https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8015

In re Savannah Cement Limited (Insolvency Cause E173 of 2022) [2026] KEHC 8015 (KLR) (Commercial and Tax) (5 June 2026) (Ruling) Neutral citation: [2026] KEHC 8015 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Insolvency Cause E173 of 2022 A Mabeya, J June 5, 2026 IN THE MATTER OF SAVANNAH CEMENT LIMITED AND IN THE MATTER OF THE COMPANIES ACT NO. 17 OF 2015 AND IN THE AMTTER OF INSOLVENCY ACT, NO. 18 OF 2015 Between W General Trading Llc Applicant and Peter Kahi 1st Respondent Absa Bank Kenya Ltd 2nd Respondent Kcb Bank Kenya Limited 3rd Respondent Ruling 1.It is regrettable that the delivery of this ruling delayed for sometime. Directions on the Motion dated 16/10/2024 by the applicant were given on 21/11/2024. By then I had been transferred on 27/9/2024 from the Commercial Division of the High Court to Kisumu High Court commencing 1/1/2025. On the said date, the ruling on that Motion was reserved for 6/12/2024. 2.Unknown to me, when I carted away the 133 Judgments and rulings from that Station to the new Station, this file was not one of them. All the judgments and rulings for the former Station were concluded in October, 2025 not knowing that this file was not amongst them. 3.On 19/5/2026, I was notified by the Presiding Judge of the Commercial Division that the ruling in this matter was still pending. Together with that notice was the Original file for this matter. The oversight is sincerely regretted. I now proceed to consider the matter as follows:- 4.By the Motion dated 16/10/2024, the 2nd creditor sought various orders of injunction. It sought to restrain the Administrator from undertaking various steps that would result in the sale, disposal or transfer of the assets of the Company (1st applicant) pending the determination of the Motion. It also sought an order directing the Administrator to secure all the assets of the Company and to undertake a comprehensive inventory and valuation and report the same to Court. 5.There were also prayers to the effect that the call by the Administrator for expression of interest for the purchase of the business and assets of the company was inconsistent with the provisions of the law and that the same was detrimental to the interests of the applicant. 6.The Motion was predicated upon the grounds set out in the body thereof and the supporting and supplementary affidavit of Mike Suman sworn on 16/10/2024 and 13/11/2024, respectively. 7.It was the applicant’s contention that it was owed by the company US $ 4,500,000 an amount that was undisputed. While the debt remained unpaid, the 1st respondent was placed under administration by the 2nd respondent while at the same time, the 3rd respondent placed it under receivership. The 1st respondent called for the first meeting of the creditors on 17/4/2024. 8.The meeting was to consider and approve the statement of proposals prepared by the 1st respondent. The same was lodged with the Court. The applicant duly attended and voted thereat. It also lodged its claim with the 1st respondent. That in that meeting, the creditors agreed that in order to achieve the objectives of administration, the 1st respondent was to lease out the assets of the company and engage the services of professionals to conduct a valuation thereof. 9.That despite as aforesaid, the applicant was surprised to notice that the 1st respondent had published a Notice in one of the dailies calling for expression of interest for the purchase of the assets of the Company. That the process was to conclude on 31/12/2024. That the same was being undertaken in an opaque and clandestine manner. It would prejudice the unsecured creditors as no valuation of the assets of the company had been undertaken. That in the premises, the process was not being undertaken in accordance with the objectives of the administration as provided for by the law. 10.The application was opposed by the 1st and 2nd respondent. The 2nd respondent contended through its Grounds of Opposition dated 22/10/2024 that; the applicant was guilty of delay as the call for purchase of assets was made on 6/8/2024. That the proposed sale had been approved by the creditors. 11.On his part, the 1st respondent opposed the Motion vide his detailed replying affidavit sworn on 11/11/2024. He placed reliance on his affidavit of 24/4/2024 wherein he had annexed a report of the meeting held on 17/4/2024 pursuant to section 570(2) of the Insolvency Act. that the said meeting had supported his proposal to present for expression of interest in the assets of the Company for him to evaluate the one that would present the best value for all the creditors. 12.That although the applicant attended the meeting of 17/4/2026, there was no evidence that it had lodged its claim with him. He then set out what the report contained. 13.He admitted issuing the subject notice in the dailies calling for expression of interest for the purchase of the assets of the Company. That the same was in accordance with what had been ratified by the creditors in the meeting of 17/4/2026. That his actions was meant to achieve the objectives of administration and in compliance with sections 580 to 587 of the Insolvency Act. 14.He denied acting opaquely or secretively as contended by the applicant. He indicated that the applicant had on 19/4/2024 raised twelve (12) issues with him all of which he answered vide his letter of 5/5/2024. That the applicant was underserving the orders sought as it had concealed this fact. That he would in due course undertake the valuation. 15.He indicated that he was at the time evaluating the bids and the timetable set was to conclude the matter by the 17/11/2024. He urged the Court to decline the orders sought. 16.The administration of the Company has been protracted. The same has twice been suspended; on 22/11/2022 and again on 16/5/2023. Then on 21/7/2023, the Court lifted the second suspension and allowed the 1st respondent to proceed with the administration of the Company. The Court directed that all the statutory timelines that were supposed to take effect on 24/11/2022 were to commence on 21/7/2023. 17.The prayers sought in the current Motion may have the effect of paralyzing the already commenced administration. The view this Court takes is that, the Insolvency Court is not to interfere with an administration unless the same is being conducted in an oppressive manner or in a manner that is at variant with the objectives of the Law, the Insolvency Act. 18.The objectives of the Act are set out in section 522 which provides: -“(1)The objectives of the administration of a Company as the following: -a.to maintain the company as a going concern;b.to achieve a better outcome for the Company’s Creditors as a whole than would likely to be the case if the company were liquidated (without first being under administration);c.to realize the property of the Company in order to make a distribution to one or more secure or preferential creditors.” 19.In Re-Nakumatt Holdings Ltd (2017) eKLR, the Court observed: -“Administration, though now a tool intended to offer breathing space for insolvent companies whilst also putting better returns and packages for creditors, not ordinarily available in liquidation. And, unlike compromises, administration as an alternative rescue process leads to a stay of past and future legal proceedings as per section 560 and 561 of the Act hence making it cheaper for the company.…Running through Part VIII of the Insolvency Act is the recognition of the value of a business entity as a going concern as well as a juristic person. There is focus under section 522 of the Act on ‘a going concern’ and avoidance of liquidation process, for the sake of persons dealing with or who have dealt with the company. There is clear attempt to secure and balance the opposing interests of creditors, traders, employees as well as shareholders. The company is to be maintained, whilst the creditors also made happier with the hope of full recovery.” 20.From the foregoing, what the Insolvency Court has to do is to examine whether the conduct of the parties and the Administrator do conform with section 522 of the Act. An administration is not to be interfered with unless it does not conform with the objectives of the Act. This is in tandem with what the Court of Appeal held in Kenya United Steet Ltd vs KCB Ltd (2005) eKLR. In that case, it was held: -“Perhaps we need only refer to this Court’s decision in Hastings Irrigation Ltd vs Standard Chartered Bank Ltd (1987) KLR 280 in which it was held that it was not appropriate, within the above principles for the Court to interfere in the passage of the receivership unless it could be shown that the conduct of the receivers and managers was seriously oppressive or not in accordance with the recognized principles of law and of commercial practice, or that there were clear and compelling reasons to do so.” 21.The Court is aware of the case relied on by the applicant in Kimeto & Associates vs KCB Ltd & 2 Others (2021) eKLR where it was held: -“The law of insolvency took the forms of a compact to which there were three parties; the debtor, his creditors and society. In consequence insolvency proceedings, were not treated as an exclusively private matter between the debtor and his creditors, the community itself had always been recognized as having an important interest in them. In exercising their jurisdictional or discretionary power in matters insolvency, courts should consider public interest. Those were both financial and non-financial (equitable claimants). Financial claimants were the debtor, the creditors and the public while the equitable claimants were such groups as employees.The Court had a duty to interfere with a decision made by an administrator especially if the decision was to harm the interest of the public. Winding up a company affected may other entities and not just creditors and debtors.In balancing the conflicting interests in managing the corporate re-organization process, it was in the public interest to:a.Avoid premature liquidations. Restructuring schemes were a valuable mechanism to prevent them. Those entailed a temporary suspension of control or enforcement rights in order to provide an opportunity to establish the cause of the financial distress and evaluate the prospects of rehabilitation.b.Protect the claims of various stakeholders such that there was no race to enforce individual claims to the detriment of other claimants.c.Respect the statutory allocation of priority claims while allowing parties the opportunity to determine deferring their claims in anticipation of generating value for the long terms.d.Enhance access to information about the insolvent firm to allow for informed negotiation for an optimal solution.e.Generate economic activity and create a going-forward business strategy that preserved creditors, workers and firms’ in specific economic investments to maximize the wealth of the entity.” 22.In the present case, what is complained of is that the 1st respondent had put a Notice calling for expression of interest with the intention of selling the assets of the Company. There is no dispute that the 1st respondent had called the Creditor’s meeting on 17/4/2024. That meeting was in accordance with section 570(2) (a) (i) of the Insolvency Act which provides: -“As soon as practicable after the initial creditors' meeting has ended, the administrator—(a)shall report any decision at the meeting taken—(i)to the Court.” 23.In that meeting, the creditors approved the proposals which the 1st respondent lodged in this court by way of a report produced in his affidavit of 24/4/2024. That being the case, the expression of interest cannot be said to be against the objectives of the Act. The 1st respondent explained that the action was in tandem with section 522 (b) and (c) of the Act. Further, he denied that he would proceed to effect the sale before carrying out valuation of the assets. That being the case, I do not think that the actions of the 1st respondent were reprehensible to warrant the orders sought. 24.In view of the foregoing, I find the application to be without merit and dismiss the same. I will not make any order as to costs.It is so ordered. DATED AND DELIVERED AT KISUMU THIS 5TH DAY OF JUNE, 2026.A. MABEYA, FCI ArbJUDGE