[2021] KEHC 8603 (KLR)
The court found that although Nakumatt Holdings Limited currently has no property available for distribution to its creditors, the administrator has demonstrated that there are outstanding debts and ongoing legal matters that require management for the benefit of the company. The court exercised its discretion under...
Source-derived case information.
- Citation
- [2021] KEHC 8603 (KLR)
- Parties
- Respondent: Nakumatt Holdings Limited; Applicant: Peter Obondo Kahi
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Insolvency Cause 10 of 2017
- Procedural Posture
- Insolvency Cause / Ruling on Administrator's Update Report and Application Under Section 600(2) of the Insolvency Act
- Outcome
- Application allowed; section 600(1) disapplied; administration order extended; administrator's report adopted.
- Judges
- B Ojoo
- Legal Topics
- Insolvency Administration, Creditor Distribution, Company Liquidation, Administrator Powers
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Nakumatt Holdings Limited
Respondent
Peter Obondo Kahi
Applicant
Procedural Posture
Insolvency Cause / Ruling on Administrator's Update Report and Application Under Section 600(2) of the Insolvency Act
Legal Issues
- 1 Whether the court should disapply section 600(1) of the Insolvency Act, 2015 in respect of Nakumatt Holdings Limited.
- 2 Whether the administration order should be extended despite the company having no property for creditor distribution.
- 3 Whether the administrator's report justifies continuation of administration rather than liquidation.
Ratio Decidendi
The court found that although Nakumatt Holdings Limited currently has no property available for distribution to its creditors, the administrator has demonstrated that there are outstanding debts and ongoing legal matters that require management for the benefit of the company. The court exercised its discretion under section 600(2) of the Insolvency Act, 2015 to disapply the requirement for the administrator to lodge a notice of no property under section 600(1). The court also extended the administration order to enable the administrator to continue managing the company’s affairs as set out in his report, rather than proceeding to liquidation. The administrator’s report was adopted by the...
Court Disposition
Application allowed; section 600(1) disapplied; administration order extended; administrator's report adopted.
Orders
- Section 600(1) of the Insolvency Act, 2015 is disapplied in respect of Nakumatt Holdings Limited.
- Section 600(6) of the Insolvency Act, 2015 is disapplied.
Full Case Text
Judgment text and source record
25 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA
NAIROBI
MILIMANI COMMERCIAL AND TAX DIVISION
INSOLVENCY CAUSE NO. 10 OF 2017
IN THE MATTER OF NAKUMATT HOLDINGS LIMITED (UNDER ADMINISTRATION)
AND
IN THE MATTER OF THE INSOLVENCY ACT NO. 18 OF 2015
AND
IN THE MATTER OF THE ADMINISTRATOR’S UPDATE REPORT
R U L I N G
1. By a ruling delivered on 22/1/2018, Ochieng J placed Nakumatt Holdings Limited (“the Company”) under administration. At the same time, Peter Obondo Kahi,was appointed the administrator of the company.
2. The said administrator has been undertaking the administration of the Company to-date. In making the Administration Order, the Court was of the view that if properly executed, the same was to be beneficial to all the creditors.
3. In accordance with the law, the Administrator has been reporting to Court on the administration whereby the Administration Order has been extended twice.
4. On 1/2/2021, the Administrator prepared an Update Report on the administration. According to that report, the outlook of the company is not rosy. Be that as it may, the Administrator has been able to raise Kshs. 5,218,737,409/-. Out of the said amount, an amount in excess of Kshs. 3. 5 billion was paid to creditors which included Kshs. 766,641,309/- paid to landlords of the various premises occupied by the company.
5. In his Report, the Administrator observed that he had formed the belief that the company has no property that might allow a distribution to its creditors. However, in line with the objectives provided under section 522 of the Act,he requested that the Court grants him his prayer made under section 600(2) of the Act.
6. Section 600 of the Insolvency Act, 2015 provides: -
“(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”.
7. In his report, the Administrator has shown that although the Company has no property that can be distributed to its creditors, there are debts out there as well as cases that require to be managed for the benefit of the Company. That in the premises, the Company should not be liquidated but let it remain as it were.
8. In this regard, I am satisfied that this is a fit case to disapply sub-section 1 of section 600 of the Act.Further, I disapply section 600(6) of the Act.The Administration Order is hereby extended to enable the Administrator to carry out the matters set out in his Report. The Court therefore adopts the Report of the Aministrator.
It is so ordered.
DATED AND DELIVERED AT NAIROBI THIS 11TH DAY OF MARCH, 2021.
A. MABEYA, FCI Arb
JUDGE