https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7388

**REPUBLIC OF KENYA** **IN THE HIGH COURT AT NAKURU** **INSOLVENCY PETITION E001 OF 2023** **ALI MOHSIN-AMOODY T/A** **KAPITOL ASSOCIATES..........................................................PETITIONER** **VERSUS** **KAVRINK DISTRIBUTORS LTD.....................................................DEBTOR** **JUDGMENT** 1. The Petitioner herein has filed an insolvency petition against the debtor herein dated 23rd October, 2023, seeking Orders that:- 2. ***An Order of Liquidation be issued against Kavrink Distributors Ltd.*** 3. ***The appointment of the Official Receiver as a provisional Liquidator.*** 4. ***Any other Orders that the Court may deem fit to grant*** 5. ***Costs of this Petitioner be awarded to the Petitioner*** 6. The Petitioner is identified as an accountancy firm registered under the Business Names Registration Act. 7. The Debtor is identified as Kavrink Distributors Ltd, a Kenyan limited liability company that has conducted business in Nakuru within the past year. 8. The Petitioner states that the Debtor’s nominal capital is 1,000,000 Kenyan Shillings, divided into 1,000 ordinary shares. 9. It recounts the history of the professional relationship, stating that the Debtor engaged the Petitioner in the year 2015 to provide accounting services for the period between 2019 and 2022. The Petitioner provided the said accounting services and, upon completion, it issued invoices totalling Kshs. 1,057,500.00 for payment. 10. It is alleged that despite issuing the said invoices, the Debtor has intentionally failed or refused to pay the outstanding balance from the aforementioned invoices. This failure caused the Petitioner, by the letter dated 5th October, 2022, to demand payment of the outstanding sum. Consequently, and vide the letter of 13th October, 2022, the Debtor admitted the debt and undertook to make payments by 30th October, 2022. However, no payments were made. 11. It is averred that the Petitioner does not know, nor does any person on his behalf hold any security on the Debtor's estate or any part thereof for the payment of the said sum. 12. It is stated that on 11th July, 2023, the Petitioner served upon the Debtor by hand delivery to its directors, a statutory demand requiring the Debtor to settle the sum of Kshs. 1,057,500 within 21 days. However, despite that service and lapse of 21 days, the Debtor has failed and or refused to pay the said money or made any reasonable offer to the Petitioner to secure or compound the same, and neither has the statutory demand been set aside. 13. It is thus the Petitioner's position that the Debtor is unable to pay its debts within the meaning of the Insolvency Act and thus should be declared insolvent. That the owed amount is within the prescribed amount in the Insolvency Act, 2015. 14. In the circumstances, the Petitioner states that the debtor company should be liquidated through the supervision of this Court since there is no alternative remedy for them. 15. Despite service of the Petitioner herein and the same Petitioner being advertised in the standard Newspaper on 6th June, 2024, the Debtor did not enter an appearance or oppose the Petition. **Analysis and Determination** 1. This Court has considered the grounds in support of the petition and the evidence therein. The issue for determination is whether the application meets the threshold for issuance of an insolvency Order. 2. The instances under which the Court may liquidate a Company are provided for under Section 424 (1) of the Insolvency Act, 2015, which provides that:- ***“A company may be liquidated by the Court if:*** 1. ***The company has by special resolution resolved that the company be liquidated by the Court;*** 2. ***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***](https://new.kenyalaw.org/akn/ke/act/2015/17)***(Cap. 486); and*** ***(ii).more than twelve months has elapsed since it was so registered;*** 1. ***The company does not commence its business within twelve months from its incorporation or suspends its business for a whole year;*** 2. ***Except in the case of a private company limited by shares or by guarantee, the number of members is reduced below two;*** 3. ***The company is unable to pay its debts;*** 4. ***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*** 5. ***The Court is of the opinion that it is just and equitable that the company should be liquidated.”*** (Emphasis added). 6. The Petitioner is seeking an order for liquidation to be made against the Debtor because the latter is unable to pay its debts. Section 384 of the Insolvency Act 2015 provides the circumstances in which a company may be deemed as being unable to pay its debts in the following words: ***“(1) For the purposes of this Part, a company is unable to pay its debts-*** 1. ***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;*** 2. ***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*** 3. ***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).”*** 1. The Petitioner has placed before this Court a clear evidentiary trail establishing a long-standing professional relationship. This includes a letter dated 29th December 2015, accepting the Debtor’s offer for accountancy and tax consultancy services, and a subsequent confirmation from the Debtor on 5th January, 2016. 2. The financial obligations arising from this engagement are documented through a series of fee notes issued between January 2019 and June 2022, totalling Kshs. 1,057,500. This cumulative debt was formally demanded on 5th October 2022, and a comprehensive statement of account was exhibited to the Court. 3. The record further indicates that by a letter dated 13th October 2022, the Debtor expressly acknowledged the debt and sought the Petitioner’s indulgence, promising to settle the full amount by the end of that month. However, that promise remains unfulfilled. 4. Despite a formal demand from the firm of Kimani Muriithi on 11th July 2023, and the subsequent service of a Statutory Demand, the Debtor has failed to comply or demonstrate any realistic ability to pay. The Petitioner has further submitted that there are no identifiable attachable assets belonging to the Debtor to satisfy the claim. 5. Consequently, it is clear to this Court that the Petitioner holds a valid, unsatisfied debt. The Debtor's persistent failure to settle the account, coupled with the lack of attachable assets, provides sufficient evidence of insolvency. As the Petitioner has satisfied all prerequisites under the Insolvency Act of 2015, and there being no compelling reason to stay these proceedings, the Court finds the Petition dated 23rd October, 2023 to be merited. 6. In conclusion, the Petition is hereby allowed in the following terms:- 7. **That Kavrink Distributors Limited is declared insolvent and is hereby liquidated under the provisions of Section 424 (1)(e) of the**[**Insolvency Act**](https://new.kenyalaw.org/akn/ke/act/2015/18)**2015.** 8. **The Official Receiver (or a person nominated by the Official Receiver) is hereby appointed as the Liquidator of the Respondent’s properties.** 9. **Costs of the Petition are awarded to the Petitioner and shall also be borne out of the Respondent’s assets.** **Dated, signed, and delivered at Nakuru, this 25th Day of May, 2026.** **PATRICIA GICHOH** **JUDGE** **In the presence of:** **Mr. Richu h/b for Mr. Muriithi for the Petitioner** **N/A for the Debtor/ Respondent** **Erickson, Court Assistant**