[2021] KEHC 12978 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIALAND TAX DIVISION

INSOLVENCY CAUSE NO. 6 OF 2016

IN THE MATTER OF SPENCON HOLDINGS LIMITED

MUNIU THOITHI.............................................PETITIONER/APPLICANT

VERSUS

SPENCON HOLDINGS LIMITED........................................RESPONDENT

JUDGMENT

1. The petitioner herein, Muniu Thoithi, filed the petition dated 7th November 2018 seeking the following orders: -

1) THAT SPENCON HOLDINGS LIMITED be liquidated by the court under the provisions of section 424(1)(e) and 425 (1)(d) of the insolvency Act No 18 of 2015.

2) THAT MUNIU THOITHI and KURIA MUCHIRU be appointed as joint liquidators for purposes of winding up the affairs of the Company.

3) THAT the costs of this application be in the cause and be paid out of the assets of the Company.

4) THAT such other order be made as this Honourable Court may deem just and expedient in the circumstances.

2. The petition is brought pursuant to Section 424(1)(e) and 425(1)(d) of the Insolvency Act 2015.

3. The Petitioner’s case is that the Company ought to be liquidated as it has been in administration in Insolvency Cause No. INP 6 of 2016 and that the term of the administrators had expired without payment of creditors including secured creditors. It was therefore the Petitioner’s position that it is necessary, in the circumstances of the case, that the Company be properly wound up through liquidation by the court.

4. The Petitioner states that in the Joint Administrators’ Report and Statement of Proposals that were approved by the creditors, it was proposed that at the end of the Administration, the Administrators, Muniu Thoithi and Kuria Muchiru, be appointed as joint liquidators, and that any act required or authorized to be done by the Joint Liquidators be done by either or all of them.

5. The question before the court is whether the petitioner has made out a case for liquidating the Company. The petitioner invoked the provisions of Sections 424(1)(e) and 425(1)(d) of the Insolvency Act which state as follows: -

Section 424(1)-The Court may liquidate a company if it is unable to pay its debts.

Section 425(1)(d) -Aprovisional liquidator or administrator may apply to the Court for the liquidation of the Company.

Section 427(1) of the Actprovides that: -

“(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”.

6. InRe Ukwala Supermarket Limited[2019] eKLR the Court stated: -

“In any Petition brought for the purposes of liquidating a Company, the Court has the discretion once the Petitioner has established the right to bring a Petition and established the grounds alleged, to make or deny the order sought. By the same vein the Court also has an inherent jurisdiction to strike out any Petition which is bound to fail or is an abuse of the process of the Court.”

7. I have perused the documents placed before the court and I note that from the Joint Administrators Progress Report dated 6th June 2018, it is evident that the Company is unable to pay its debts. Considering that the Company has been under Administration for some time and that the Administrators have been unable to meet the objectives of Administration of achieving a better result for the Creditors, I find that the Company cannot continue to operate as a going concern.

8. I therefore find that the Petitioner has made out a case for the liquidation of the Company and I consequently allow the Petition in the following terms: -

a)Spencon Holdings Limitedbe liquidated by the Court under the provisions ofsections 424 (1) and 425 (1) (d) of the Insolvency Act No.18 of 2015.

b)Muniu ThoithiandKuria Muchiruare hereby appointed as Joint Liquidators for purposes of winding up the Company.

c) The costs of this petition be paid out of the assets of the Company.

DATED, SIGNED AND DELIVERED VIA MICROSOFT TEAMS AT NAIROBI THIS 27TH DAY OF MAY 2021 IN VIEW OF THE DECLARATION OF MEASURES RESTRICTING COURT OPERATIONS DUE TO COVID -19 PANDEMIC AND IN LIGHT OF THE DIRECTIONS ISSUED BY HIS LORDSHIP, THE CHIEF JUSTICE ON THE 17TH APRIL 2020.

W. A. OKWANY

JUDGE

In the presence of:

Mr. Yussuf Abdi for Wafula for Petitioner.

Court Assistant: Sylvia.