[2020] KEHC 8244 (KLR)
The court found that the applicant had established the statutory threshold for bankruptcy under the Insolvency Act. The applicant demonstrated inability to pay debts exceeding Kshs 6 million, supported by evidence of business collapse following a road accident, loss of assets, and current limited means. Creditors...
Source-derived case information.
- Citation
- [2020] KEHC 8244 (KLR)
- Parties
- Applicant: Morris Gitonga Njagi Kathianyu t/a Sumo Trading Enterprises; Respondent: Jamii Distributors; Respondent: Commercial Grain Millers; Respondent: Dennis Majani
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Insolvency Cause 13 of 2018
- Procedural Posture
- Insolvency Cause / Judgment
- Outcome
- petition allowed; applicant adjudged bankrupt
- Judges
- WA Okwany
- Legal Topics
- Bankruptcy Petition, Insolvency Proceedings, Creditor Claims, Debt Enforcement
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
More case intelligence is available
Unlock the full research layer for this judgment.
Parties
Morris Gitonga Njagi Kathianyu t/a Sumo Trading Enterprises
Applicant
Jamii Distributors
Respondent
Commercial Grain Millers
Respondent
Dennis Majani
Respondent
Procedural Posture
Insolvency Cause / Judgment
Legal Issues
- 1 Whether the applicant has met the legal threshold for being declared bankrupt under the Insolvency Act.
- 2 Whether the applicant is unable to pay his debts to the creditors as claimed.
- 3 Whether the petition should be allowed and the applicant adjudged bankrupt.
Ratio Decidendi
The court found that the applicant had established the statutory threshold for bankruptcy under the Insolvency Act. The applicant demonstrated inability to pay debts exceeding Kshs 6 million, supported by evidence of business collapse following a road accident, loss of assets, and current limited means. Creditors were served and did not oppose the petition, instead confirming the applicant's indebtedness and inability to pay. The court noted the applicant's failure to settle debts even after civil jail committal in one instance. On this basis, the court adjudged the applicant bankrupt and appointed the Official Receiver as trustee, finding the petition merited and unopposed.
Court Disposition
petition allowed; applicant adjudged bankrupt
Orders
- The petitioner is adjudged bankrupt.
- The Official Receiver is appointed trustee of the petitioner.
Full Case Text
Judgment text and source record
32 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA
AT NAIROBI
COMMERCIAL AND TAX DIVISION
INSOLVENCY CAUSE NO.13 OF 2018
IN THE MATTER PF MORRIS GITONGA NJAGI KATHIANYU t/a SUMO TRADING ENTERPRISES(APPLICANT)
AND
IN THE MATTER OF THE INSOLVENCY ACT 201 LAWS OF KENYA
JUDGMENT
1. The petitioner lodged an instant Insolvency cause in 28th June 2018 on the basis that he is unable to pay his debts due to diverse legal action, lack of sufficient working capital among other reasons.
2. The suit papers were served on all the creditors who instructed their respective advocates to file Notice of Appointment and intention to appear as follows:
a) On 7th December 2018, M/S Waziri Omollo & Co. Advocates filed a Notice of Intention to Appear and affidavit of debt stating that the petitioner who trades as Sumo Traders owes Jamii Distributors Kshs 840,699. 92.
b) On 8th April 2019, M/S Yano & Co. Advocates filed Notice of Appointment in respect to Commercial Grain Millers, a creditor.
c) On 6th April 2019, M/S Risper Arunga & Co. Advocates filed a Notice of Appointment of advocates on behalf of Dennis Majani, a creditor and decree holder in Kitale CMCC204 of 2015.
3. At the hearing of the petition, the petitioner testified that following a road traffic accident that occurred in 2015 involving his lorry he lost all his business stock and his driver also died in the said accident. He stated that he was engaged in the business of selling cereals and that after the accident, his supplies, commercial Grain Millers and Jamii Distributors demand that he pays more than Kshs 3. 7 million which sum he was not able to settle thereby leading to the auction of all his shop goods.
4. In the same clear, one Gillette Traders also demanded a debt of Kshs 3. 5 million which he was also unable to pay thereby leading to the auction of his lorry Registration No. KBN 085 alongside the remaining shop goods.
5. The petitioner’s case is that he is not able to pay all the creditors as he is currently engaged in small time trade of selling vegetables, maize and wheat flour. He added that he will however be willing to settle the debts at kshs 50,000 at interval of 3 months as shown in the proposal dated 7th May 2018.
6. The petitioner submitted his certificate of compliance to the Official Receiver on 27th June 2018, the statement filed on Preliminary Examination of the debtor shows that he is worth Kshs 22,000 and that the debt is Kshs 6,104,402 as at 29th June 2018.
7. Having considered the petitioner’s testimony and the pleadings filed before this court, I find that the petitioner has established the threshold for being declared bankrupt.
8. The creditors did not oppose the petition at the hearing despite service with the hearing notices. They however confirmed, through their various affidavits, that the debtor is truly indebted to them and has been unable to settle the debts.
9. The court notes that in the case of the debt owed to Mr Dennis Majani, the petitioner was not able to pay it despite being committed to civil jail in execution of the decree issued in Kitale CMCC 204 of 2015.
10. For the foregoing reasons, I am satisfied that the petition is merited and I therefore allow it in the following terms:
a) The petitioner is adjudged bankrupt.
b) The Official Receiver is appointed a trustee of the petitioner.
c) I make no orders as to costs.
d) There be liberty to apply.
Dated, signed and delivered in open court at Nairobi this 23rd day of January 2020.
W. A. OKWANY
JUDGE
In the presence of:
Mr. Omeri for Saende for the applicant
Court Assistant – Sylvia