[2025] KEHC 4040 (KLR)

In re Media Edge Interactive Limited (Insolvency Notice E129 of 2023) [2025] KEHC 4040 (KLR) (Commercial and Tax) (27 March 2025) (Ruling)

Neutral citation: [2025] KEHC 4040 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts)

Commercial and Tax

Insolvency Notice E129 of 2023

F Gikonyo, J

March 27, 2025

Ruling

1. The Official Receiver filed the notice of motion dated 16th October 2024, under Sections 1A, 1B and 3A of the Civil Procedure Act, CAP 21 Laws of Kenya, S. 427, 437 & 441 of the Insolvency Act, 2015, seeking to be appointed a Provisional Liquidator for Media Edge Limited pending the hearing and determination of the Liquidation Petition.

2. The motion is based on the grounds in the motion and the supporting affidavit sworn by Senior Assistant Official Receiver, Diana Mumo, Advocate on 16th October 2024.

3. The grounds are that the company’s directors appointed the Official Receiver as the administrator on 28th September 2023; the company was placed under administration for one year and that the company’s affairs and assets vested in the administrator.

4. It was deposed that the directors indicated that they opted for administration due to financial constraints; that without funding, the applicant can neither revive the company nor maintain it as a going concern; that in the applicant’s opinion, a realization of the company’s assets under Section 522 (1) (c) of the Insolvency Act, to make a distribution to one or more secured or preferential creditors, was the best outcome.

5. It was also deposed that the applicant partially paid Kshs. 8,292,868. 61 to SBM Bank, one of the secured creditors owed Kshs. 29,572,273. 70; that the company's known creditors made formal demands against the company and filed Proof of Debt Forms but the administrator could not settle them in full.

6. It was further deposed that the administrator’s term ended on 28th September 2024; that the administration process, having failed to achieve its purpose, ought to be converted into a liquidation to undergo an orderly winding up of its affairs and to achieve the best possible outcome for the creditors.

7. The applicant asserted that it is in the interests of justice for the court to grant the orders sought for the orderly winding up of the company’s affairs and to achieve the best possible outcome for the creditors.

Hearing 8. At the hearing of the matter on 18th February 2025, Mr. Kyalo appeared for Ms. Mumo for the Official Receiver, Mr. Chumba appeared for a creditor, Tentackles. Mr. Kyalo urged the court to grant the application. Mr. Chumba indicated that the creditor does not oppose the application.

Analysis and Determination 9. This is an application by the Official Receiver to be appointed as a provisional liquidator pending the hearing of the liquidation petition.

10. Section 437 of the Insolvency Act provides: -“(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.”

11. The Official Receiver’s term as the administrator ended on 28th September 2024, one year after its appointment. It filed the present application along with a liquidation petition that is pending.

12. The Official Receiver exhibited; the Notice of Intention to Appoint an Administrator dated 5th October 2023 and a statement of affairs of the company as of 31st August 2023; Notice of Appointment of Administrator dated 28th September 2023; the statement of account of receipts and payments as of 12th August 2024; and its report showing that the company cannot be revived or operated as a going concern.

13. The circumstances are that the company’s directors appointed the Official Receiver as the administrator based on financial constraints and that without funding, the applicant could neither revive the company nor maintain it as a going concern. After undertaking the administration of the company, the administrator formed the opinion that the administration process, having failed to achieve its purpose, ought to be converted into a liquidation for the company to undergo an orderly winding up of its affairs and to achieve the best possible outcome for the creditors.

14. The administration has expired. The company affairs cannot stay in limbo before the liquidation petition is heard. Such vacuum should never occur lest it should defeat the whole purpose of the Insolvency laws. Accordingly, from the foregoing, I am satisfied that the applicant has made a case for appointment as a provisional liquidator of the company pending the determination of the liquidation petition.

15. In the upshot, prayers 3, 4 and 5 of the Official Receiver’s application dated 16th October 2024 are allowed in the following terms: -1. The Official Receiver is hereby appointed as Provisional Liquidator of Media Edge Interactive Limited pending the hearing and determination of the Liquidation Petition;2. The Official Receiver is granted leave to serve this Application and Petition together with any consequent order upon creditors by substituted service through advertisement in the Kenya Gazette and a newspaper of nationwide circulation.3. Costs are to be borne out of the company’s assets.

DATED, SIGNED AND DELIVERED THROUGH MICROSOFT TEAMS ONLINE APPLICATION THIS 27TH DAY OF MARCH, 2025. -------------------------F. GIKONYO MJUDGEIn the presence of: -Kyalo for Official ReceiverOkeyo for companyChumba for CreditorCA - Godfrey