cap. 53) Kenya
(4) In a prosecution for an offence under subsection (2)(a), it is a defence to prove that the officer or
former officer did not, at the time of the alleged offence, have any intent to defraud the company's
creditors. (5) An officer or former officer of company who is found guilty of an offence under this section is
liable on conviction to a fine not exceeding one million shillings or to imprisonment or a fine not
exceeding two years, or to both. 500. Offences involving transactions to defraud creditors of company in liquidation
(1) This section applies in relation to a company that is in liquidation, whether voluntary or by the
Court.

fraud creditors of company in liquidation
(1) This section applies in relation to a company that is in liquidation, whether voluntary or by the
Court.

(2) An officer or former officer of the company commits an offence if the officer or former officer—
(a) does not to the best of the officer's or former officer's knowledge and belief fully and truly
disclose to the liquidator all of the company's property, and how and to whom and for what
consideration and when the company disposed of any part of that property (except such part
as has been disposed of in the ordinary course of the company's business);
(b) does not deliver to the liquidator, or in accordance with the directions of the liquidator, all
such part of the company's property as is under the control of the officer or former officer,
and that the officer or former officer is required by law to deliver to the liquidator;
(c) fails to deliver to the liquidator, or in accordance with the liquidator's directions, all
documents under the control of the officer or former officer that belong to the company and
that the officer or former officer is required by law to deliver to the liquidator;
(d) knowing or believing that a false debt has been proved by any person in the liquidation, fails
to inform the liquidator of that knowledge or belief as soon as is practicable; or
(e) after the commencement of the liquidation, prevents the production of any document
affecting or relating to the company's affairs or property.

or
(e) after the commencement of the liquidation, prevents the production of any document
affecting or relating to the company's affairs or property.

(3) An officer or former officer also commits an offence if, after the commencement of the liquidation,
the officer or former officer attempts to account for any part of the company's property by means of
fictitious losses or expenses. (4) An officer or former officer is presumed, in the absence of evidence to the contrary, to have
committed an offence under subsection (3) if the officer or former officer has made an attempt
of the kind referred to in that subsection at a meeting of the company's creditors held within the
twelve months immediately preceding the commencement of the liquidation. (5) In a prosecution for an offence under subsection (2)(a), (b) or (c), it is a defence to prove that the
officer or former officer had no intention to defraud. (6) In a prosecution for an offence under subsection (2)(e), it is a defence to prove that the officer or
former officer had no intention to conceal the state of affairs of the company or to defeat the law. (7) An officer or former officer found guilty of an offence under this section is liable on conviction to a
fine not exceeding two million shillings or to imprisonment for a term not exceeding five years, to
both. 501.

is section is liable on conviction to a
fine not exceeding two million shillings or to imprisonment for a term not exceeding five years, to
both. 501.

Offence to falsify documents in relation to company in liquidation
(1) This section applies in relation to a company that is in liquidation, whether voluntary or by the
Court. (2) An officer or contributory of the company commits an offence if, during the liquidation, the officer
or contributory, with intent to defraud or deceive the company or any other person—
(a) destroys, damages, alters or falsifies a security or other document of the company; or
170

to defraud or deceive the company or any other person—
(a) destroys, damages, alters or falsifies a security or other document of the company; or
170

Insolvency Act (Cap. 53) Kenya
(b) makes or is privy to the making of a false or fraudulent entry in any record or other
document of the company. (3) A person who is found guilty of an offence under subsection (1) is liable on conviction to a fine not
exceeding two million shillings or to imprisonment for a term not exceeding five years, to both. 502. Offence to make material omission from statement relating to financial position of
company in liquidation
(1) This section applies to a company that is in liquidation, whether voluntary or by the Court. (2) An officer or former officer of the company commits an offence if, during the liquidation, the officer
or former officer makes a material omission from a statement relating to the company's financial
position. (3) An officer or former officer of the company is also taken to have committed an offence under
subsection (2) if, before the commencement of the liquidation, the officer or former officer has
made any material omission from a statement relating to the company's financial position. (4) In a prosecution for an offence under this section, it is a defence to prove that the officer or former
officer had no intention to defraud.

tion. (4) In a prosecution for an offence under this section, it is a defence to prove that the officer or former
officer had no intention to defraud.

(5) A person who is found guilty of an offence under this section is liable on conviction to a fine not
exceeding one million shillings or to imprisonment for twelve months, or to both. 503. Offence to make false representations to creditors of company in liquidation
(1) This section applies to a company that is in liquidation, whether voluntary or by the Court. (2) An officer or former officer of the company commits an offence if—
(a) the officer or former officer makes a false representation; or
(b) does any other fraudulent act,
for the purpose of obtaining the consent of the company's creditors or any of them to an agreement
relating to the company's affairs or to the liquidation. (3) An officer or former officer of the company is also to be taken to have committed an offence under
subsection (2) if, before the commencement of the liquidation, the officer or former officer—
(a) made any false representation; or
(b) did any other fraudulent act,
for the purpose of obtaining that consent.

ion, the officer or former officer—
(a) made any false representation; or
(b) did any other fraudulent act,
for the purpose of obtaining that consent.

(4) An officer or former officer who is found guilty of an offence under this section is liable on
conviction to a fine not exceeding two million shillings and to imprisonment for a term not
exceeding five years, or to both. 504. Power of the Court to make orders against delinquent directors, liquidators, etc. (1) This section applies to the following persons—
(a) an officer or former officer of a company that is in liquidation (whether by the Court or
voluntarily);
(b) a person who is or has acted as the liquidator of such a company;
(c) not being a person referred to in paragraph (a) or (b), a person who has been concerned in
the promotion, formation or management of such a company. 171

t being a person referred to in paragraph (a) or (b), a person who has been concerned in
the promotion, formation or management of such a company. 171

Insolvency Act (Cap. 53) Kenya
(2) If, during the course of the liquidation of a company, it appears that a person to whom this section
applies has or may have—
(a) misapplied or retained, or become accountable for, money or property of the company; or
(b) committed misfeasance or a breach of any fiduciary or other duty in relation to the company,
the Official Receiver, the liquidator of the company or a creditor or contributory of the company
may make an application to the Court to conduct an examination under subsection (6). (3) The reference in subsection (2) to misfeasance or a breach of any fiduciary or other duty in relation
to the company includes, in the case of a person who has acted as liquidator of the company, any
misfeasance or breach of any fiduciary or other duty in connection with the carrying out of the
liquidator's functions as liquidator of the company. (4) An application under subsection (2) may be made in relation to a person who has acted as liquidator
of the company only with the approval of the Court given after the person has been released from
the responsibilities of liquidator.

ted as liquidator
of the company only with the approval of the Court given after the person has been released from
the responsibilities of liquidator.

(5) A contributory may make an application under subsection (2) only with the approval of the Court. (6) On the hearing of an application made under subsection (2), the Court may undertake an
examination into the conduct of the person in relation to whom the application was made. (7) If, at the conclusion of the examination, the Court finds that the person examined has engaged in
conduct of a kind referred to in subsection (2), it may make an order compelling the person—
(a) to repay, restore or account for the money or property or any part of it, with interest at such
rate as the Court considers appropriate; or
(b) to contribute such amount to the company's assets as compensation for the misfeasance,
breach of fiduciary or other duty as the Court considers fair and reasonable. 505.

amount to the company's assets as compensation for the misfeasance,
breach of fiduciary or other duty as the Court considers fair and reasonable. 505.

Power of the Court to make orders against officers of company and others found to
have participated in fraudulent trading by company in liquidation
(1) A liquidator of a company may make an application to the Court to make an order under subsection
(2) if—
(a) in the course of the liquidation of the company, the liquidator forms the view that a business
of the company has been carried on with intent to defraud creditors of the company or
creditors of any other person, or for any fraudulent purpose; and
(b) the liquidator believes that specified persons participated (directly or indirectly) in the
business with the knowledge that the business was being carried on in that manner. (2) If, on hearing an application made under subsection (1), the Court finds that the persons specified
in the application did in fact participate (directly or indirectly) in a business of the company with
the knowledge that it was being carried on in the manner referred to in subsection (1)(a), it may
order those persons (or any of them) to make such contributions to the company's assets as the
Court considers fair and reasonable.

ion (1)(a), it may
order those persons (or any of them) to make such contributions to the company's assets as the
Court considers fair and reasonable.

(3) The persons specified in an application made under subsection (2) are entitled to be served with a
copy of the application and to appear and be heard as respondents at the hearing of the application. (4) If the Court makes an order against a person under subsection (2), it may also make an order
disqualifying the person from—
(a) being or acting as a director of a company or a partner of a limited liability partnership;
(b) being or acting as a liquidator, provisional liquidator or administrator of a company or
limited liability partnership;
172

liability partnership;
(b) being or acting as a liquidator, provisional liquidator or administrator of a company or
limited liability partnership;
172

Insolvency Act (Cap. 53) Kenya
(c) being or acting as a supervisor of a voluntary arrangement approved by the company or a
limited liability partnership; or
(d) in any way, whether directly or indirectly, being concerned in the promotion, formation or
management of a company or limited liability partnership,
for such period, not exceeding fifteen years, as may be specified in the order. 506. Power of the Court to make orders against officers of company engaging in wrongful
trading
(1) This section applies—
(a) to a company that is in insolvent liquidation; and
(b) to a person who, at a time before the commencement of the liquidation, was an officer of the
company. (2) For the purposes of this section—
(a) a company is in insolvent liquidation if, at the time the liquidation commences, its assets
are insufficient for the payment of its debts and other liabilities and the expenses of the
liquidation; and
(b) the person in respect of whom an application is made under subsection (3) is the respondent
to the application.

e expenses of the
liquidation; and
(b) the person in respect of whom an application is made under subsection (3) is the respondent
to the application.

(3) If, in the course of the liquidation of a company, it appears to the liquidator that a person to whom
this section applies knew or ought to have known that there was no reasonable prospect that the
company would avoid being placed in insolvent liquidation, the liquidator may make an application
to the Court for an order under subsection (5). (4) The Court may hear an application made under subsection (3) only if the person in respect of whom
the application was made has been served with a copy of the application. (5) On the hearing of an application made under subsection (3), the Court may make an order declaring
the respondent to be liable to make such contribution (if any) to the company's assets as the Court
considers appropriate, but only if it is satisfied that, at the relevant time, the respondent knew or
ought to have known that there was no reasonable prospect that the company would avoid being
placed in insolvent liquidation.

, the respondent knew or
ought to have known that there was no reasonable prospect that the company would avoid being
placed in insolvent liquidation.

(6) However, the Court may not make such an order if satisfied that the respondent took such steps to
avoid potential loss to the company's creditors as the respondent ought reasonably to have taken,
assuming that the respondent knew that there was no reasonable prospect of the company avoiding
going into solvent liquidation. (7) Nothing in this section affects the operation of section 505. (8) If the Court makes an order against a person under subsection (5), it may also make an order
disqualifying the person from—
(a) being or acting as a director of a company or limited liability partnership;
(b) being or acting as a liquidator, provisional liquidator or administrator of a company or
limited liability partnership;
(c) being or acting as a supervisor of a voluntary arrangement approved by the company or
limited liability partnership; or
(d) in any way, whether directly or indirectly, being concerned in the promotion, formation or
management of a company or limited liability partnership,
for such period, not exceeding fifteen years, as may be specified in the order. 173

ation or
management of a company or limited liability partnership,
for such period, not exceeding fifteen years, as may be specified in the order. 173

Insolvency Act (Cap. 53) Kenya
507. Supplementary provisions relating to proceedings under sections 505 and 506
(1) On the hearing of an application under section 505 or 506, the liquidator may personally give
evidence or call witnesses. (2) If the Court makes an order under section 505 or 506, it may make such further orders as it
considers appropriate for giving effect to the order. (3) In particular, the Court may-
(a) provide for the liability of any person under the order to be a charge or security right-
(i) on any debt or obligation due from the company to the person; or
(ii) on any mortgage or charge or any interest in a mortgage or charge on assets of the
company held by or vested in the person, or any other person on the person's behalf,
or any other person who claims as an assignee from or through the person liable, or
any person acting on that person's behalf; and
(b) from time to time make such further order as may be necessary for enforcing a charge or
security right imposed under paragraph (a).

's behalf; and
(b) from time to time make such further order as may be necessary for enforcing a charge or
security right imposed under paragraph (a).

(4) For the purposes of subsection (3)(a)(ii), "assignee"—
(a) includes a person to whom or in whose favour, by the directions of the person made liable,
the debt, obligation, mortgage or charge was created, issued or transferred or the interest
created; but
(b) does not include an assignee for valuable consideration (not including consideration by way
of marriage) given in good faith and without notice of any of the matters on the ground of
which the order is made. (5) If the Court makes an order under section 505 or 506 in relation to a person who is a creditor of the
company, it may direct that the whole or any part of any debt owed by the company to that person,
and any interest on the debt, ranks in priority after all other debts owed by the company and after
any interest on those debts. (6) The Court can make an order under section 505 or 506 even if the person concerned may be
criminally liable in respect of matters giving rise to the making of the order. [Act No. 13 of 2017, Sch.]
508.

06 even if the person concerned may be
criminally liable in respect of matters giving rise to the making of the order. [Act No. 13 of 2017, Sch.]
508.

Director of company in insolvent liquidation prohibited from being director of, or
being involved with, any other company that is known by a prohibited name
(1) This section applies to a person if—
(a) a company is in insolvent liquidation on or after the commencement of this section; and
(b) the person was a director of the company at any time during the twelve months immediately
preceding the date on which the liquidation of the company commenced. (2) For the purposes of this section, a name is a prohibited name in relation to such a person if—
(a) it is a name by which the company was known at any time during that period of twelve
months; or
(b) it is a name that is so similar to a name of the kind referred to in paragraph (a) as to suggest
an association with the company. 174

e
months; or
(b) it is a name that is so similar to a name of the kind referred to in paragraph (a) as to suggest
an association with the company. 174

Insolvency Act (Cap. 53) Kenya
(3) Except with approval of the Court, or in such circumstances as may be prescribed by the insolvency
regulations, a person to whom this section applies shall not at any time during the five years from
and including the date on which the liquidation of the company commenced—
(a) be a director of any other company, or any limited liability partnership, that is known by a
prohibited name;
(b) in any way (directly or indirectly) be concerned or take part in the promotion, formation or
management of any such company or partnership; or
(c) in any way (directly or indirectly) be concerned or take part in the carrying on of a business
carried on (otherwise than by a company or limited liability partnership) under a prohibited
name. (4) A person who contravenes this section commits an offence and on conviction is liable to a fine not
exceeding one million shillings or to imprisonment for a term not exceeding twelve months, or to
both.

fence and on conviction is liable to a fine not
exceeding one million shillings or to imprisonment for a term not exceeding twelve months, or to
both.

(5) A reference in this section, in relation to a time, to a name by which a company or limited liability
partnership is known is a reference to the name of the company or partnership at that time or to
any name under which the company or partnership carried on business at that time. (6) For the purposes of this section, a company is in insolvent liquidation if, at the time the liquidation
commences, the company's assets are insufficient for the payment of its debts and other liabilities
and the expenses of the liquidation. (7) In this section, "company" includes a company to which Part VII applies. 509. Circumstances in which persons are personally liable for debts of company
(1) A person is personally responsible for all the relevant debts of a company if at any time—
(a) the person is involved in the management of the company in contravention of section 508; or
(b) while involved in the management of the company, the person acts or is willing to act on
instructions given (without the approval of the Court) by a person to whom subsection (2)
applies.

he company, the person acts or is willing to act on
instructions given (without the approval of the Court) by a person to whom subsection (2)
applies.

(2) This subsection applies to the following persons—
(a) a person who is involved in the management of the company in contravention of section 508;
(b) a person who is subject to a disqualification order or disqualification undertaking, or foreign
restrictions, under the Companies Act (Cap. 486);
(c) a person who is subject to any other restriction or disability prescribed by the insolvency
regulations for the purposes of this section. (3) If, because of subsection (1), a person is personally responsible for the relevant debts of a company,
the person is jointly and severally liable for those debts with the company and any other person
who, whether under this section or otherwise, is so liable.

rson is jointly and severally liable for those debts with the company and any other person
who, whether under this section or otherwise, is so liable.

(4) For the purposes of this section, the relevant debts of a company are—
(a) in relation to a person who is personally responsible under paragraph (a) of subsection (1),
such debts and other liabilities of the company as are incurred at a time when the person was
involved in the management of the company; and
(b) in relation to a person who is personally responsible under paragraph (b) of that subsection,
such debts and other liabilities of the company as are incurred at a time when the person was
acting or was willing to act on instructions given as referred to in that paragraph. 175

of the company as are incurred at a time when the person was
acting or was willing to act on instructions given as referred to in that paragraph. 175

Insolvency Act (Cap. 53) Kenya
(5) For the purposes of this section, a person is involved in the management of a company if the person
—
(a) is a director of the company; or
(b) is concerned, whether directly or indirectly, or takes part, in the management of the
company. (6) For the purposes of this section, a person who, as a person involved in the management of a
company, has at any time acted on instructions given (without the approval of the Court) by a
person to whom subsection (2) applies is presumed, unless the contrary is shown, to have been
willing at any later time to act on any instructions given by that person. (7) In this section, "company" includes a company to which Part VII applies. 510.

g at any later time to act on any instructions given by that person. (7) In this section, "company" includes a company to which Part VII applies. 510.

Prosecution of delinquent officers and members of company in liquidation
(1) If, in the course of liquidating a company, the Court concludes that a person who was at the
relevant time a past or present officer, or a member, of the company may have committed an
offence in relation to the company for which the person is criminally liable, the Court may (either
on the application of a person interested in the liquidation or on its own initiative) direct the
liquidator to report the matter to the Official Receiver. (2) If, in the case of a company being liquidated by the Court, the liquidator (not being the Official
Receiver) concludes that a person who, at the relevant time was a past or present officer, or a
member, of the company, may have committed an offence in relation to the company for which the
person is criminally liable, the liquidator shall report the matter to the Official Receiver.

tted an offence in relation to the company for which the
person is criminally liable, the liquidator shall report the matter to the Official Receiver.

(3) If, in the course of a voluntary liquidation, the liquidator concludes that a person who, at the
relevant time, was a past or present officer, or a member, of the company, may have committed an
offence in relation to the company for which the person is criminally liable, the liquidator shall
immediately report the matter to the Official Receiver. (4) In making a report to the Official Receiver in accordance with subsection (1), (2) or (3), the
liquidator shall provide the Official Receiver with—
(a) such information; and
(b) such access to and facilities for inspecting and taking copies of documents,
as the Official Receiver reasonably requires and the liquidator is reasonably able to give or provide. (5) As soon as practicable after receiving a report of a matter in accordance with subsection (1), (2) or
(3), the Official Receiver shall forward the report to the Attorney-General for further investigation,
together with—
(a) the information and documents (if any) given or provided in accordance with subsection (4);
and
(b) such observations on the report and on the information and documents (if any) as the
Official Receiver considers relevant.

ith subsection (4);
and
(b) such observations on the report and on the information and documents (if any) as the
Official Receiver considers relevant.

(6) If the liquidator of a company being liquidated by the Court is the Official Receiver and the Official
Receiver concludes that a person who, at the relevant time was a past or present officer, or a
member, of the company, may have committed an offence in relation to the company for which
the person is criminally liable, the Official Receiver shall immediately report the matter to the
Attorney-General for further investigation, together with such observations on the matter as the
Official Receiver considers relevant. (7) On receiving a report made under subsection (5) or (6), the Attorney-General shall investigate the
matter reported and such other matters relating to the affairs of the company as appear to the
Attorney-General to require investigation. 176

gate the
matter reported and such other matters relating to the affairs of the company as appear to the
Attorney-General to require investigation. 176

Insolvency Act (Cap. 53) Kenya
(8) For the purpose of an investigation under subsection (7), the Attorney-General may exercise any of
the powers conferred on an inspector appointed under the Companies Act (Cap. 486) to investigate
a company's affairs. (9) If, in the course of a voluntary liquidation, the Court concludes that—
(a) any past or present officer of the company, or any member of it, has committed an offence as
referred to in subsection (1); and
(b) no report with respect to the matter has been made by the liquidator in accordance with
subsection (3),
the Court may, on the application of any person interested in the liquidation or on its own
initiative, direct the liquidator to make such a report. (10) On the making of a report in accordance with subsection (9), this section has effect as though the
report had been made in accordance with subsection (3). 511.

king of a report in accordance with subsection (9), this section has effect as though the
report had been made in accordance with subsection (3). 511.

Obligations arising under section 510
(1) For the purpose of an investigation by the Attorney-General under 510(4), a person has the same
obligation to produce documents or give information, or otherwise assist the Attorney-General, as
the person would have in relation to an inspector appointed under the Companies Act (Cap. 486). (2) An answer given by a person to a question put to the person in exercise of the powers conferred by
section 510(8) may be used in evidence against the person. (3) However, in criminal proceedings in which that person is charged with an offence to which this
section applies—
(a) evidence relating to the answer may not be adduced; and
(b) questions relating to it may not be asked, by or on behalf of the prosecution,
unless evidence relating to it is adduced, or a question relating to it is asked, in the proceedings by
or on behalf of that person. (4) This section applies to all offences other than an offence under sections 108 and 114 of the Penal
Code (Cap. 63) (which respectively deal with false statements made on oath otherwise than in
judicial proceedings or made otherwise than on oath).

nal
Code (Cap. 63) (which respectively deal with false statements made on oath otherwise than in
judicial proceedings or made otherwise than on oath).

(5) If criminal proceedings are begun by the Director of Public Prosecutions following an investigation
under section 510(7), the liquidator and every officer and agent of the company past and present
(other than the defendant) shall provide the Director of Public Prosecutions with such assistance in
connection with the prosecution as the liquidator, officer or agent is reasonably able to give. (6) In subsection (5), "agent" includes any bank or advocate of the company and any person employed
by the company as auditor, whether that person is or is not an officer of the company. (7) If a person fails to provide assistance as required by subsection (5), the Court may, on the
application of the Director of Public Prosecutions or the Attorney-General, make an order directing
the person to comply with that subsection. (8) If the application is made with respect to a liquidator, the Court may also make an order directing
the costs to be borne by the liquidator personally.

f the application is made with respect to a liquidator, the Court may also make an order directing
the costs to be borne by the liquidator personally.

(9) However, the Court may not make such an order if it is established that the failure to comply was
due to the liquidator having insufficient assets of the company to enable the liquidator to provide
the required assistance. 177

failure to comply was
due to the liquidator having insufficient assets of the company to enable the liquidator to provide
the required assistance. 177

Insolvency Act (Cap. 53) Kenya
Part VII – LIQUIDATION OF UNREGISTERED COMPANIES
512. Meaning of "unregistered company" for purposes of this Part
For the purposes of this Part, "unregistered company" includes any association and any company, other
than a company registered under the Companies Act (Cap. 486). 513. Liquidation of unregistered companies
(1) Subject to the provisions of this Part—
(a) any unregistered company may be liquidated under Pat VI; and
(b) the provisions of that Part relating to liquidation apply to an unregistered company. (2) An unregistered company cannot be liquidated under this Part voluntarily. 514. Circumstances in which unregistered company can be liquidated
(1) The circumstances in which an unregistered company can be liquidated are as follows—
(a) if the company is dissolved, or has ceased to carry on business, or is carrying on business
only for the purpose of liquidating its affairs;
(b) if the company is unable to pay its debts;
(c) if the Court is of opinion that it is just and equitable that the company should be liquidated.

rs;
(b) if the company is unable to pay its debts;
(c) if the Court is of opinion that it is just and equitable that the company should be liquidated.

(2) An unregistered company is, for the purposes of subsection (1)(b), unable to pay its debts if there is
a creditor, by assignment or otherwise, to which the company owes an amount exceeding seventy-
five thousand shillings then due and—
(a) the creditor has served on the company, by leaving at its principal place of business, or by
delivering to an officer of the company, or by otherwise serving in such manner as the Court
may approve or direct, a written demand requiring the company to pay the amount due; and
(b) the company has, within the twenty-one days after the service of the demand, failed to pay
the amount or to secure or compound for it to the creditor's satisfaction. (3) The amount of money for the time being specified in subsection (2) is subject to increase or
reduction by the insolvency regulations, but no increase in the amounts so specified affects any
case in which the liquidation application was made before the increase took effect.

gulations, but no increase in the amounts so specified affects any
case in which the liquidation application was made before the increase took effect.

(4) An unregistered company is, for the purposes of subsection (1)(b), also unable to pay its debts if
legal proceedings have been brought against any member of the company for a debt or demand due,
or claimed to be due, from the company, or from the member as such, and—
(a) notice of the bringing of the proceedings has been served on the company by leaving it at the
company's principal place of business (or by delivering it to an officer of the company, or by
otherwise serving it in such manner as the Court may approve or direct); and
(b) the company has not within twenty-one days after service of the notice—
(i) paid, secured or compounded for the debt or demand;
(ii) obtained a stay to the proceedings; or
(iii) indemnified the defendant to the defendant's reasonable satisfaction against the
proceedings, and against all costs, damages and expenses to be incurred by the
defendant because of it. 178

dant's reasonable satisfaction against the
proceedings, and against all costs, damages and expenses to be incurred by the
defendant because of it. 178

Insolvency Act (Cap. 53) Kenya
(5) An unregistered company is, for the purposes of subsection (1)(b), also unable to pay its debts—
(a) if execution or other process issued on a judgment, decree or order obtained in any
Court in favour of a creditor against the company, or any member of it as such, or any
person authorised to be sued as nominal defendant on behalf of the company, is returned
unsatisfied; or
(b) if it is otherwise proved to the satisfaction of the Court that the company is unable to pay its
debts as they fall due. (6) An unregistered company is also unable to pay its debts for the purposes of subsection (1)(b) if
it is proved to the satisfaction of the Court that the value of the company's assets is less than the
amount of its liabilities, taking into account its contingent and prospective liabilities. (7) In this section (3), "officer", in relation to an unregistered company, means the secretary, or a
director, manager or principal officer, of the company. 515.

section (3), "officer", in relation to an unregistered company, means the secretary, or a
director, manager or principal officer, of the company. 515.

Company incorporated outside Kenya may be liquidated though dissolved
(1) If a company incorporated outside Kenya that has been carrying oh business in Kenya ceases to
carry on business there, it can be liquidated as an unregistered company under this Act. (2) Subsection (1) has effect even if the company has been dissolved or has otherwise ceased to exist as
a company in accordance with the laws of the country under which it was incorporated. 516. Contributories in liquidation of unregistered company
(1) If an unregistered company is in liquidation, each person is a contributory who is liable—
(a) to pay or contribute to the payment of any debt or liability of the company;
(b) to pay or contribute to the payment of any amount for the adjustment of the rights of
members among themselves; or
(c) to pay or contribute to the payment of the expenses of liquidating the company. (2) Each contributory is liable to contribute to the company's assets all amounts due from the
contributory in respect of the contributory is liable under subsection (1). 517.

liable to contribute to the company's assets all amounts due from the
contributory in respect of the contributory is liable under subsection (1). 517.

Power of the Court to stay or restrain proceedings
The provisions of this Part with respect to staying or restraining legal proceedings against a company
after the making of an application for liquidation and before the making of a liquidation order extend, if
the application to stay or restrain is made by a creditor, to legal proceedings against a contributory of an
unregistered company. 518. Actions stayed on liquidation order
If an order has been made for liquidating an unregistered company, no legal proceedings may be begun or
continued against a contributory of the company in respect of any debt of the company, except by approval
of the Court, and subject to such terms as the Court may impose. 519. Provisions of this Part to be cumulative
(1) The provisions of this Part with respect to unregistered companies are in addition to those of Part
VI with respect to the liquidation of companies by the Court. (2) The Court or liquidator may exercise any powers or do any act in the case of unregistered
companies that might be exercised or done by it or by the liquidator in liquidating a company that is
registered under the Companies Act (Cap. 486). 179

mpanies that might be exercised or done by it or by the liquidator in liquidating a company that is
registered under the Companies Act (Cap. 486). 179

Insolvency Act (Cap. 53) Kenya
Part VIII – ADMINISTRATION OF INSOLVENT COMPANIES
Division 1 — Introductory provisions: nature and objective of administration
520. Interpretation: Part VIII
In this Part—
"administrator", in relation to a company, means a person appointed under this Part to manage the
company's affairs and property, and, if the context requires, includes a former administrator;
"creditors' meeting" means a meeting of creditors of a company under administration that is convened by
the administrator as provided by the insolvency regulations;
"enters administration" has the meaning given by section 521;
"floating charge" means a charge that is a floating charge on its creation;
"holder of a qualifying floating charge" in respect of a company's property has the meaning given by
section 534 (holder of floating charge may appoint administrator of company);
"market value" means the amount that would be realised on a sale of property in the open market by a
willing vendor;
"objective of administration" means an objective specified in section 522. 521. What is administration?

operty in the open market by a
willing vendor;
"objective of administration" means an objective specified in section 522. 521. What is administration?

For the purposes of this Act—
(a) a company is "under administration" while the appointment of an administrator of the company
continues to have effect;
(b) a company "enters administration" when the appointment of an administrator takes effect;
(c) a company ceases to be under administration when the appointment of an administrator of the
company ends in accordance with this Part; and
(d) a company does not cease to be under administration only because an administrator vacates office
(whether through resignation, death, removal or otherwise). 522. The objectives of administration
(1) The objectives of the administration of a company are the following—
(a) to maintain the company as a going concern;
(b) to achieve a better outcome for the company's creditors as a whole than would likely to be
the case if the company were liquidated (without first being under administration);
(c) to realise the property of the company in order to make a distribution to one or more secured
or preferential creditors. (2) Subject to subsection (4), the administrator of a company shall perform the administrator's
functions in the interests of the company's creditors as a whole.

to subsection (4), the administrator of a company shall perform the administrator's
functions in the interests of the company's creditors as a whole.

(3) The administrator shall perform the administrator's functions with the objective specified in
subsection (1)(a) unless the administrator believes either—
(a) that it is not reasonably practicable to achieve that objective; or
180

e specified in
subsection (1)(a) unless the administrator believes either—
(a) that it is not reasonably practicable to achieve that objective; or
180

Insolvency Act (Cap. 53) Kenya
(b) that the objective specified in subsection (1)(b) would achieve a better result for the
company's creditors as a whole. (4) The administrator may perform the administrator's functions with the objective specified in
subsection (1)(c) only if—
(a) the administrator believes that it is not reasonably practicable to achieve either of the
objectives specified in subsection (1)(a) and (b); and
(b) the administrator does not unnecessarily harm the interests of the creditors of the company
as a whole. Division 2 — Appointment of administrators otherwise than by the Court
523. Who can appoint an administrator? A person may be appointed as administrator of a company—
(a) by administration order of the Court in accordance with Division 3;
(b) by the holder of a floating charge under section 534; or
(c) by the company or its directors under section 541. 524. Duty of administrator
The administrator of a company shall perform the administrator's functions as quickly and efficiently as is
reasonably practicable. 525. Status of administrator
An administrator is an officer of the Court, whether or appointed by the Court or not. 526.

as is
reasonably practicable. 525. Status of administrator
An administrator is an officer of the Court, whether or appointed by the Court or not. 526.

Qualification for appointment of administrators
A person may be appointed as administrator of a company only if the person is an authorised insolvency
practitioner. 527. Administrator not to be appointed if company is already under administration
(1) Except as provided by subsection (2), a person may not be appointed as administrator of a company
that is already under administration. (2) Subsection (1) is subject to sections 606 to 613 and sections 616 to 619. 528. Administrator not to be appointed if company is in liquidation
(1) A person may not be appointed as administrator of a company that is in liquidation because of—
(a) a resolution for voluntary liquidation; or
(b) a liquidation order. (2) Subsection (1)(a) is subject to section 557 (power of liquidator to make an application for
administration). (3) Subsection (1)(b) is subject to sections 556 (application if company is subject to a floating charge). 181

ake an application for
administration). (3) Subsection (1)(b) is subject to sections 556 (application if company is subject to a floating charge). 181

Insolvency Act (Cap. 53) Kenya
529. Administrator not to be appointed in respect of banking, finance and insurance
companies
(1) A person may not be appointed under this Part as administrator of—
(a) a company that is a bank; or
(b) a company that enters into contracts of insurance or carries on insurance business. (2) Subsection (1) is subject to section 35A of the Banking Act (Cap. 488). Division 3 — Appointment of administrators by the Court
530. What is an administration order? An administration order is an order appointing a person as the administrator of a company and providing
for the administration of the company by that person. 531. Conditions for making administration orders
The Court may make an administration order in relation to a company only if satisfied—
(a) that the company is or is likely to become unable to pay its debts; and
(b) that the administration order is reasonably likely to achieve an objective of administration. 532.

s likely to become unable to pay its debts; and
(b) that the administration order is reasonably likely to achieve an objective of administration. 532.

Who may make an application to the Court to for an administration order in respect of
company
(1) An application to the Court for an administration order in respect of a company may be made only
by the following persons—
(a) the company;
(b) the directors of the company;
(c) one or more creditors of the company;
(d) a combination of persons specified in paragraphs (a) to (c);
(e) any other person of a class prescribed by the insolvency regulations for the purposes of this
section. (2) As soon as is reasonably practicable after the making of an application for administration, the
applicant shall notify—
(a) any person who is or may be entitled to appoint an administrator of the company under
section 534; and
(b) such other persons (if any) as may be prescribed by the insolvency regulations for the
purposes of this section. (3) An application for administration may not be withdrawn without the approval of the Court. (4) In subsection (1), "creditor" includes a contingent creditor and a prospective creditor. 533.

not be withdrawn without the approval of the Court. (4) In subsection (1), "creditor" includes a contingent creditor and a prospective creditor. 533.

Powers of the Court on hearing application for administration order
(1) On hearing an application for an administration order in respect of a company, the Court may—
(a) make the administration order sought;
182

order
(1) On hearing an application for an administration order in respect of a company, the Court may—
(a) make the administration order sought;
182

Insolvency Act (Cap. 53) Kenya
(b) dismiss the application;
(c) adjourn the hearing conditionally or unconditionally;
(d) make an interim order;
(e) treat the application as a liquidation application and make any order that the Court could
make under section 426;
(f) make any other order that the Court considers appropriate. (2) An appointment of an administrator by an administration order takes effect—
(a) at a time specified in the order; or
(b) if no time is specified, when the order is made. (3) An interim order under subsection (1)(d) may, in particular—
(a) restrict the exercise of a power of the directors or the company;
(b) make provision conferring a discretion on the Court or on a person qualified to act as an
insolvency; or
(c) do either of those things. Division 4 — Appointment of administrator by holder of floating charge
534. Holder of floating charge may appoint administrator
(1) The holder of a qualifying floating charge in respect of a company's property may appoint an
administrator of the company.

y appoint administrator
(1) The holder of a qualifying floating charge in respect of a company's property may appoint an
administrator of the company.

(2) For the purposes of subsection (1), a floating charge is a qualifying floating charge if it is created by
a document that—
(a) states that this section applies to the floating charge; or
(b) purports to empower the holder of the floating charge to appoint an administrator of the
company. (3) For the purposes of subsection (1), a person is the holder of a qualifying floating charge in respect
of a company's property if the person holds one or more debentures of the company secured—
(a) by a qualifying floating charge that relates to the whole or substantially the whole of the
company's property;
(b) by a number of qualifying floating charges that together relate to the whole or substantially
the whole of the company's property; or
(c) by charges and other forms of security that together relate to the whole or substantially the
whole of the company's property and at least one of which is a qualifying floating charge. 535.

that together relate to the whole or substantially the
whole of the company's property and at least one of which is a qualifying floating charge. 535.

Restrictions on the power of holder of floating charge to appoint administrator
(1) A person may not appoint an administrator under section 534 unless the person has given at least
three days' notice to the holder of any prior floating charge that satisfies subsection (2) of that
section. (2) For the purposes of subsection (1), the priority of a floating charge shall be determined in
accordance with the Movable Property Security Rights Act. [Act No. 13 of 2017, Sch.]
183

(1), the priority of a floating charge shall be determined in
accordance with the Movable Property Security Rights Act. [Act No. 13 of 2017, Sch.]
183

Insolvency Act (Cap. 53) Kenya
536. Administrator not to be appointed if relevant floating charge is not enforceable
A person may not be appointed as administrator under section 534 if the floating charge on which the
appointment depends is unenforceable. 537. Holder of relevant floating charge to notify the Court on appointing administrator
(1) A person who appoints an administrator of a company under section 534 shall lodge with the Court
—
(a) a notice of appointment that complies with subsections (2); and
(b) such other documents as may be prescribed by the insolvency regulations for the purposes of
this section.

that complies with subsections (2); and
(b) such other documents as may be prescribed by the insolvency regulations for the purposes of
this section.

(2) A notice of appointment complies with this subsection if—
(a) it includes a statutory declaration by or on behalf of the person who makes the appointment
—
(i) that the person is the holder of a qualifying floating charge in respect of the
company's property;
(ii) that each floating charge relied on in making the appointment is (or was) enforceable
on the date of the appointment; and
(iii) that the appointment is in accordance with this Part; and
(b) it identifies the administrator and is accompanied by a statement by the administrator—
(i) that the administrator consents to the appointment;
(ii) that in the administrator's opinion the purpose of administration is reasonably likely
to be achieved; and
(iii) giving such other information and opinions of a kind prescribed by the insolvency
regulations for the purposes of this section. (3) A statutory declaration under subsection (2) is not effective unless it is made during the period
prescribed by the insolvency regulations for the purposes of this section. 538. When administrator's appointment takes effect
The appointment of an administrator under section 534 takes effect when the requirements of section 537
are satisfied. 539.

s appointment takes effect
The appointment of an administrator under section 534 takes effect when the requirements of section 537
are satisfied. 539.

Duty of holder of relevant floating charge to notify appointment to administrator and
other persons
(1) As soon as is reasonably practicable after the requirements of section 537 are satisfied, the person
who appointed the administrator under section 534 shall notify the administrator, and such other
persons as may be prescribed by the insolvency regulations for the purposes of this section, that
those requirements have been satisfied. (2) A person who, without reasonable excuse, fails to comply with subsection (1) commits an offence
and on conviction is liable to a fine not exceeding five hundred thousand shillings. 184

xcuse, fails to comply with subsection (1) commits an offence
and on conviction is liable to a fine not exceeding five hundred thousand shillings. 184

Insolvency Act (Cap. 53) Kenya
540. Power of the Court to order person invalidly appointed to be indemnified against
liability
(1) If—
(a) a person purports to appoint an administrator under section 534; and
(b) the appointment is discovered to be invalid,
any person who appears to the Court to have a legitimate interest in the matter may apply to the
Court for an order under subsection (2). (2) On the hearing of an application made under subsection (1), the Court may order the person who
purported to make the appointment to indemnify the person appointed against liability that is
solely attributable to the appointment's invalidity. Division 5 — Appointment of Administrator by Company or Directors
541. Administrator may be appointed by company or by its directors
(1) A company may appoint an administrator. (2) The directors of a company may appoint an administrator. 542.

appointed by company or by its directors
(1) A company may appoint an administrator. (2) The directors of a company may appoint an administrator. 542.

Restrictions on power of company or its directors to appoint administrator
lf an administrator of a company—
(a) is appointed under section 541; or
(b) is appointed on an application for administration made by the company or its directors,
another person may not be appointed as an administrator of the company appointed under that section
during the twelve months from and including the date the on which the appointment referred to in
paragraph (a) or (b) ends. 543. Other restrictions on power of company or its directors to appoint administrator
(1) If a moratorium for a company under Division 2 of Part IX ends on a date when no voluntary
arrangement is in force in respect of the company, this section applies for the twelve months from
and including that date. (2) This section also applies for the period of twelve months from and including date on which a
voluntary arrangement in respect of a company ends if—
(a) the arrangement was made during a moratorium for the company under Part IX; and
(b) the arrangement ends prematurely. (3) While this section applies, an administrator of the company may not be appointed under section
541. 544.

and
(b) the arrangement ends prematurely. (3) While this section applies, an administrator of the company may not be appointed under section
541. 544.

Circumstances in which company or its directors may not appoint administrator
An administrator of a company may not be appointed under section 541 if—
(a) an application for the liquidation of the company has been presented and is not yet disposed of;
(b) an application for administration has been made and is not yet disposed of; or
(c) an administrative receiver of the company is in office. 185

of;
(b) an application for administration has been made and is not yet disposed of; or
(c) an administrative receiver of the company is in office. 185

Insolvency Act (Cap. 53) Kenya
545. Notice to be given of intention to appoint administrator
(1) A person who proposes to make an appointment under section 541 shall give to any person who
is or may be entitled to appoint an administrator of the company under section 534 a notice that
complies with subsection (3). (2) A person who proposes to make an appointment under section 541 shall also give such a notice
to such other persons as may be prescribed by the insolvency regulations for the purposes of this
section. (3) A notice complies with this subsection only if it—
(a) identifies the proposed administrator;
(b) contains such other information (if any) as may be prescribed by the insolvency regulations
for the purposes of this section; and
(c) is given at least seven days' before the appointment is to be made. 546.

ribed by the insolvency regulations
for the purposes of this section; and
(c) is given at least seven days' before the appointment is to be made. 546.

Person giving notice of intention to appoint administrator to lodge certain documents
with the Court
(1) As soon as practicable after a person has given notice of an intention to make an appointment
under section 545, the person shall lodge with the Court—
(a) a copy of the notice and of any document that accompanied it; and
(b) a statutory declaration by the person that complies with subsection (2). (2) A statutory declaration complies with this subsection if—
(a) it declares—
(i) that the company is or is likely to become unable to pay its debts;
(ii) that the company is not in liquidation; and
(iii) that, so far as the declarant is able to ascertain, the appointment is not prevented by
sections 542 to 544;
(b) contains such additional information (if any) as may be prescribed by the insolvency
regulations for the purposes of this section; and
(c) is made within such period as is so prescribed. 547.

any) as may be prescribed by the insolvency
regulations for the purposes of this section; and
(c) is made within such period as is so prescribed. 547.

Further restrictions on making appointments under section 541
(1) An appointment may not be made under section 541 unless the person who makes the appointment
has complied with the requirements of section 545 and 546 and—
(a) the period of notice specified in section 545(1) has expired; or
(b) each person to whom notice has been given under section 545(1) has consented in writing to
the making of the appointment. (2) An appointment may not be made under section 541 after the period of fourteen days beginning
with the date on which the notice of intention to appoint is lodged under section 546(1). 186

section 541 after the period of fourteen days beginning
with the date on which the notice of intention to appoint is lodged under section 546(1). 186

Insolvency Act (Cap. 53) Kenya
548. Person appointing administrator under section 541 to lodge certain documents with
the Court
(1) A person who appoints an administrator of a company under section 541 shall lodge with the Court
—
(a) a notice of appointment that identifies the administrator;
(b) a statement by the administrator that complies with subsection (2);
(c) a statutory declaration by the person making the appointment that complies with subsection
(3); and
(d) such other documents, (if any) as may be prescribed by the insolvency regulations for the
purposes of this section. (2) A statement complies with this subsection if it—
(a) states that the administrator consents to the appointment;
(b) states that jn the administrator's opinion, the objective of the administration is reasonably
likely to be achieved; and
(c) gives such other information and opinions (if any) as may be prescribed by the insolvency
regulations for the purposes of this section.

ieved; and
(c) gives such other information and opinions (if any) as may be prescribed by the insolvency
regulations for the purposes of this section.

(3) A statutory declaration complies with this subsection if it—
(a) declares—
(i) that the declarant is entitled to make an appointment under section 541;
(ii) that the appointment is in accordance with this Part; and
(iii) that, so far as the declarant is able to ascertain, the statements made and information
given in the statutory declaration lodged with the notice of intention to appoint
remain accurate; and
(b) is made within such period as is prescribed by the insolvency regulations for the purposes of
this subsection. (4) For the purpose of a statement under subsection (2), an administrator may rely on information
supplied by directors of the company, unless the administrator has reason to doubt its accuracy. (5) Any person who fails to comply with subsection (1) commits an offence and is liable on conviction
to a fine not exceeding five hundred thousand shillings. 549.

n who fails to comply with subsection (1) commits an offence and is liable on conviction
to a fine not exceeding five hundred thousand shillings. 549.

What happens if no one is entitled to notice of intention to appoint administrator
If no person is entitled to notice of intention to appoint under section 545(1) so that section 547 does not
apply, the statutory declaration accompanying the notice of appointment is ineffective unless it includes
the statements and information required under section 546(2), in which case section 548(2)(c) does not
apply. 550. When appointment of administrator under this Division takes effect
The appointment of an administrator under section 541 takes effect when the requirements of section 548
are satisfied. 187

this Division takes effect
The appointment of an administrator under section 541 takes effect when the requirements of section 548
are satisfied. 187

Insolvency Act (Cap. 53) Kenya
551. Person making appointment to notify appointment to administrator and others
(1) As soon as is reasonably practicable after the requirements of section 548 are satisfied, the person
who has appointed the administrator under section 541 shall notify the administrator, and such
other persons as may be prescribed by the insolvency regulations for the purposes of this section,
that those requirements have been satisfied. (2) A person who, without reasonable excuse, fails to comply with subsection (1) commits an offence
and on conviction is liable to a fine not exceeding five hundred thousand shillings. 552. Appointment under section 541 not to take effect in certain cases
If, before the requirements of section 548 are satisfied, the company enters administration under an
administration order, or because of an appointment under section 534—
(a) the appointment under section 541 has no effect; and
(b) the requirement imposed by section 551 does not apply. 553.

ppointment under section 534—
(a) the appointment under section 541 has no effect; and
(b) the requirement imposed by section 551 does not apply. 553.

Power of the Court to order person invalidly appointed to be indemnified against
liability
(1) If—
(a) a person purports to appoint an administrator under section 541; and
(b) the appointment is discovered to be invalid,
any person who appears to the Court to have a legitimate interest in the matter may apply to the
Court for an order under subsection (2). (2) On the hearing of an application made under subsection (1), the Court may order the person who
purported to make the appointment to indemnify the person appointed against liability that is
solely attributable to the appointment's invalidity. Division 6 — Applications for administration—special cases
554.

pointed against liability that is
solely attributable to the appointment's invalidity. Division 6 — Applications for administration—special cases
554.

Power of the Court to make administration order in respect of company on application
made by holder of qualifying floating charge even if company may be able to pay its
debts
(1) If an application for administration in respect of a company—
(a) is made by the holder of a qualifying floating charge in respect of the company's property;
and
(b) includes a statement that the application is made in reliance on this section,
the Court may make an administration order whether or not it is satisfied that the company is or is
likely to become unable to pay its debts. (2) However, the Court may make such an order only if it is satisfied that the applicant could properly
appoint an administrator under section 534. 188

2) However, the Court may make such an order only if it is satisfied that the applicant could properly
appoint an administrator under section 534. 188

Insolvency Act (Cap. 53) Kenya
555. Holder of qualifying floating charge may intervene in application made by person who
is not the holder of such a charge
If—
(a) an application for administration in respect of a company is made by a person who is not the holder
of a qualifying floating charge in respect of the company's property; and
(b) the holder of a qualifying floating charge in respect of the company's property applies to the
Court to have a specified person appointed as administrator and not the person specified by the
administration applicant,
the Court shall grant the application unless the Court believes it should be refused because of the
particular circumstances of the case. 556. Other circumstance in which holder of qualifying floating charge may make
application for administration order
(1) If the holder of a qualifying floating charge in respect of a company's property could appoint an
administrator under section 534 but for section 528(1)(b), that holder may nevertheless make an
application to the Court for an administration order under subsection (2).

section 534 but for section 528(1)(b), that holder may nevertheless make an
application to the Court for an administration order under subsection (2).

(2) If the Court makes an administration order on hearing an application made under subsection (1),
the Court—
(a) shall discharge the liquidation order;
(b) shall make provision for such matters as may be prescribed by the insolvency regulations for
the purposes of this section;
(c) may make such other provision of a consequential nature as it considers appropriate; and
(d) shall specify which of the powers under this Part are to be exercisable by the administrator. (3) If the Court specifies the powers under this Part that are to be exercisable by the administrator, this
Part has, in relation to the exercise of those powers, effect with such modifications as the Court may
specify. 557. Power of liquidator of company to make an application for its administration
(1) The liquidator of a company may make an application to the Court for an administration order
under subsection (2).

lication for its administration
(1) The liquidator of a company may make an application to the Court for an administration order
under subsection (2).

(2) If the Court makes an administration order on the hearing of an application made under subsection
(1), the Court—
(a) shall discharge any liquidation order existing in respect of the company;
(b) may make such other provision of a consequential nature as it considers appropriate; and
(c) shall specify which of the powers under this Part are to be exercisable by the administrator. (3) If the Court specifies the powers under this Part that are to be exercisable by the administrator, this
Part has, in relation to the exercise of those powers, effect with such modifications as the Court may
specify. Division 7 — Effect of administration orders
189

in relation to the exercise of those powers, effect with such modifications as the Court may
specify. Division 7 — Effect of administration orders
189

Insolvency Act (Cap. 53) Kenya
558. Administration order in respect of company prevents making of application for
liquidation order and suspends pending applications for liquidation order
(1) On the making of an administration order in respect of a company—
(a) an application for the liquidation of the company may not be made; and
(b) any application for the liquidation of the company that is then pending is suspended while
the company is under administration. (2) Subsection (1)(a) does not prevent an application from being made for the liquidation of the
company under section 425 or the Court from making a liquidation order in respect of such an
application. (3) If an administrator becomes aware that an application was made under section 425 before the
administrator's appointment, the administrator shall apply to the Court for directions under section
580. 559. Moratorium on insolvency proceedings while administration order has effect
(1) While a company is under administration—
(a) a resolution for the liquidation of the company may not be made; and
(b) the Court may not make an order for the liquidation of the company.

tion—
(a) a resolution for the liquidation of the company may not be made; and
(b) the Court may not make an order for the liquidation of the company.

(2) Subsection (1)(b) does not prevent an application from being made for the liquidation of the
company under section 425 or the Court from making a liquidation order in respect of such an
application. (3) On becoming aware that an application for a liquidation order has been made under section 425,
the administrator shall apply to the Court for directions under section 580. 560.

application for a liquidation order has been made under section 425,
the administrator shall apply to the Court for directions under section 580. 560.

Moratorium on other legal process while administration order has effect
(1) While a company is under administration—
(a) a person may take steps to enforce a security over the company's property only with the
consent of the administrator or with the approval of the Court;
(b) a person may take steps to repossess goods in the company's possession under a credit
purchase transaction only with the consent of the administrator or with the approval of the
Court; if the Court gives approval, subject to such conditions as the Court may impose;
(c) a landlord may exercise a right of forfeiture by peaceable re-entry in relation to premises let
to the company only with the consent of the administrator or with the approval of the Court;
and
(d) a person may begin or continue legal proceedings (including execution and distress) against
the company or the company's property only with the consent of the administrator or with
the approval of the Court. (2) In giving approval for a transaction under subsection (1), the Court may impose a condition on, or a
requirement in connection with, the transaction. 560A.

ving approval for a transaction under subsection (1), the Court may impose a condition on, or a
requirement in connection with, the transaction. 560A.

Considerations to take into account on applications for approval to lift moratorium
(1) When considering whether to grant its approval under section 560, the court or the administrator
may in particular take into consideration where appropriate—
(a) the statutory purpose of the administration;
190

560, the court or the administrator
may in particular take into consideration where appropriate—
(a) the statutory purpose of the administration;
190

Insolvency Act (Cap. 53) Kenya
(b) the impact of the approval on the applicant particularly whether the applicant is likely to
suffer significant loss;
(c) the legitimate interests of the applicant and the legitimate interest of the creditors of the
company, giving the right of priority to the proprietary interest of the applicant;
(d) whether the value of the secured creditor's claim exceeds the value of the encumbered asset;
(e) whether the secured creditor is not receiving protection for the diminution in the value of
the encumbered asset;
(f) whether the provision of protection may be feasible or overly burdensome to the estate;
(g) whether the encumbered asset is not needed for the reorganization or sale of the company as
a going concern;
(h) whether relief is required to protect or preserve the value of assets such as perishable goods;
or
(i) whether in reorganisation, a plan is not approved within six months. (2) An approval granted under subsection (1) shall be for a period of not more than twenty-eight days. [Act No. 12 of 2019, Sch., Act No. 1 of 2020, s. 39.]
561.

oval granted under subsection (1) shall be for a period of not more than twenty-eight days. [Act No. 12 of 2019, Sch., Act No. 1 of 2020, s. 39.]
561.

Interim moratorium when application for administration order has been made
(1) This section applies if an application for administration in respect of a company has been made and
—
(a) the application has not yet been granted or dismissed; or
(b) the application has been granted but the administration order has not yet taken effect. (2) This section also applies from the time when a copy of notice of intention to appoint an
administrator under section 523 is lodged with the Court until—
(a) the appointment of the administrator takes effect; or
(b) seven days from and including the date of lodgment without an administrator having been
appointed. (3) This section applies from the time when a copy of notice of intention to appoint an administrator is
lodged with the Court under section 546(1) until—
(a) the appointment of the administrator takes effect; or
(b) the period specified in section 547(2) expires without an administrator having been
appointed.

e appointment of the administrator takes effect; or
(b) the period specified in section 547(2) expires without an administrator having been
appointed.

(4) When this section applies, the following provisions have effect—
(a) a resolution may not be passed for the liquidation of the company;
(b) the Court may not make an order for the liquidation of the company;
(c) a person may take steps to to enforce security over the company's property only with the
approval of the Court;
(d) a person may take steps to repossess goods in the company's possession under a hire
purchase agreement only with the approval of the Court;
(e) a landlord may exercise a right of forfeiture by peaceable re-entry in relation to premises let
to the company only with the approval of the Court;
191

landlord may exercise a right of forfeiture by peaceable re-entry in relation to premises let
to the company only with the approval of the Court;
191

Insolvency Act (Cap. 53) Kenya
(f) a person may begin or continue legal process (including legal proceedings, execution,
distress and diligence) against the company or property of the company only with the
approval of the Court;
(g) a person may take steps to enforce security over the company's property only with the
approval of the Court;
(h) a person may take steps to repossess goods in the company's possession under a hire
purchase agreement only with the approval of the Court. (5) In giving approval for a transaction under subsection (4), the Court may impose a condition on, or a
requirement in connection with, the transaction. (6) Subsection (4)(b) does not prevent an application from being made for the liquidation of the
company under section 425 or the Court from making a liquidation order in respect of such an
application. 562.

m being made for the liquidation of the
company under section 425 or the Court from making a liquidation order in respect of such an
application. 562.

Company's business documents to state that company's affairs are under
administration
(1) While a company is under administration, the administrator shall ensure that all business
documents issued by or on behalf of the company or the administrator, and all the company's
websites, state—
(a) the name of the administrator; and
(b) that the affairs and property of the company are being managed by the administrator. (2) An administrator who, without reasonable excuse, fails to comply with subsection (1) commits an
offence and on conviction is liable to a fine not exceeding five hundred thousand shillings. (3) If, while under administration, a company sends or publishes a business document that does not
state—
(a) the name of the administrator; and
(b) that the affairs and property of the company are being managed by the administrator,
the company, and each officer of the company who is in default, commit an offence and on
conviction are each liable to a fine not exceeding five hundred thousand shillings.

officer of the company who is in default, commit an offence and on
conviction are each liable to a fine not exceeding five hundred thousand shillings.

(4) In this section, "business document" means—
(a) an invoice;
(b) an order for goods or services;
(c) a business letter; or
(d) an order form,
whether in hard copy, electronic or any other form. Division 8 — Process of Administration
563. Announcement of administrator's appointment
(1) As soon as practicable after becoming administrator of a company, the administrator shall comply
with subsection (2) and (3). (2) The administrator shall—
(a) send a notice of the administrator's appointment to the company; and
192

or shall comply
with subsection (2) and (3). (2) The administrator shall—
(a) send a notice of the administrator's appointment to the company; and
192

Insolvency Act (Cap. 53) Kenya
(b) publish a notice of the administrator's appointment in such publications and in such
locations as are prescribed by the insolvency regulations for the purposes of this section. (3) The administrator shall also—
(a) obtain a list of the company's creditors; and
(b) send a notice of the administrator's appointment to each creditor of whose claim and address
the administrator is aware. (4) Within seven days from and including the prescribed date, the administrator shall lodge with the
Registrar for registration a notice of the administrator's appointment. (5) Within fourteen days from and including the prescribed date, the administrator shall also send a
notice of the administrator's appointment to such classes of persons as may be prescribed by the
insolvency regulations for the purposes of this section.

ice of the administrator's appointment to such classes of persons as may be prescribed by the
insolvency regulations for the purposes of this section.

(6) The prescribed date for the purpose of subsections (4) and (5) is—
(a) in the case of an administrator appointed by administration order, the date of the order;
(b) in the case of an administrator appointed under section 534, the date on which the
administrator receives notice under section 539; and
(c) in the case of an administrator appointed under section 541, the date on which the
administrator receives notice under section 551. (7) On the application of the administrator, the Court may order that subsection (3)(b) or (5)—
(a) is not to apply; or
(b) is to apply with the substitution of a different period. (8) An administrator who fails without reasonable excuse to comply with a requirement of this section
commits an offence and on conviction is liable to a fine not exceeding five hundred thousand
shillings. (9) If, after being convicted of an offence under subsection (8), an administrator continues to fail to
comply with the relevant requirement, the administrator commits a further offence on each day
on which the failure continues and on conviction is liable to a fine not exceeding fifty thousand
shillings for each such offence. 564.

ce on each day
on which the failure continues and on conviction is liable to a fine not exceeding fifty thousand
shillings for each such offence. 564.

Relevant persons to provide administrator with statement of company's affairs
(1) As soon as practicable after becoming administrator of a company, the administrator shall give
notice requiring one or more relevant persons to provide the administrator with a statement of the
company's affairs that complies with subsection (2). (2) A statement complies with this subsection if it—
(a) is verified by a statutory declaration;
(b) gives the particulars of the company's property, debts and liabilities prescribed by the
insolvency regulations for the purposes of this section;
(c) gives the names and addresses of the company's creditors;
(d) specifies the security (if any) held by each creditor;
(e) gives the date on which each such security was given; and
(f) contains such other information (if any) as may be so prescribed. 193

each creditor;
(e) gives the date on which each such security was given; and
(f) contains such other information (if any) as may be so prescribed. 193

Insolvency Act (Cap. 53) Kenya
(3) In subsection (1) "relevant person" means any of the following—
(a) a person who is an officer of the company;
(b) a person who took part in the formation of the company during the period of twelve months
ending with the date on which the company enters administration;
(c) a person employed by the company during that period;
(d) a person who is or has been during that period an officer or employee of the company. (4) For the purpose of subsection (3), a reference to being employed includes being employed through a
contract for the supply of services. 565. Deadline for submitting statement of affairs
(1) The deadline for submitting a statement of financial position is the end of twelve days from and
including the day on which the relevant person receives notice of the requirement. (2) The administrator may—
(a) revoke a requirement under section 564(1); or
(b) extend the deadline specified in subsection (1) (whether before or after expiry). (3) If the administrator refuses a request to act under subsection (2)—
(a) the person whose request is refused may apply to the Court; and
(b) the Court may take action of a kind specified in subsection (2).

bsection (2)—
(a) the person whose request is refused may apply to the Court; and
(b) the Court may take action of a kind specified in subsection (2).

(4) A person who, without reasonable excuse, fails to comply with a requirement under section 564(1)
commits an offence and on conviction is liable to a fine not exceeding five hundred thousand
shillings. (5) If, after being convicted of an offence under subsection (4), a person continues to fail to comply
with the relevant requirement, the person commits a further offence on each day on which the
failure continues and on conviction is liable to a fine not exceeding fifty thousand shillings for each
such offence. 566. Administrator to make statement setting out administrator's proposals for achieving
the purpose of the administration
(1) The administrator of a company shall make a statement setting out proposals for achieving the
purpose of administration. (2) The administrator shall ensure that the proposals—
(a) deal with such matters as may be prescribed by the insolvency regulations for the purposes of
this section; and
(b) if applicable, explain why the administrator believes that the objective specified in section
522(1)(a) or (b) cannot be achieved.

is section; and
(b) if applicable, explain why the administrator believes that the objective specified in section
522(1)(a) or (b) cannot be achieved.

(3) Proposals under this section may include—
(a) a proposal for a voluntary arrangement under Part IX; or
(b) a proposal for a compromise or arrangement to be sanctioned under the Companies Act (Cap. 486). 194

for a voluntary arrangement under Part IX; or
(b) a proposal for a compromise or arrangement to be sanctioned under the Companies Act (Cap. 486). 194

Insolvency Act (Cap. 53) Kenya
(4) The administrator—
(a) shall send a copy of the statement of the administrator' s proposals—
(i) to every creditor of the company of whose claim and address the administrator is
aware; and
(ii) to every member of the company of whose address the administrator is aware; and
(b) shall lodge a copy of the statement with the Registrar for registration. (5) The administrator shall comply with subsection (4)—
(a) as soon as is reasonably practicable after the company enters administration; and
(b) in any case, not later than sixty days after the date on which the company enters
administration,
(6) Subsection (4)(a)(ii) is complied with if the administrator publishes in accordance with the
insolvency regulations a notice undertaking to provide a copy of the statement of proposals free of
charge to any member of the company who applies in writing to a specified address. (7) An administrator who fails, without reasonable excuse, to comply with subsection (5) commits an
offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

asonable excuse, to comply with subsection (5) commits an
offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

(8) If, after being convicted of an offence under subsection (7), an administrator continues to fail to
comply with the relevant requirement of this section, the administrator commits a further offence
on each day on which the failure continues and on conviction is liable to a fine not exceeding fifty
thousand shillings for each such offence. (9) A period specified in this section can be varied in accordance with section 622. 567. Conduct of creditors' meetings
The person presiding at a creditors' meeting shall ensure that it is conducted in the manner prescribed by
the insolvency regulations. 568. Requirement to convene initial creditors' meeting
(1) The administrator shall ensure that each copy of the administrator's statement of proposals sent
to a creditor in accordance with section 566(4)(b) is accompanied by an invitation to an initial
creditors' meeting to be held—
(a) as soon as is reasonably practicable after the company enters administration; and
(b) in any case, within seventy days from and including the date on which the company enters
administration.

er the company enters administration; and
(b) in any case, within seventy days from and including the date on which the company enters
administration.

(2) The administrator shall present a copy to the administrator's statement of proposals to the initial
creditors' meeting. (3) The period specified in subsection (1)(b) can be varied in accordance with section 622. 569. When administrator is not required to convene meeting
(1) Section 568(1) does not apply if the statement of proposals states that the administrator believes—
(a) that the company has sufficient property to enable each creditor of the company to be paid
in full;
(b) that the company has insufficient property to enable a distribution to be made to unsecured
creditors otherwise than in accordance with section 474(2)(a); or
195

mpany has insufficient property to enable a distribution to be made to unsecured
creditors otherwise than in accordance with section 474(2)(a); or
195

Insolvency Act (Cap. 53) Kenya
(c) that neither of the objectives specified in section 522(1)(a) and (b) can be achieved. (2) However, the administrator shall convene an initial creditors' meeting if requested to do so—
(a) by creditors of the company holding debts amounting to at least ten percent of the total
debts of the company; and
(b) in the manner, and within the period, prescribed by the insolvency regulations for the
purposes of this section. (3) The administrator shall convene a meeting requested under subsection (2) for a date within the
period prescribed for the purpose of subsection (2)(b). (4) The period so prescribed can be varied in accordance with section 622. (5) An administrator who fails, without reasonable excuse, to comply with subsection (3) commits an
offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

asonable excuse, to comply with subsection (3) commits an
offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

(6) If, after being convicted of an offence under subsection (5), an administrator continues to fail to
convene a creditors' meeting as required by subsection (3), the administrator commits a further
offence on each day on which the failure continues and on conviction is liable to a fine not
exceeding fifty thousand shillings for each such offence. 570. Business to be conducted at initial creditors' meeting and obligation of administrator
to report outcome to the Court and others
(1) An initial creditors' meeting to which an administrator's proposals are presented shall consider
them and may—
(a) approve them without modification; or
(b) approve them with modifications to which the administrator consents. (2) As soon as practicable after the initial creditors' meeting has ended, the administrator—
(a) shall report any decision at the meeting taken—
(i) to the Court; and
(ii) to such other persons as may be prescribed by the insolvency regulations for the
purposes of this section; and
(b) shall lodge a copy of the report with the Registrar for registration.

escribed by the insolvency regulations for the
purposes of this section; and
(b) shall lodge a copy of the report with the Registrar for registration.

(3) An administrator who, without reasonable excuse, fails to comply with subsection (2)(a) or (b)
commits an offence and on conviction is liable to a fine not exceeding two hundred thousand
shillings. (4) If, after being convicted of an offence under subsection (3), an administrator continues to fail to
comply with the relevant requirement of that subsection, the administrator commits a further
offence on each day on which the failure continues and on conviction is liable to a fine not
exceeding twenty thousand shillings for each such offence. 571. Administrator's proposals can be revised
(1) This section applies if—
(a) an administrator's proposals have been approved (with or without modification) at an initial
creditors' meeting;
(b) the administrator proposes a revision to the proposals; and
(c) the administrator believes that the proposed revision is substantial. 196

meeting;
(b) the administrator proposes a revision to the proposals; and
(c) the administrator believes that the proposed revision is substantial. 196

Insolvency Act (Cap. 53) Kenya
(2) When this section applies, the administrator shall—
(a) convene a creditors' meeting;
(b) send a statement of the proposed revision with the notice of the meeting sent to each
creditor;
(c) send a copy of the statement, within the period prescribed by the insolvency regulations
for the purposes of this paragraph, to each member of the company of whose address the
administrator is aware; and
(d) present a copy of the statement to the meeting. (3) An administrator complies with subsection (2)(c) by publishing a notice undertaking to provide a
copy of the statement free of charge to any member of the company who applies in writing to the
administrator at an address specified in the notice. (4) The administrator shall publish the notice in such publications and within such period as may be
prescribed by the insolvency regulations for the purposes of this subsection. (5) A creditors' meeting to which a proposed revision is presented shall consider it and may—
(a) approve it without modification; or
(b) approve it with modifications to which the administrator consents.

is presented shall consider it and may—
(a) approve it without modification; or
(b) approve it with modifications to which the administrator consents.

(6) As soon as practicable after the conclusion of a creditors' meeting, the administrator—
(a) shall report every decision taken at the meeting—
(i) to the Court; and
(ii) to such other persons as may be prescribed by the insolvency regulations for the
purposes of this section; and
(b) shall lodge a copy of the report with the Registrar for registration. (7) An administrator who, without reasonable excuse, fails to comply with a requirement of this section
commits an offence and on conviction is liable to a fine not exceeding five hundred thousand
shillings. (8) If, after being convicted of an offence under subsection (7), an administrator continues to comply
with the relevant requirement, the administrator commits a further offence on each day on which
the failure continues and on conviction is liable to a fine not exceeding fifty thousand shillings for
each such offence. 572.

ce on each day on which
the failure continues and on conviction is liable to a fine not exceeding fifty thousand shillings for
each such offence. 572.

Consequences of failure to obtain approval of administrator's proposals
(1) This section applies if an administrator reports to the Court that—
(a) an initial creditors' meeting has failed to approve the administrator's proposals presented to
it; or
(b) a creditors' meeting has failed to approve a revision of the administrator's proposals
presented to it. (2) The Court may—
(a) make an order terminating the appointment of an administrator with immediate effect or
with effect from a specified date;
(b) adjourn the hearing conditionally or unconditionally;
(c) make an interim order;
197

r with immediate effect or
with effect from a specified date;
(b) adjourn the hearing conditionally or unconditionally;
(c) make an interim order;
197

Insolvency Act (Cap. 53) Kenya
(d) make an order declaring an application for a liquidation order to be suspended because of
section 558(1)(b); or
(e) make any other order (including an order making consequential provision) that the Court
considers appropriate. 573. Power of administrator to convene further creditors' meetings
(1) The administrator of a company shall convene a creditors' meeting if—
(a) in the manner prescribed by the insolvency regulations, it is requested by creditors of the
company holding debts amounting to at least ten percent of the total debts of the company;
or
(b) the administrator is directed by the Court to convene a creditors' meeting. (2) An administrator who, without reasonable excuse, fails to convene a creditors' meeting as required
by this section commits an offence and on conviction is liable to a fine not exceeding five hundred
thousand shillings.

creditors' meeting as required
by this section commits an offence and on conviction is liable to a fine not exceeding five hundred
thousand shillings.

(3) If, after being convicted of an offence under subsection (2), an administrator continues to fail
to comply with the relevant request, the administrator commits a further offence on each day
on which the failure continues and on conviction is liable to a fine not exceeding fifty thousand
shillings for each such offence. (4) The fact that an administrator may be prosecuted for, and convicted of an offence, under this
section does not preclude the Court from finding the administrator guilty of contempt of the Court
for failing to comply with a direction of the Court. 574. Creditors' meeting may establish creditors' committee
(1) A creditors' meeting may establish a creditors' committee. (2) A creditors' committee shall perform the functions conferred on it by or under this Act. (3) A creditors' committee may require the administrator—
(a) to appear before the committee at any reasonable time of which the administrator is given at
least seven days' notice; and
(b) to provide the committee with such information about the performance of the
administrator's functions as the committee reasonably requires. 575.

d
(b) to provide the committee with such information about the performance of the
administrator's functions as the committee reasonably requires. 575.

Creditors' meeting can be conducted by correspondence
(1) Any matter or decision that is required or permitted by or under this Part to be dealt with or made
at a creditors' meeting may be dealt with or made by correspondence between the administrator and
creditors—
(a) as provided by the insolvency regulations; and
(b) subject to any condition specified in those regulations for the purposes of this section. (2) A reference in this Part to anything done at a creditors' meeting includes anything done in the
course of correspondence in reliance on subsection (1). (3) A requirement to hold a creditors' meeting is satisfied by conducting correspondence in accordance
with this section. Division 9 — Functions and Powers of Administrator
198

a creditors' meeting is satisfied by conducting correspondence in accordance
with this section. Division 9 — Functions and Powers of Administrator
198

Insolvency Act (Cap. 53) Kenya
576. Specific functions of administrator
The administrator of a company has the functions and powers specified in the Fourth Schedule. 577. Power of administrator to remove and appoint directors of company
The administrator of a company—
(a) may remove a director of the company from office; and
(b) may appoint a person to be director of the company (whether or not to fill a vacancy). 578. Power of administrator to convene meetings of members and creditors of company
The administrator of a company may convene a meeting of members or creditors of the company. 579. Power of administrator to seek directions from the Court
(1) On the application of the administrator of a company, the Court may give directions with respect
to the performance and exercise of the administrator's functions and powers and the conduct of the
administration generally. (2) An administrator shall comply with any directions given to the administrator under subsection (1). 580.

e conduct of the
administration generally. (2) An administrator shall comply with any directions given to the administrator under subsection (1). 580.

General powers of administrator
(1) The administrator of a company may take any action that contributes to, or is likely to contribute
to, the effective and efficient management of the affairs and property of the company. (2) A provision of this Part that expressly permits the administrator to do or not to do a specified act
does not limit the effect of subsection (1). (3) A person who deals with the administrator of a company in good faith and for value need not
inquire whether the administrator is acting within the administrator's powers. 581. Company under administration not to perform management functions without
administrator's consent
(1) A company under administration, or an officer of a company under administration, shall not
perform or exercise a management function without the consent of the administrator. (2) For the purpose of subsection (1)—
(a) "management function" means a function or power that could be performed or exercised so
as to interfere with the exercise of the administrator' s functions; and
(b) consent may be general or specific.

at could be performed or exercised so
as to interfere with the exercise of the administrator' s functions; and
(b) consent may be general or specific.

(3) A company that contravenes subsection (1) commits an offence and on conviction is liable to a fine
not exceeding one million shillings. (4) An officer of a company who contravenes subsection (1) commits an offence commits an
offence and on conviction is liable to a fine not exceeding five hundred thousand shillings or to
imprisonment for a term not exceeding six months, or to both. 582. Power of administrator to distribute company's assets to creditors
(1) The administrator of a company may make a distribution to creditors of the company. 199

administrator to distribute company's assets to creditors
(1) The administrator of a company may make a distribution to creditors of the company. 199

Insolvency Act (Cap. 53) Kenya
(2) Section 471 and the Second Schedule apply in relation to a distribution under this section as they
apply in relation to the liquidation of a company. (3) In the case of a creditor of the company who is neither a secured nor a preferential creditor, a
payment may be made to the creditor as part of a distribution under this section only with the
approval of the Court. (4) An administrator who makes a payment in contravention of subsection (3) is guilty of contempt of
the Court and is liable to be punished accordingly (in addition to any other punishment to which
the administrator may be subject). 583. Power of administrators to make special payments in certain cases
The administrator of a company may make a payment otherwise than in accordance with section 582 or
paragraph 13 of the Fourth Schedule if the administrator believes it likely to assist achievement of the
purpose of administration. 584. Duty of administrator to assume control of property of company
Immediately on being appointed as administrator of a company, the administrator shall assume control of
all the property to which the administrator believes the company is entitled. 585.

ministrator of a company, the administrator shall assume control of
all the property to which the administrator believes the company is entitled. 585.

Duty of administrator to manage affairs and property of company
(1) Subject to subsection (2), the administrator of a company shall manage its affairs and property in
accordance with—
(a) any proposals approved under section 570;
(b) any revision of those proposals that is made by the administrator and that the administrator
does not consider substantial; and
(c) any revision of those proposals approved under section 571. (2) If the Court gives directions to the administrator of a company in connection with any aspect of the
administrator's management of the company's affairs, business or property, the administrator shall
comply with the directions.

with any aspect of the
administrator's management of the company's affairs, business or property, the administrator shall
comply with the directions.

(3) The Court may give directions under subsection (2) only if—
(a) no proposals have been approved under section 570;
(b) the directions are consistent with any proposals under section 570 or revision approved
under section 571;
(c) the Court believes that the directions are required in order to reflect a change in
circumstances since the approval of proposals under section 570 or a revision under section
571; or
(d) the Court believes the directions are desirable because of a misunderstanding about
proposals approved under section 570 or a revision approved under section 571. 586. Administrator is agent of company
In performing and exercising the administrator's functions and powers under this Part, the administrator
of a company acts as its agent. 587. Power of administrator to dispose of, and deal with, charged property: floating charge
(1) The administrator of a company may dispose of, or take action relating to, property that is subject
to a floating charge as if it were not subject to the charge. 200

or of a company may dispose of, or take action relating to, property that is subject
to a floating charge as if it were not subject to the charge. 200

Insolvency Act (Cap. 53) Kenya
(2) If property is disposed of in reliance on subsection (1), the holder of the floating charge has the
same priority in respect of acquired property as that holder had in respect of the property disposed
of. (3) In subsection (2), "acquired property" means property of the company that directly or indirectly
represents the property disposed of. 588. Power of administrator to dispose of, and deal with, charged property: non-floating
charge
(1) On the application of the administrator of a company, the Court may make an order enabling the
administrator to dispose of property that is subject to a security as if it were not subject to the
security. (2) An order under subsection (1) may be made if the Court believes that disposal of the property would
be likely to promote the purpose of the administration of the company.

ction (1) may be made if the Court believes that disposal of the property would
be likely to promote the purpose of the administration of the company.

(3) An order under this section is subject to the condition that—
(a) the net proceeds of disposal of the property; and
(b) any additional money required to be added to the net proceeds so as to produce the amount
determined by the Court as the net amount that would be realised on a sale of the property at
market value,
will be applied towards discharging the amounts secured by the security. (4) If an order under this section relates to more than one security, the administrator shall apply the
net proceeds of disposal in the order of the priorities of the securities. (5) Within fourteen days after the date on which an order is made under this section, the administrator
shall lodge a copy of the order with the Registrar for registration. (6) An administrator who, without reasonable excuse, fails to comply with subsection (5) commits an
offence and on conviction is liable to a fine not exceeding two hundred shillings.

t reasonable excuse, fails to comply with subsection (5) commits an
offence and on conviction is liable to a fine not exceeding two hundred shillings.

(7) If, after being convicted of an offence under subsection (6), the administrator continues to fail
to lodge the required order with the Registrar, the administrator commits a further offence on
each day on which the failure continues and on conviction is liable to a fine not exceeding twenty
thousand shillings for each such offence. 589. Power of administrator to dispose of goods that are subject to credit purchase
transaction
(1) The Court may make an order authorising the administrator of a company to dispose of goods that
are in the possession of the company under a credit purchase transaction as if all the rights of the
owner under the agreement were vested in the company. (2) An order under subsection (1) may be made—
(a) only on the application of the administrator; and
(b) only if the Court believes that disposal of the goods would be likely to promote the purpose
of administration of the company. (3) An order under subsection (1) is subject to the condition that—
(a) the net proceeds of disposal of the goods; and
201

inistration of the company. (3) An order under subsection (1) is subject to the condition that—
(a) the net proceeds of disposal of the goods; and
201

Insolvency Act (Cap. 53) Kenya
(b) any additional money required to be added to the net proceeds so as to produce the amount
determined by the Court as the net amount that would be realised on a sale of the goods at
market value,
will be applied towards discharging the amounts payable under the credit purchase transaction. (4) Within fourteen days from and including the date of the order, an administrator who makes a
successful application for an order under this section shall lodge a copy of the order with the
Registrar for registration. (5) An administrator who, without reasonable excuse, fails to comply with subsection (4) and on
conviction is liable to a fine not exceeding two hundred thousand shillings. (6) If, after being convicted of an offence under subsection (5), an administrator continues to fail to
lodge the required copy, the administrator commits a further offence on each day on which the
failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for
each such offence. 590.

e on each day on which the
failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for
each such offence. 590.

Protection for secured and preferential creditors
(1) An administrator's statement of proposals under section 566 may not include action that—
(a) affects the right of a secured creditor of the company to enforce the creditor's security;
(b) would result in a preferential debt of the company being paid otherwise than in priority to its
non-preferential debts; or
(c) would result in one preferential creditor of the company being paid a smaller proportion of
that creditor's debt than another. (2) Subsection (1) does not apply to—
(a) action to which the relevant creditor consents;
(b) a proposal for a voluntary arrangement under Part IX;
(c) a proposal for a compromise or arrangement to be sanctioned under the Companies Act (Cap. 486); or
(d) a proposal for a cross-border merger. (3) The reference to a statement of proposals in subsection (1) includes a reference to a statement as
revised or modified. 591.

cross-border merger. (3) The reference to a statement of proposals in subsection (1) includes a reference to a statement as
revised or modified. 591.

Administrator's conduct of administration can be challenged
(1) A creditor or member of a company under administration may apply to the Court claiming—
(a) that the administrator is acting or has acted so as to detrimentally affect the interests of the
applicant (whether alone or in common with some or all other members or creditors of the
company); or
(b) that the administrator proposes to act in a way that would detrimentally affect the interests
of the applicant (whether alone or in common with some or all other members or creditors). (2) A creditor or member of a company under administration may apply to the Court on the ground
that the administrator is not performing the administrator's functions as quickly or as efficiently as
is reasonably practicable. (3) On the hearing of an application made under subsection (1) or (2), the Court may—
(a) make an order granting relief;
(b) make an order dismissing the application;
202

f an application made under subsection (1) or (2), the Court may—
(a) make an order granting relief;
(b) make an order dismissing the application;
202

Insolvency Act (Cap. 53) Kenya
(c) adjourn the hearing conditionally or unconditionally;
(d) make an interim order; or
(e) make such other order as it considers appropriate. (4) In particular, an order under this section may do all or any of the following—
(a) regulate the administrator’s performance or exercise of the administrator's functions or
powers;
(b) require the administrator to do or not do a specified act;
(c) require a creditors' meeting to be held for a specified purpose;
(d) end the appointment of an administrator;
(e) make provisions of a consequential nature. (5) An order may be made on a claim made under subsection (1) whether or not the action complained
of—
(a) is within the administrator's powers under this Part; or
(b) was taken in reliance on an order under section 588 or 589. (6) An order may not be made under this section if it would impede or prevent the implementation of—
(a) a voluntary arrangement approved under Part IX;
(b) a compromise or arrangement sanctioned under the Companies Act (Cap.

nt the implementation of—
(a) a voluntary arrangement approved under Part IX;
(b) a compromise or arrangement sanctioned under the Companies Act (Cap.

486);
(c) a merger of a kind prescribed by the insolvency regulations made for the purposes of this
section; or
(d) proposals or a revision approved under section 570 or 571 more than thirty days before the
day on which the application for the order under this section is made. 592. Power of the Court to examine conduct of administrator's administration of the
company
(1) The Court may examine the conduct of a person who—
(a) is or purports to be the administrator of a company; or
(b) has been, or has purported to be, the administrator of a company. (2) An examination under this section may be held only on the application of—
(a) the Official Receiver;
(b) the administrator of the company;
(c) the liquidator (if any) of the company;
(d) a creditor of the company; or
(e) a contributory of the company. (3) An application under subsection (2) may be made only if it alleges that the administrator or person
purporting to be the administrator—
(a) has misapplied or retained money or other property of the company;
(b) has become accountable for money or other property of the company;
(c) has breached a fiduciary or other duty in relation to the company; or
203

;
(b) has become accountable for money or other property of the company;
(c) has breached a fiduciary or other duty in relation to the company; or
203

Insolvency Act (Cap. 53) Kenya
(d) has been guilty of misfeasance. (4) On an examination under this section into the conduct of an administrator or a person purporting
to act as such, the Court may order the administrator or person to do all or any of the following—
(a) to repay, restore or account for money or property;
(b) to pay interest;
(c) to contribute an amount to the company's property as compensation for breach of duty or
misfeasance. (5) An application under subsection (2) may be made in respect of an administrator who has been
discharged under section 614 only with the approval of the Court. 593. Automatic end of administration
The appointment of an administrator automatically ends at the end of twelve months from and including
the date on which it took effect. 594. Circumstances in which administrator's term of office can be extended
(1) Despite section 593—
(a) on the application of an administrator, the Court may by order extend the administrator's
term of office for a specified period; and
(b) an administrator's term of office may be extended by consent for a specified period not
exceeding six months.

f office for a specified period; and
(b) an administrator's term of office may be extended by consent for a specified period not
exceeding six months.

(2) An order of the Court made under subsection (1)(a)—
(a) may be made in respect of an administrator whose term of office has already been extended;
but
(b) may not be made after the administrator's term of office has ended. (3) As soon as practicable after an order is made under (1)(a), the administrator shall lodge a copy of
the order with the Registrar for registration. (4) In subsection (1)(b), "consent" means—
(a) the consent of each secured creditor of the company; and
(b) if the company has unsecured debts, the consents of creditors of the company holding debts
amounting to more than fifty percent of the company's unsecured debts (disregarding debts
held by any creditor who does not respond to an invitation to give or withhold consent).

percent of the company's unsecured debts (disregarding debts
held by any creditor who does not respond to an invitation to give or withhold consent).

(5) However, if the administrator has made a statement under section 569(1)(b), "consent" means—
(a) the consent of each secured creditor of the company; or
(b) if the administrator believes that a distribution may be made to preferential creditors—
(i) the consent of each secured creditor of the company; and
(ii) the consents of preferential creditors of the company holding debts amounting
to more than fifty percent of the preferential debts of the company (disregarding
debts held by any creditor who does not respond to an invitation to give or withhold
consent). (6) Consent for the purposes of subsection (1)(b) may be—
(a) written; or
204

itor who does not respond to an invitation to give or withhold
consent). (6) Consent for the purposes of subsection (1)(b) may be—
(a) written; or
204

Insolvency Act (Cap. 53) Kenya
(b) signified orally at a creditors' meeting. (7) An administrator's term of office—
(a) may be extended by consent only once;
(b) may not be extended by consent after it has been extended by an order of the Court; and
(c) may not be extended by consent after it has ended. (8) As soon as practicable after an administrator's term of office is extended by consent, the
administrator shall—
(a) lodge a notice of the extension with the Court; and
(b) lodge a copy of the notice with the Registrar for registration. (9) An administrator who, without reasonable excuse, fails to comply with subsection (3) or (8)
commits an offence and on conviction is liable to a fine not exceeding two hundred thousand
shillings for each such offence. (10) If, after being convicted of an offence under subsection (9), an administrator continues to fail to
lodge the required copy, the administrator commits a further offence on each day on which the
failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for
each such offence. 595.

e on each day on which the
failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for
each such offence. 595.

Court may terminate administration on application of administrator
(1) The administrator of a company shall make an application to the Court for an order terminating the
administrator's appointment—
(a) on forming the belief that—
(i) the objective of the administration cannot be achieved in relation to the company; or
(ii) the company should not have entered administration; or
(b) if a creditors' meeting requires the administrator to make such an application. (2) An administrator shall also make such an application if—
(a) the administration results from an administration order; and
(b) the administrator believes that the purpose of administration has been sufficiently achieved
in relation to the company. (3) On the hearing of an application made under this section, the Court may make—
(a) an order terminating the administrator's appointment with immediate effect or from a
specified later date;
(b) an order dismissing the application; or
(c) an interim order. (4) If the Court makes an order under subsection (3), it may also make—
(a) an order adjourning the hearing conditionally or unconditionally; and
(b) such ancillary or supplementary order as it considers appropriate. 596.

(a) an order adjourning the hearing conditionally or unconditionally; and
(b) such ancillary or supplementary order as it considers appropriate. 596.

Termination of administration when objective achieved
(1) This section applies to an administrator of a company who is appointed under section 534 or 541. 205

ion of administration when objective achieved
(1) This section applies to an administrator of a company who is appointed under section 534 or 541. 205

Insolvency Act (Cap. 53) Kenya
(2) If the administrator believes that the purpose of administration has been sufficiently achieved in
relation to the company, the administrator may lodge—
(a) with the Court; and
(b) with the Registrar,
a notice containing the information prescribed by the insolvency regulations for the purposes of
this section. (3) The administrator's appointment ends when the requirements of subsection (2) are satisfied. (4) Within seven days after lodging a notice with the Court under subsection (2), the administrator
shall send a copy of it to every creditor of the company of whose claim and address the
administrator is aware. (5) The insolvency regulations may provide that the administrator is taken to have complied with
subsection (4) if, before the end of the period specified in that subsection, the administrator
publishes in such publications, and in such locations, as may be specified in those regulations
a notice undertaking to provide a copy of the notice under subsection (2) to any creditor of the
company who applies in writing to a specified address.

notice undertaking to provide a copy of the notice under subsection (2) to any creditor of the
company who applies in writing to a specified address.

(6) An administrator who, without reasonable excuse, fails to comply with subsection (4) commits an
offence and on conviction is liable to a fine not exceeding five hundred thousand shillings. (7) If, after being convicted of an offence under subsection (6), an administrator continues to fail to
comply with the relevant requirement, the administrator commits a further offence on each day
on which the failure continues and on conviction is liable to a fine not exceeding fifty thousand
shillings for each such offence. 597. Court may terminate administrator's appointment on application of creditor
(1) A creditor of a company that is under administration may make an application to the Court for an
order terminating the appointment of an administrator of the company. (2) An application under subsection (1) may be made only if it alleges an improper motive—
(a) in the case of an administrator appointed by the Court, on the part of the applicant for the
order; or
(b) in any other case, on the part of the person who appointed the administrator.

pointed by the Court, on the part of the applicant for the
order; or
(b) in any other case, on the part of the person who appointed the administrator.

(3) On the hearing of an application made under subsection (1), the Court may make—
(a) an order terminating the administrator's appointment with immediate effect or from a
specified later date;
(b) an order dismissing the application; or
(c) an interim order. (4) If the Court makes an order under subsection (3), it may also make—
(a) an order adjourning the hearing conditionally or unconditionally; and
(b) such ancillary orders as it considers appropriate. 206

it may also make—
(a) an order adjourning the hearing conditionally or unconditionally; and
(b) such ancillary orders as it considers appropriate. 206

Insolvency Act (Cap. 53) Kenya
598. Court to terminate administrator's appointment on making of public interest
liquidation order
(1) If a liquidation order is made for the liquidation of a company under administration on an
application made under section 425, the Court shall make an order—
(a) terminating the appointment of the administrator; or
(b) directing the appointment of the administrator to continue to have effect. (2) If the Court makes an order under subsection (1)(b), it may also—
(a) specify which of the powers under this Part are to be exercisable by the administrator; and
(b) order that this Part has effect in relation to the administrator with specified modifications. 599. Procedure for moving from administration to creditors' voluntary liquidation
(1) This section applies if the administrator of a company believes—
(a) that the total amount that each secured creditor of the company is likely to receive has been
paid to the creditor or set aside for the creditor; and
(b) if there are any unsecured creditors, that a distribution will be made to them. (2) The administrator may lodge with the Registrar for registration a notice that this section applies.

ors, that a distribution will be made to them. (2) The administrator may lodge with the Registrar for registration a notice that this section applies.

(3) On receipt of a notice under subsection (2), the Registrar shall register it. (4) As soon as practicable lodging a notice under subsection (2), the administrator shall—
(a) lodge a copy of the notice with the Court; and
(b) send a copy of the notice to each creditor of whose claim, and of whose address, the
administrator is aware. (5) On the registration of a notice in accordance with subsection (3)—
(a) the administrator's appointment in respect of the company ends; and
(b) the company is required to be liquidated as if a resolution for voluntary liquidation under
section 393 were passed on the day on which the notice is registered. (6) The liquidator for the purposes of the liquidation is—
(a) a person nominated by the creditors of the company in the prescribed manner and within the
prescribed period; or
(b) if no person is nominated under paragraph (a), the administrator.

ors of the company in the prescribed manner and within the
prescribed period; or
(b) if no person is nominated under paragraph (a), the administrator.

(7) In the application of Part VI to a liquidation in accordance with this section—
(a) section 393 does not apply;
(b) section 394 applies as if the reference to the time of the passing of the resolution for
voluntary liquidation were a reference to the beginning of the date of registration of the
notice under subsection (2);
(c) section 397 does not apply;
(d) sections 405,406 and 407 do not apply;
(e) section 430 applies as if the reference to the time of the passing of the resolution for
voluntary liquidation were a reference to the beginning of the date of registration of the
notice under subsection (2); and
207

of the resolution for
voluntary liquidation were a reference to the beginning of the date of registration of the
notice under subsection (2); and
207

Insolvency Act (Cap. 53) Kenya
(f) any creditors' committee that is in existence immediately before the company ceased to be
under administration continues in existence after that time as if appointed as a liquidation
committee under section 409. 600. Moving from administration to dissolution
(1) On forming the belief that a company that is under administration has no property that might allow
a distribution to its creditors, the administrator shall lodge with the Registrar a notice to that effect. (2) On the application of the administrator of a company, the Court may disapply subsection (1) in
respect of the company. (3) On receiving of a notice lodged under subsection (1), the Registrar shall register it. (4) The appointment of the administrator ends when the notice is registered. (5) As soon as practicable after lodging a notice under subsection (1), the administrator shall—
(a) lodge a copy of the notice with the Court; and
(b) send a copy of the notice to each creditor of whose claim, and whose address, the
administrator is aware.

a copy of the notice with the Court; and
(b) send a copy of the notice to each creditor of whose claim, and whose address, the
administrator is aware.

(6) At the end of three months from and including the date of registration of a notice in respect of a
company under subsection (1) the company is dissolved. (7) On an application in respect of a company made by the administrator or some other person who has
a legitimate interest in the matter, the Court may—
(a) extend the period specified in subsection (6);
(b) suspend that period; or
(c) disapply subsection (6). (8) As soon as practicable after an order is made under subsection (7), the administrator shall lodge a
copy of the order with the Registrar for registration. (9) On receiving of a notice lodged under subsection (8), the Registrar shall register it. (10) An administrator who, without reasonable excuse, fails to comply with a requirement of this section
commits an offence and on conviction is liable to a fine not exceeding two hundred thousand
shillings.

ls to comply with a requirement of this section
commits an offence and on conviction is liable to a fine not exceeding two hundred thousand
shillings.

(11) If, after being convicted of an offence under subsection (10), an administrator continues to fail to
comply with the relevant requirement, the administrator commits a further offence on each day
on which the failure continues and on conviction is liable to a fine not exceeding twenty thousand
shillings for each such offence. 601. Discharge of administration order if administrator's appointment is terminated
The Court shall discharge an administration order if—
(a) it has made an order under this Part terminating an administrator's appointment; and
(b) the administrator was appointed by the Court. 602. Administrator to lodge copy of order of the Court terminating appointment with
Registrar of Companies
(1) Within fourteen days after the Court has made an order under this Part terminating the
appointment of an administrator, the administrator shall lodge a copy of the order with the
Registrar for registration. 208

this Part terminating the
appointment of an administrator, the administrator shall lodge a copy of the order with the
Registrar for registration. 208

Insolvency Act (Cap. 53) Kenya
(2) On receiving the copy lodged under subsection (1), the Registrar shall register it. (3) An administrator who, without reasonable excuse, fails to comply with subsection (1) commits an
offence and on conviction is liable to a fine not exceeding two hundred thousand shillings. (4) If, after being convicted of an offence under subsection (3), an administrator continues to fail to
comply with the relevant requirement, the administrator commits a further offence on each day
on which the failure continues and on conviction is liable to a fine not exceeding twenty thousand
shillings for each such offence. Division 10 — Termination of appointment and replacement of administrators
603. Resignation of administrator
(1) An administrator may resign only in the circumstances prescribed by the insolvency regulations for
the purposes of this section.

of administrator
(1) An administrator may resign only in the circumstances prescribed by the insolvency regulations for
the purposes of this section.

(2) If a circumstance has arisen that permits an administrator to resign, the administrator may do so
only—
(a) in the case of an administrator appointed by the Court, by notice given to the Court;
(b) in the case of an administrator appointed under section 534, by notice given to the holder of
the floating charge under which the appointment was made;
(c) in the case of an administrator appointed under section 541(1), by notice given to the
company; or
(d) in the case of an administrator appointed under section 541(2), by notice given to the
directors of the company. 604. Court may remove administrator from office
The Court may, by order, remove an administrator from office if satisfied that circumstances exist that
make it inappropriate for the administrator to continue in office. 605. Administrator to vacate office on ceasing to be qualified
(1) An administrator of a company vacates office if the administrator ceases to be an authorised
insolvency practitioner.

e on ceasing to be qualified
(1) An administrator of a company vacates office if the administrator ceases to be an authorised
insolvency practitioner.

(2) If an administrator vacates office because of subsection (1), the administrator shall give notice of
that fact—
(a) in the case of an administrator appointed by administration order, to the Court;
(b) in the case of an administrator appointed under section 534, by notice given to the holder of
the floating charge under which the appointment was made;
(c) in the case of an administrator appointed under section 541(1), by notice given to the
company; or
(d) in the case of an administrator appointed under section 541(2), by notice given to the
directors of the company. (3) An administrator who, without reasonable excuse, fails to comply with subsection (2) commits an
offence and on conviction is liable to a fine not exceeding one million shillings. (4) If, after being convicted of an offence under subsection (3), an administrator continues to fail to
comply with the relevant requirement, the administrator commits a further offence on each day
on which the failure continues and on conviction is liable to a fine not exceeding one hundred
thousand shillings for each such offence. 209

each day
on which the failure continues and on conviction is liable to a fine not exceeding one hundred
thousand shillings for each such offence. 209

Insolvency Act (Cap. 53) Kenya
606. Filling vacancy in office of administrator
Sections 607 to 611 apply to an administrator who—
(a) dies;
(b) resigns;
(c) is removed from office under section 604; or
(d) vacates office under section 605. 607. Power of the Court to replace administrator
(1) Any of the following may make an application under subsection (2) for the replacement of an
administrator appointed by the Court—
(a) a creditors' committee of the company;
(b) the company;
(c) the directors of the company;
(d) one or more creditors of the company; or
(e) if more than one person was appointed to act jointly or concurrently as the administrator,
any of the persons who remain in office. (2) An application may be made by a person or persons referred to subsection (1)(b), (c) or (d) only if—
(a) there is no creditors' committee of the company;
(b) the Court is satisfied that the creditors' committee or a remaining administrator is not taking
reasonable steps to make a replacement; or
(c) the Court is satisfied that for any other reason it is right for the application to be made.

not taking
reasonable steps to make a replacement; or
(c) the Court is satisfied that for any other reason it is right for the application to be made.

(3) On the hearing of an application made under subsection (1), the Court shall make an order
replacing the administrator if satisfied the administrator has died, is for any other reason not able
to act as such or is not performing his or her duties in a competent manner
608. Power of holder of floating charge to appoint replacement administrator appointed
under section 534
If the administrator was appointed under section 534, the holder of the floating charge under which the
appointment was made may replace the administrator. 609. Power of company to appoint replacement administrator appointed under section
541(1)
(1) If the administrator of a company was appointed under section 541(1), the company may replace
the administrator. (2) A replacement under this section may be made only—
(a) with the consent of each person who is the holder of a qualifying floating charge in respect of
the company's property; or
(b) if consent is withheld, with the approval of the Court. 210

is the holder of a qualifying floating charge in respect of
the company's property; or
(b) if consent is withheld, with the approval of the Court. 210

Insolvency Act (Cap. 53) Kenya
610. Power of directors of company to appoint replacement administrator appointed under
section 541(2)
(1) If the administrator of a company was appointed under section 541(2), the directors of the company
may replace the administrator. (2) A replacement under this section may be made only—
(a) with the consent of each person who is the holder of a qualifying floating charge in respect of
the company's property; or
(b) if consent is withheld, with the approval of the Court. 611. Power of the Court to replace administrator in certain other circumstances
(1) The Court may make an order replacing an administrator on the application of a person by whom an
application is made under section 607(1) if the Court—
(a) is satisfied that a relevant person is not taking reasonable steps to make a replacement; or
(b) that for another reason it is right for the Court to make the replacement. (2) In subsection (1), a relevant person is a person who is entitled to replace the administrator under
any of sections 608 to 610. 612.

replacement. (2) In subsection (1), a relevant person is a person who is entitled to replace the administrator under
any of sections 608 to 610. 612.

Court may replace administrator when there is a competing floating charge-holder
(1) If an administrator of a company is appointed under section 534 by the holder of a qualifying
floating charge in respect of the company's property, the holder of a prior qualifying floating charge
in respect of the company's property may apply to the Court for the administrator to be replaced by
an administrator nominated by the holder of the prior floating charge. (2) On the hearing of an application made under subsection (1), the Court may make an order replacing
the existing administrator with the person nominated by the applicant, but only if satisfied that to
do so would result in the company being administered more effectively and efficiently. (3) An application made under subsection (1) may not be heard unless the existing administrator and
the holder of the qualifying floating charge who appointed that administrator have been served
with a copy of the application and have been given an opportunity to appear at the hearing as
parties
(4) The Movable Property Security Rights Act determines whether one floating charge is prior to
another for the purposes of this section. [Act No.

ies
(4) The Movable Property Security Rights Act determines whether one floating charge is prior to
another for the purposes of this section. [Act No.

13 of 2017, Sch.]
613. Creditors' meeting may replace administrator appointed by company or directors
(1) A creditors' meeting may replace an administrator of a company if—
(a) the administrator has been appointed by the company or its directors under section 541; and
(b) there is no holder of a qualifying floating charge in respect of the company's property. (2) A creditors' meeting may act under subsection (1) only if the replacement administrator's written
consent to act is presented to the meeting before the replacement is made. 211

ct under subsection (1) only if the replacement administrator's written
consent to act is presented to the meeting before the replacement is made. 211

Insolvency Act (Cap. 53) Kenya
614. Discharge from liability on administrator's vacating office
(1) If the appointment of a person as the administrator of a company ends (for whatever reason),
the administrator is discharged from liability in respect of all acts done or omitted to be done as
administrator. (2) The discharge provided by subsection (1) takes effect—
(a) in the case of an administrator who dies, on the lodging with the Court of notice of the
administrator' s death;
(b) in the case of an administrator appointed under section 534 or 541, at a time fixed by
resolution of the creditors' committee or, if there is no creditors' committee, by resolution of
the creditors; or
(c) in any other case, at a time specified by the Court.

ditors' committee or, if there is no creditors' committee, by resolution of
the creditors; or
(c) in any other case, at a time specified by the Court.

(3) For the purpose of the application of subsection (2)(b), if the administrator has made a statement
that the company has insufficient property to enable a distribution to be made to unsecured
creditors otherwise than in accordance with section 474(2)(a), a resolution is taken to have been
passed if (and only if) passed with the approval of—
(a) each secured creditor of the company; or
(b) if the administrator has made a distribution to preferential creditors or believes that a
distribution may be made to preferential creditors—
(i) each secured creditor of the company; and
(ii) preferential creditors whose debts amount to more than fifty percent of the
preferential debts of the company, disregarding debts of any creditor who does not
respond to an invitation to give or withhold approval. (4) A discharge—
(a) applies to liability accrued before the discharge takes effect; and
(b) does not prevent the exercise of the Court's powers under section 592. 615.

a) applies to liability accrued before the discharge takes effect; and
(b) does not prevent the exercise of the Court's powers under section 592. 615.

Former administrator's remuneration and expenses payable of company's property
and to have priority over holders of floating charges
(1) This section applies if a person’s appointment as the administrator of a company has ended for
whatever reason. (2) In this section—
(a) "the former administrator" means the person referred to in subsection (1); and
(b) "termination" means the time when the person's appointment as the company's
administrator ended. (3) The former administrator's remuneration and expenses is—
(a) a charge on and payable out of property over which the person had control immediately
before the termination; and
(b) payable in priority to any security to which section 587 applies. (4) An amount payable in respect of a debt or liability arising out of a contract including a contract
of a loan or other credit or finance facility for the benefit of the company and necessary for the
212

arising out of a contract including a contract
of a loan or other credit or finance facility for the benefit of the company and necessary for the
212

Insolvency Act (Cap. 53) Kenya
continuation of any business of the company entered into by the former administrator or a
predecessor before the termination is—
(a) a charge on and payable out of property over which the former administrator had control
immediately before the termination; and
(b) payable in priority to any charge arising under subsection (3). (5) Subsection (4) applies to a liability arising under a contract of employment that was adopted by the
former administrator or a predecessor before the termination; and for that purpose—
(a) action taken within fourteen days after an administrator's appointment is not to be treated
as action adopting or contributing to adopting the contract;
(b) no account is to taken of a liability that arises, or in so far as it arises, by reference to
anything that is done or that occurs before the adoption of the contract of employment; and
(c) no account is to be taken of a liability to make a payment other than wages or salary.

curs before the adoption of the contract of employment; and
(c) no account is to be taken of a liability to make a payment other than wages or salary.

(6) In subsection (5)(c), "wages or salary" includes—
(a) amounts payable in respect of periods of holiday (for which purpose the amounts are to be
treated as relating to the period by reference to which the entitlement to holiday accrued);
(b) amounts payable in respect of periods of absence through illness or other good cause;
(c) amounts payable instead of a period of holidays;
(d) in relation to a particular period, amounts that would be treated as earnings by any
enactment prescribed by the insolvency regulations for the purposes of this section; and
(e) contributions to occupational pension schemes. [Act No. 12 of 2019, Sch.]
Division 11 — Supplementary provisions
616. Joint and concurrent administrators
(1) In this Part—
(a) a reference to the appointment of an administrator of a company includes a reference to the
appointment of a number of persons to act jointly or concurrently as the administrator of a
company; and
(b) a reference to the appointment of a person as administrator of a company includes a
reference to the appointment of a person as one of a number of persons to act jointly or
concurrently as the administrator of a company.

ny includes a
reference to the appointment of a person as one of a number of persons to act jointly or
concurrently as the administrator of a company.

(2) A person who appoints more than one person as an administrator of a company shall specify—
(a) which (if any) functions are to be performed by the persons appointed acting jointly; and
(b) which (if any) functions are to be exercised by any or all of the persons appointed. 617. Offences committed by joint administrators
(1) If two or more persons are appointed to act as joint administrators of a company, a reference to the
administrator of the company in this Part is to those persons acting jointly. (2) However, a reference to the administrator of a company in Division 10 is to all or any of the persons
appointed to act jointly. 213

cting jointly. (2) However, a reference to the administrator of a company in Division 10 is to all or any of the persons
appointed to act jointly. 213

Insolvency Act (Cap. 53) Kenya
(3) If—
(a) a provision of this Part requiring an administrator of a company to comply with a specified
requirement constitutes an offence;
(b) the requirement is not complied with in relation to a particular company; and
(c) two or more administrators are appointed to act jointly in respect of the company,
each of the persons commits the offence and may be proceeded against and punished individually. (5) The reference in section 562(1) to the name of the administrator is a reference to the name of each
of the persons appointed to act jointly. (6) If persons are appointed to act jointly to perform or exercise only some of the functions or powers
of the administrator of a company, this section applies only in relation to the functions or powers in
respect of which those persons are appointed. 618. Administrators acting concurrently
If two or more persons are appointed to act concurrently as the administrator of a company, a reference
to the administrator of a company in this Part is to any of the persons appointed or to any combination of
them. 619.

trator of a company, a reference
to the administrator of a company in this Part is to any of the persons appointed or to any combination of
them. 619.

Power to appoint administrators to act concurrently
(1) If a company is under administration, a person may be appointed to act as administrator jointly or
concurrently with the person or persons acting as the administrator of the company. (2) If a company entered administration by administration order, an appointment under subsection (1)
may be made only by the Court on the application of—
(a) a person or group listed in section 532(1)(a) to (e); or
(b) the administrator of the company. (3) If a company entered administration because of an appointment under section 534, an appointment
under subsection (1) may be made only by—
(a) the holder of the floating charge under which the appointment was made; or
(b) the Court on the application of the administrator of the company. (4) If a company entered administration because of an appointment under section 541(1), an
appointment under subsection (1) may be made only—
(a) by the Court on the application of the administrator of the company; or
(b) by the company with the consent of each person who is the holder of a qualifying floating
charge in respect of the company's property or, if consent is withheld, with the approval of
the Court.

son who is the holder of a qualifying floating
charge in respect of the company's property or, if consent is withheld, with the approval of
the Court.

(5) If a company entered administration because of an appointment under section 541(2), an
appointment under subsection (1) may be made only—
(a) by the Court on the application of the administrator of the company; or
(b) by the directors of the company with the consent of each person who is the holder of a
qualifying floating charge in respect of the company's property or, if consent is withheld,
with the approval of the Court. (6) An appointment under subsection (1) may be made only with the consent of the administrator of
the company. 214

ld,
with the approval of the Court. (6) An appointment under subsection (1) may be made only with the consent of the administrator of
the company. 214

Insolvency Act (Cap. 53) Kenya
620. Presumption of validity of acts of administrator
An act of the administrator of a company is valid even if the administrator's appointment or qualification
is subsequently found to be defective. 621. Majority decision of directors
A reference in this Part to act done or omitted to be done by the directors of a company includes the same
act done or omitted to be done by a majority of the directors of a company. 622. Power to extend time limits
(1) If a provision of this Part relating to a company under administration provides that a period can
be varied in accordance with this section, the Court may vary the period on the application of the
administrator of the company. (2) A period of time period can be extended under this section—
(a) more than once in relation to the same company and the same provision; and
(b) after the period has expired. 623. Certain specified period can be varied by consent
(1) A period specified in section 566(5) or 568(1) may be varied in respect of a company by the
administrator with consent.

d can be varied by consent
(1) A period specified in section 566(5) or 568(1) may be varied in respect of a company by the
administrator with consent.

(2) In subsection (1), "consent" means—
(a) the consent of each secured creditor of the company; and
(b) if the company has unsecured debts, the consents of creditors whose debts amount to more
than fifty percent in value of the company's unsecured debts, disregarding debts of any
creditor who does not respond to an invitation to give or withhold consent. (3) However, if the administrator has made a statement of the kind to which section 569(1)(b) applies,
"consent" means—
(a) the consent of each secured creditor of the company; or
(b) if the administrator believes that a distribution may be made to preferential creditors—
(i) the consent of each secured creditor of the company; and
(ii) the consents of preferential creditors whose debts amount to more than fifty percent
in value of the total preferential debts of the company, disregarding debts of any
creditor who does not respond to an invitation to give or withhold consent. (4) Consent for the purposes of subsection (1) may be—
(a) written; or
(b) signified orally at a creditors' meeting.

tion to give or withhold consent. (4) Consent for the purposes of subsection (1) may be—
(a) written; or
(b) signified orally at a creditors' meeting.

(5) The power to extend under subsection (1)—
(a) may be exercised in respect of a period only once;
(b) may not be exercised to extend a period by more than thirty days;
(c) may not be exercised to extend a period that has been extended by the Court; and
(d) may not be exercised to extend a period after it has expired. 215

may not be exercised to extend a period that has been extended by the Court; and
(d) may not be exercised to extend a period after it has expired. 215

Insolvency Act (Cap. 53) Kenya
Part IX – COMPANY VOLUNTARY ARRANGEMENTS
Division 1 — Proposals for company voluntary arrangements
624. Interpretation: Division 1
In this Division—
"prescribed publication", in relation to a company, means—
(a) a newspaper circulating in the area in which the company carries on business;
(b) the company's website (if any); or
(c) any other publication of a description prescribed by the insolvency regulations for the purposes of
this Part;
"proposal" means a proposal by the directors of a company for a voluntary arrangement made in
accordance with section 625;
"proposers", in relation to a proposal for a voluntary arrangement in respect of a company, means the
directors making the proposal;
"supervisor" means the person appointed to supervise a voluntary arrangement, and includes any
replacement supervisor appointed under section 626 or 627;
"voluntary arrangement", in relation to a company means a composition or scheme of arrangement that
has effect as provided by section 630. 625.

r 627;
"voluntary arrangement", in relation to a company means a composition or scheme of arrangement that
has effect as provided by section 630. 625.

Proposal for voluntary arrangement
(1) The directors of a company may make a proposal under this Division to the company and to its
creditors for a voluntary arrangement under which the company enters into a composition in
satisfaction of its debts or a scheme for arranging its financial affairs. (2) In making such a proposal, the directors shall provide for the appointment of a person to supervise
the implementation of the voluntary arrangement. (3) Only an authorised insolvency practitioner may be appointed to supervise a voluntary arrangement. (4) A proposal under this Division may also be made—
(a) if the company is under administration, by the administrator; or
(b) if the company is in liquidation, by the liquidator. 626. Procedure if provisional supervisor is not the liquidator or administrator
(1) This section applies if the provisional supervisor in respect of a director's proposal is not the
liquidator or administrator of the company and the directors do not propose to take steps to obtain
a moratorium for the company under Division 2.

the
liquidator or administrator of the company and the directors do not propose to take steps to obtain
a moratorium for the company under Division 2.

(2) The provisional supervisor shall, within thirty days (or within such extended period as the Court
may allow) after that supervisor is given notice of the proposal, submit a report to the Court stating
—
(a) whether, in that supervisor's opinion, the proposal has a reasonable prospect of being
approved and implemented;
(b) whether, in that supervisor's opinion, meetings of the company and of the company's
creditors should be convened to consider the proposal; and
216

(b) whether, in that supervisor's opinion, meetings of the company and of the company's
creditors should be convened to consider the proposal; and
216

Insolvency Act (Cap. 53) Kenya
(c) if that supervisor believes that those meetings should be convened—the date on which, and
the time and place at which, it is proposed to hold the meetings. (3) For the purposes of enabling the provisional supervisor to prepare the report, the proposers shall
submit to that supervisor—
(a) a document setting out the terms of the proposal; and
(b) a statement of the company's financial position containing—
(i) such particulars of its creditors and of its debts and other liabilities and of its assets as
may be prescribed by the insolvency regulations for the purposes of this subsection;
and
(ii) such other information as may be so prescribed. (4) An application may be made to the Court for an order under subsection (5)—
(a) if the provisional supervisor has failed to submit the report required by this section or has
died, by the proposers; or
(b) if it is impracticable or inappropriate for that supervisor to continue to act as such, by the
proposers or that supervisor.

by the proposers; or
(b) if it is impracticable or inappropriate for that supervisor to continue to act as such, by the
proposers or that supervisor.

(5) On the hearing of an application made under subsection (4), the Court may make an order directing
the provisional supervisor to be replaced as such by another authorised insolvency practitioner. 627. Provisional supervisor to convene meetings of company and of its creditors
(1) If the provisional supervisor appointed under section 625 is not the liquidator or administrator and
has reported to the Court that the meetings referred to in section 626(2) should be convened, that
supervisor shall, unless the Court otherwise directs, convene those meetings to be held on the date,
and at the time and place, proposed in the report. (2) If the provisional supervisor is the liquidator or administrator, that supervisor shall convene
meetings of the company and of the company's creditors to consider the proposal to be held on such
date, and at such time and place, as that supervisor considers appropriate having regard to where
the creditors carry on their businesses or reside. (3) The persons to be summoned to a creditors' meeting convened under this section are all creditors of
the company of whose claims and addresses the provisional supervisor is aware.

o a creditors' meeting convened under this section are all creditors of
the company of whose claims and addresses the provisional supervisor is aware.

(4) The directors of the company may, not later than seven days before the dates on which the
meetings are, or either of those meetings is, to be held, give notice to the provisional supervisor
of any modifications of the proposal for which the directors intend to seek the approval at those
meetings. 628. Conduct of meetings of company and its creditors
(1) The main purpose of a meeting convened under section 627 is to decide whether to approve the
proposal or that proposal with modifications. (2) At the beginning of a creditors' meeting, the meeting shall elect one of their number to be
Chairperson of the meeting. (3) At the first meeting of the creditors, the Chairperson shall divide the meeting into three groups
for voting purposes, with the first group comprising secured creditors (if any), the second group
comprising preferential creditors (if any) and the third group comprising unsecured creditors. (4) A modification to the directors' proposal may be approved only if the company consents to it. 217

the third group comprising unsecured creditors. (4) A modification to the directors' proposal may be approved only if the company consents to it. 217

Insolvency Act (Cap. 53) Kenya
(5) A modification to the directors' proposal may provide for the replacement of the provisional
supervisor by another authorised insolvency practitioner who will act as the supervisor of the
proposal if it takes effect as a voluntary arrangement. (6) If the proposal or a modification to it affects the right of a secured creditor of the company to
enforce the creditor's security, it may not be approved unless—
(a) the creditor consents to it; or
(b) if the creditor does not consent to it, the creditor—
(i) would be in a position no worse than if the company was in liquidation;
(ii) would receive no less from the assets to which the creditor's security relates, or from
their proceeds of sale, than any other secured creditor having a security interest in
those assets that has the same priority as the creditor's; and
(iii) would be paid in full from those assets, or their proceeds of sale, before any payment
from them or their proceeds is made to any other creditor whose security interest in
them is ranked below that of the creditor, or who has no security interest in them.

proceeds is made to any other creditor whose security interest in
them is ranked below that of the creditor, or who has no security interest in them.

(7) Subject to this section, the meetings of the company and of the creditors are to be conducted in
accordance with the rules (if any) prescribed by the insolvency regulations. (8) Either meeting may at any time resolve that it be adjourned, or further adjourned. (9) As soon as practicable after the conclusion of a company meeting or a creditors' meeting, the
Chairperson of the meeting shall—
(a) report the result of the meeting to the Court; and
(b) immediately after reporting to the Court, give notice of the result of the meeting to those
persons who attended the meeting, and to those persons of whom the Chairperson is aware
who were entitled to attend the meeting but did not do so. 629. Approval of proposal for voluntary arrangement
(1) This section applies to the decisions taken at the meeting of the company and the meeting of the
company's creditors held in accordance with section 628 to consider a directors' proposal (with or
without modifications).

pany and the meeting of the
company's creditors held in accordance with section 628 to consider a directors' proposal (with or
without modifications).

(2) The proposal (including any modifications) is approved if—
(a) it is a approved—
(i) by a majority the members of the company present (either in person or by proxy) at
the meeting of the company; and
(ii) by a majority (in number and value) of the members of each group of creditors present
(either in person or by proxy) at the meeting of creditors; or
(b) if, despite not being not approved by a majority of the members referred to in paragraph (a)
(i), it is approved by a majority (in number and value) of the members of each of the groups
of creditors referred to in paragraph (a)(ii). (3) For the purposes only of deciding whether the requisite majority by value has voted in favour of a
resolution to approve the proposal—
(a) the Chairperson of the meeting may—
(i) admit or reject proofs of debt; and
(ii) adjourn the meeting in, order to admit or reject proofs of debt; and
218

Chairperson of the meeting may—
(i) admit or reject proofs of debt; and
(ii) adjourn the meeting in, order to admit or reject proofs of debt; and
218

Insolvency Act (Cap. 53) Kenya
(b) a person whose debt has been admitted is a creditor. (4) At any time before the deadline for making an application under this subsection, any member of
the company, or any creditor, who attended or was entitled to attend the meetings may make an
application to the Court for an order under subsection (7). (5) The deadline for making an application under subsection (4) is—
(a) the expiry of thirty days after the holding of the meetings of the company and its creditors
(or if the meetings were held on different days, the later of the meetings); or
(b) if the Court extends that period, the expiry of the extended period. (6) Any member of the company, and any creditor, who attended or was entitled to attend the meetings
is entitled to appear and be heard at the hearing of the application even if the member or creditor
is not the applicant. The right conferred by this subsection may be exercised by such a member
or creditor irrespective of whether the member or creditor supports or has an interest in the
implementation of the proposal.