Insolvency Act

Court may annul a bankruptcy order on specified grounds; the Official Receiver or any person with a legitimate interest may apply to the Court.

The Official Receiver may annul a bankruptcy order in specified circumstances and only if the order was made on a debtor's application.

When a bankruptcy order is annulled, property that had vested in the Official Receiver (and which was not sold or otherwise disposed of) revests in the bankrupt without needing a transfer.

Defines "confirming resolution" and "preliminary resolution" as special resolutions passed by a bankrupt's creditors in accordance with section 276.

Creditors of a bankrupt may accept a composition to satisfy their debts by passing a special resolution; if there are multiple classes of creditors one class's delay or failure to accept does not stop other classes from accepting.

A composition becomes effective only if creditors pass a confirming special resolution; creditors may vary terms in that confirming resolution provided the variations are at least as favourable, and certain small‑debt creditors are excluded from counting toward the majority.

If members of a partnership are adjudged bankrupt, the joint creditors and each class of separate creditors may make separate compositions; where that applies, the majorities required to confirm are the separate majorities of each class, although otherwise joint and separate creditors are counted as one body for voting.

A composition is not binding until approved by the Court; when approved it binds all creditors for provable debts, and the Court may refuse or must not approve in specified circumstances; the Court's approval is conclusive on validity.

When a creditor's application for a bankruptcy order relates to more than one debtor, the Court may refuse to make the order in respect of one or some of the debtors without affecting the application for the remaining debtor(s).

The bankrupt or the Official Receiver may apply to the Court to approve the composition; the Court may hear the application only if satisfied that each creditor who submitted a claim was given notice; the Court may receive and consider the Official Receiver's report and hear objections; when approving the composition the Court may correct formal errors but may not alter the composition's substance.

The bankrupt and the Official Receiver must execute a deed of composition to put the proposal into effect, and the Official Receiver must apply to the Court for confirmation of the deed.

A deed of composition binds all the creditors in all respects as if they had each executed the deed.

A bankrupt must remain liable for unpaid balances of certain debts under specified conditions.

Some steps in approving a composition and executing its deed must occur within specific short time limits: the Court must approve the composition within one month after a confirming resolution is passed; the bankrupt must execute the deed within seven days after Court approval (or within any additional time the Court allows).

After the Court approves a composition, the deed is to be recorded in the Court registry, may be delivered to the Official Receiver on request, any vesting in the deed must be registered or recorded in the appropriate public registry or office, and the deed is then returned to the Registrar of the Court; property (or so much of it under the control of the Official Receiver) revests in the bankrupt or the bankruptcy trustee.

The Court may, on application by eligible applicants, order payment enforcement or enforcement of composition provisions.

After the preliminary resolution is passed, the Court retains exclusive jurisdiction over the composition and deed of composition and their administration, and may summon and examine the bankrupt and witnesses and may make appropriate orders, including as to costs.

The law and practice in bankruptcy apply to a deed of composition.

A bankrupt commits an offence if, when contracting a debt, the bankrupt lacked capacity to pay that debt when due and to pay all other debts; examples include gambling, rash speculation, unjustifiable spending or living extravagantly; it is a defence to prove no intention to defraud.

The Court has the power to make various orders (including staying bankruptcy applications and making orders as to costs), and the debtor, the bankruptcy trustee or any creditor may apply for an order under this section.

Section 290 makes it an offence for a bankrupt to transfer, give charges over, conceal, or fraudulently move the bankrupt's property (with specific temporal and value conditions) and allows the bankrupt to raise as a defence that there was no intention to defraud.

A bankrupt commits an offence if, within the three years before the bankruptcy order, they make or produce to a material person a written statement of their financial position that is false or misleading; it is a defence to prove there was no intention to deceive.

It is an offence for a bankrupt to conceal, destroy, falsify, make false entries in, fraudulently alter or omit, or prevent production of, documents relating to their conduct, affairs or property; a defence exists if the bankrupt proves lack of intent to conceal or defeat the law.

A bankrupt commits an offence if they attempt to account for any part of their property by means of fictitious losses or expenses within twelve months before the bankruptcy application or at any time after the application is made.

A bankrupt commits offences for obtaining property on credit and not paying, making false representations or fraudulent acts (including false statements of finances or false pretence of business), and for pawning, mortgaging or disposing of unpaid-for property outside the ordinary course of business within three years before or any time after a bankruptcy application; it is a defence to show lack of intent to defraud.

Section 295 concerns offences in relation to obtaining consent of creditors and making a false representation.

Bankrupts must not leave, attempt to leave, or prepare to leave Kenya with property (including attempts) that should be distributed to creditors worth one hundred thousand shillings or more; lack of intent to defraud is a defence.

A bankrupt found guilty of an offence under sections 289–296 may be punished on conviction by a fine up to two million shillings, by imprisonment up to five years, or by both.

A bankrupt who fails to keep and preserve proper records of transactions (where they could reasonably be expected to have done so) commits an offence.

A bankrupt who intentionally conceals the true state of their affairs by failing to keep proper records commits an offence.

The Court may stay a bankruptcy application while questions about the underlying debt are decided, and may (as a condition of staying) require the debtor to give security to the creditor for any debt and costs that may be established.

For purposes of sections 298 and 299, a bankrupt is presumed (absent contrary evidence) not to have kept proper records of transactions if, while engaged in trade or business, the bankrupt has not kept the required records.

A bankrupt must not act as a director or partner and must comply with section 152; breaching these is an offence.

Section 302 makes various acts by a bankrupt offences, including making materially false statements to the bankruptcy trustee or Official Receiver; failing to disclose lodged false proofs; giving undue preference within two years before adjudication while insolvent; obtaining credit of one hundred thousand shillings or more; and incurring liabilities of one hundred thousand shillings or more to obtain credit for another.

The Court may permit one creditor to be substituted for another.

A debtor may apply to the Court for a bankruptcy order only if the debtor cannot pay their debts; the Court may reject the debtor's financial statement if it is incorrect or incomplete and may decline to hear the application if the publication requirements in subsection (4) are not satisfied.

The Court may appoint an authorised insolvency practitioner to prepare a report under section 34 and, subject to Division 1 of Part IV, to supervise a voluntary arrangement; appointment is conditioned on the tests in subsections (1)(a)–(d).

The insolvency practitioner must inquire into the debtor's financial affairs, submit a report to the Court within any period the Court specifies stating whether the debtor is willing to propose a voluntary arrangement, may propose convening a creditors' meeting and (unless the Court otherwise directs) must convene it if proposed; the practitioner may make an interim order under section 306 to facilitate consideration of the proposal or, if inappropriate, make a bankruptcy order.

Two or more debtors may file a joint application.

After a creditor applies, a creditor may ask the Court to appoint an authorised insolvency practitioner as interim trustee over all or part of the debtor’s property; the Court may make that order before a bankruptcy order is made and may authorise the trustee to take control of property, sell perishable or rapidly devaluing property, and control affairs or property as directed, subject to limits when controlling the debtor's business; the Official Receiver and authorised insolvency practitioners are suitably qualified; “debtor's business” includes any business in which the debtor has a financial interest.

The Court may make additional orders under section 36 after an interim trustee is appointed, on an application under subsection (2).

The appointment of an interim trustee must be published as described in subsection (1), and the appointment does not take effect until subsection (1) has been complied with.

Creditors must not issue or continue execution processes after publication of notice appointing an interim trustee; they may apply to the Court, which may order otherwise; actions contrary to (1) or (2) are void.

Section 40. Effect of staying execution

Bankruptcy begins at the date and time when a bankruptcy order is made in respect of the debtor.

When a bankruptcy order is made the Court must record the date and time; if the debtor is adjudged bankrupt on the debtor's own application, the Official Receiver must record on that application the date and time when the debtor made the application.

The Registrar of the Court must forward a copy of the bankruptcy order to the Official Receiver as soon as practicable after the Court makes the order.

The Official Receiver must, as soon as practicable after receiving a copy of a bankruptcy order, nominate a qualified person to be bankruptcy trustee for the debtor's property.

If it is doubtful whether an act or transaction occurred before or after bankruptcy, it is presumed to have been done after the bankruptcy until the contrary is proved.

A bankruptcy order becomes binding on all persons when the time for appealing it expires.

The Official Receiver must establish and maintain a public register of undischarged and discharged bankrupts and must maintain that register in accordance with Division 2 of Part XIl.

When bankruptcy commences, proceedings to recover the bankrupt's debts are stayed, the bankrupt's property vests in the Official Receiver, the Court may allow certain pre‑existing proceedings to continue on application, and the Court may order the Official Receiver not to advertise the bankruptcy order in specified circumstances.

The Official Receiver must serve a notice on a bankrupt requiring the bankrupt to lodge a statement of their financial position; the notice must be served at the bankrupt's address given in the bankruptcy application or the bankrupt's last known address, and the notice specifies a deadline for lodging the statement.

A bankrupt must lodge a statement of financial position with the bankruptcy trustee listing assets, debts, creditors and securities; they may later lodge amendments; failure is an offence with fines or imprisonment.

Creditors are entitled to inspect and to take copies of the bankrupt's statement of financial position; a person who falsely claims to be a creditor is in contempt of Court.

The Official Receiver must convene the first meeting of the bankrupt's creditors within the prescribed period, subject to subsection (5), unless the Official Receiver decides under section 53 not to hold it.

The Official Receiver has the power to decide not to convene the first creditors' meeting if the Receiver has sent the required notice and has not, within fourteen days after sending it, received a request from a creditor; the notice should include the bankrupt's assets and liabilities, the likely result of the bankruptcy, and other relevant matters.

Lists documents referred to in subsection (1) and states exceptions and effect of failure to send or receive them.

Creditors may request the Official Receiver to convene a first meeting of creditors if the Official Receiver has not convened or has decided not to convene one; the Official Receiver must convene a meeting as soon as practicable after such a request if it appears to have concurrence of not less than one-quarter in value of the bankrupt's creditors.

After a bankruptcy order is advertised or notice given by the Official Receiver, a creditor must not seize or sell the bankrupt's property by distress for rent; if distress had already begun the creditor may continue only with the Court's approval and subject to conditions the Court specifies.

If a person adjudged bankrupt dies after the bankruptcy order, the bankruptcy continues as if the person were still alive.

Describes creditors' role at creditors' meetings.

Section 59 specifies who has the power to appoint a bankruptcy trustee (a creditors' meeting, the Official Receiver under sections 60 or 61, or the Court under section 62) and sets conditions for appointments including that an appointee must accept.

If a creditors' meeting under section 52 or 55 is held and no bankruptcy trustee is appointed, the Official Receiver must decide if an appointment is needed; if so the Official Receiver must appoint one; if not the Official Receiver must notify the Court and on giving that notice becomes bankruptcy trustee for the bankrupt's estate.

The Official Receiver may appoint another qualified person as bankruptcy trustee, and must notify the Court immediately after doing so.

When a bankruptcy order is made and there is a supervisor of an approved summary instalment order, the Court may appoint that supervisor as bankruptcy trustee; if such appointment is made the Official Receiver is not required to decide under section 60(1) whether to convene a creditors' meeting; section 61(4) and (5) apply to a trustee appointed under this section.

Section 63. Powers of bankruptcy trustee Section 63(1)(a) with the approval of the creditor's committee, exercise of any of the powers specified in Part 1 of the First Schedule; and Section 63(1)(b) without that approval, exercise any of

The bankruptcy trustee must not sell a bankrupt's property before the first creditors' meeting, except in limited subsection (1) cases; and must ensure proceeds from any such sale are invested in accordance with section 66.

A purchaser's title to property bought from a bankruptcy trustee under a trustee's power of sale may not be questioned except for fraud.

Bankruptcy trustees must open and maintain a bank account for each estate and pay into it money they receive; they may invest surplus estate money as prescribed, and must credit any investment income to the estate.

A bankruptcy trustee may assign a right to sue conferred by this Act if the Court has first approved it.

Court may allow the bankruptcy trustee to bring proceedings in the names of the trustee and the bankrupt's partner; the trustee must serve notice on the partner, who may oppose; the partner is to be paid or indemnified, and any release by the partner of the relevant debt is void.

Apprentices or articled clerks (or their agents) may request discharge of their indenture or transfer it when their employer is adjudged bankrupt; the bankruptcy trustee or Official Receiver must discharge the indenture if satisfied it is in the apprentice's or clerk's interests and may pay reasonable fees from the bankrupt's estate or transfer the indenture; dissatisfied persons may apply to Court.

A bankruptcy trustee may apply to the Court for directions on any question about how this Part operates.

A person (including the bankrupt or a creditor) whose interests are detrimentally affected by an applicable act or decision may apply to the Court to reverse or modify that act or decision.

Bankruptcy trustees must keep proper accounting records for each bankruptcy and, if the Court requires, must verify them by statutory declaration; creditors or other interested persons may inspect those records.

The bankruptcy trustee must publish the final statement of receipts and payments in the prescribed form and advertise that it has been published.

The Auditor-General may audit certain bankruptcy trustee records when the Official Receiver is the bankruptcy trustee.

Section 75 sets out how a bankruptcy trustee may be removed or vacate office, including removal by Court order or a specially convened creditors' meeting; trustees who cease to be authorised vacate office; and trustees (not Official Receiver) may resign with at least thirty days' notice to the Court.

The Official Receiver is released from duties as bankruptcy trustee when (1) the Court appoints a replacement, (2) creditors appoint a replacement and the Receiver notifies the Court, or (3) the Receiver notifies the Cabinet Secretary that administration is practically complete and the Cabinet Secretary determines the release time; on release the Official Receiver is discharged from liability for acts or omissions in administering the bankrupt’s estate.

A bankruptcy trustee who is not the Official Receiver is released from their obligations in the circumstances and at the times described in this section; once released they are discharged from liability for acts or omissions in administering the bankrupt’s estate from the specified time.

When there is a vacancy in the office of bankruptcy trustee the Official Receiver holds the office until filled; the Official Receiver may convene a creditors' meeting to fill the vacancy; any creditor may request a meeting if the Official Receiver has not convened one; if a request appears to have the concurrence of at least one-quarter in value of creditors, the Official Receiver must convene it.

A person dissatisfied with a bankruptcy trustee's act, omission or decision may apply to the Court, which may confirm, reverse or modify the act, give directions to the trustee, or make other orders and give directions on matters relating to the bankrupt's estate.

Certain persons (Official Receiver, Attorney-General, a creditor, or the bankrupt) may make applications under section 80; the Court must approve applications made by the bankrupt or made after the trustee's release; if the Court is satisfied that the bankrupt's estate sustained loss due to the trustee's misfeasance or breach of duty, the Court shall make one or both orders directing the trustee to repay or to be disqualified.

Names kinds of creditors' meetings and mentions the first meeting of creditors.

The bankruptcy trustee may convene further creditors' meetings and must advertise their time, date and place as prescribed; a meeting may be convened on creditor request supported by at least one-quarter in number and value of proved creditors.

A creditors' meeting and any resolution passed there is valid even if some creditors did not receive notice, unless the Court orders otherwise.

Section 84 defines who is the Chairperson of a creditors' meeting, allows creditors to appoint a Chairperson if the trustee (or appointee) is absent provided the person can vote, and allows an appointed or elected Chairperson to administer oaths.

The Chairperson of a creditors' meeting may adjourn the meeting.

Bankruptcy trustee must report to creditors' meeting on the administration of the bankrupt's estate.

Specifies the ways people may attend a creditors' meeting: physically present at the appointed time/place; by audio or audio-visual link if the bankruptcy trustee makes it available so participants can hear and be heard; by postal or electronic vote under section 94; or by proxy on any resolution.

Bankrupt persons must attend creditors' meetings if required by the bankruptcy trustee, may be questioned about their property/conduct, must sign statements of evidence if required, and failing without reasonable excuse is an offence punishable by a fine not exceeding two hundred thousand shillings.

Attendance at creditors' meeting by non-creditors.

The bankruptcy trustee must ensure minutes are kept of each creditors' meeting; minutes are invalid unless signed by the bankruptcy trustee or the Chairperson; the trustee may record the meeting only with the consent of each person attending.

For a creditors' meeting to be valid, the bankruptcy trustee (or their representative) and a creditor (or their representative) must attend; if they do not attend the meeting lapses and the bankruptcy trustee may convene another meeting.

Lists the persons who may represent creditors and bankrupts at a creditors' meeting, including advocates, accountants, accounting record-keepers, authorised agents, those approved by the bankruptcy trustee, partners for partnerships, officers for State or public bodies, and company directors/chief executives/secretaries or their written-authorised persons.

Ordinary resolutions require a majority in number and value of attending and voting creditors or their proxies; special resolutions require three-quarters in number and value. The bankruptcy trustee may admit or reject proofs of debt; the meeting Chairperson may adjourn to admit or reject proofs; a person whose debt is admitted is a creditor; the Court may order remedies if a substantiated allegation of conflict or unfairness is made.

Postal votes and electronic votes (if permitted by the voting paper) may be counted for resolutions; such votes can be counted only if they reach the bankruptcy trustee at least seventy-two hours before the meeting, and voting papers must accompany the meeting notice with instructions to return them at least two working days before the meeting.

Creditors of the bankrupt who are entitled to vote, or their representatives, may vote at a creditors' meeting.

Secured creditor may vote at creditors' meeting.

A creditor under a bill of exchange or promissory note may (a) treat a qualifying liability as a charge, (b) estimate the value of that charge, (c) deduct the charge's value from the creditor's claim for voting purposes (but not for distribution), and (d) show the bill or note to the bankruptcy trustee when required.

The provision lists persons disqualified from voting at a creditor's meeting (business partner, employer or employee of that person; a creditor represented by that person; and business partner/employer/employee of such a creditor) and states that a vote cast in contravention of paragraph (1) is invalid.

If a partner who is jointly indebted becomes bankrupt, the creditor may prove the debt to enable voting at creditors' meetings and is entitled to vote.

Defines terms used in Division 1: "debtor", "interim order", "proposal", "provisional supervisor", "supervisor", and "voluntary arrangement", and states when a voluntary arrangement approved under section 309 ends prematurely under section 312(2)(b).

Section 304 sets when an application for an interim order may be made (when the debtor intends to propose a composition or scheme) and requires the debtor to ensure the proposal names a supervisor; only an authorised insolvency practitioner may be supervisor; who may make the application is specified and special notice requirements apply for undischarged bankrupt debtors.

A court where proceedings are pending against a debtor may, if an application under section 304 has been made, either stay those proceedings or allow them to continue on terms it considers appropriate.

The Court must make an interim order if it is satisfied that doing so would facilitate consideration and implementation of the debtor's proposal.

The provisional supervisor must submit a report on the debtor's proposal describing specified matters; the Court has procedures to replace the supervisor or extend interim orders where the report is not submitted or further time is needed.

Sets out what must be included in a debtor's proposal and requires the provisional supervisor to report and, if they consider a creditors' meeting appropriate, to fix the meeting date, time and place; the Court may replace or extend the supervisor's duties in specified circumstances.

If a report under section 307 or 308 recommends convening a creditors' meeting, the provisional supervisor must convene that meeting for the time, date and place proposed in the supervisor's report unless the Court directs otherwise; the convenor must summon every creditor whose claim and address is known and specified classes of creditors described in subsections (3)(a) and (3)(b).

Section 310 sets rules for conducting a creditors' meeting: creditors present must elect a Chairperson; the Chairperson must divide voters into secured, preferential and unsecured groups, report the result to the Court and notify meeting recipients; the meeting must follow insolvency regulations and may resolve to adjourn.

A debtor or any creditor who attended (or was entitled to attend) the creditors' meeting may apply to the Court for an order under subsection (7) before the application deadline; the Court may extend that deadline and may make an order approving the proposal or any other appropriate order. Creditors and the debtor are entitled to appear and be heard at the hearing even if not the applicant.

When the Court approves a debtor's proposal it takes effect as a voluntary arrangement the day after approval or on a later date specified by the order.

The Court must annul a bankruptcy order on hearing an application made under subsection (1), subject to subsection (2), unless there are compelling reasons not to do so; the Court may also give directions about the bankruptcy and estate administration when making that order.

Gives persons specified in the section a right to seek orders from the Court to challenge approvals or irregularities arising from a creditors’ meeting.

The supervisor must implement and supervise voluntary arrangements under sections 312 or 319 and has necessary powers; dissatisfied parties may apply to the Court which may confirm, quash or modify supervisor actions and give directions, and the Court may appoint or replace supervisors in certain circumstances.

The Official Receiver may, if satisfied the debtor's proposal has a reasonable prospect of approval and implementation, make arrangements to invite creditors to decide whether to approve the proposal.

The Official Receiver must report to the Court, as soon reasonably practicable after the arrangements under section 316 have been implemented, whether the proposed voluntary arrangement has been approved or rejected.

If the Official Receiver reports to the Court that the debtor's proposal has been approved, the proposal takes effect as a voluntary arrangement.

The Official Receiver may apply to the Court to annul a bankruptcy order for an undischarged bankrupt; the Court must annul the order unless there are compelling reasons not to do so, and the Court may give directions to facilitate a voluntary arrangement.

Certain persons (the debtor, persons entitled to participate under section 316(3), the bankruptcy trustee if any, and the Official Receiver) may apply to revoke an expedited voluntary arrangement; generally applications must be made within 30 days from the date the Official Receiver reports to the Court, except a creditor unaware of the arrangements may apply within 30 days from when they first became aware.

It is an offence for a person to knowingly make false or misleading representations, or fraudulently act or omit to act, for the purpose of obtaining creditors' approval; conviction may lead to a fine up to two million shillings or imprisonment up to five years, or both.

Supervisors of a voluntary arrangement must report suspected offences to the Attorney-General and the Director of Public Prosecutions, comply with requests for information or documents under the debtor's control, and assist prosecutions; the Attorney-General or Director may apply to court if the supervisor fails to comply, and the Court may order compliance.

Asks what a "summary instalment order" is.

A debtor may apply for a summary instalment order.

The Official Receiver may refuse a summary instalment order application that does not comply with subsection (2); subsection (2) lists particulars the debtor must include in the application.

The Official Receiver may make a summary instalment order if specified debt and inability-to-pay conditions are met; must not do so without giving debtor and creditors an opportunity to make representations; supervisor must refer and the Official Receiver must cancel if proved debts exceed the subsection (1)(a) amount.

Official Receiver has the power to make additional orders about a debtor's future earnings or income.

The Official Receiver may dispense with appointing a supervisor; the Official Receiver may require a supervisor to provide a bond, and if requiring a bond the Official Receiver must specify the bond amount and the person to receive it.

The supervisor must supervise the debtor's compliance with the summary instalment order and other orders under section 327, and may charge the debtor remuneration not exceeding rates fixed in the insolvency regulations.

The Official Receiver may issue a notice requiring a supervisor or past supervisor to provide specified documents about the debtor within not less than seven days; failure to comply is an offence punishable by a fine up to two hundred and fifty thousand shillings.

If the Official Receiver considers the supervisor has failed to supervise the debtor's compliance adequately, the Official Receiver must terminate that supervisor's appointment and appoint a replacement supervisor.

The period for payment of instalments is three years.

The debtor, any creditor or the supervisor may apply in writing at any time to the Official Receiver to vary or discharge a summary instalment order; after considering such an application the Official Receiver must vary or discharge the order as the Official Receiver considers appropriate.

Debtor must pay all instalments due under a summary instalment as prescribed by the insolvency regulations; the Official Receiver must cancel a summary instalments order if satisfied on reasonable grounds that the debtor failed to comply with that payment obligation.

While a summary instalment order is in effect, the Official Receiver can approve a creditor to begin or continue proceedings and may impose fair and reasonable conditions on such approval.

A supervisor must give notice of a summary instalment order to creditors who are known to the supervisor, whose name is shown on the debtor's application, or who have proved a debt under section 340.

The Official Receiver must establish and maintain a public register of persons subject to current summary instalment orders and must maintain that register in accordance with Division 2 of Part XII.

A summary instalment order stops being current when it has been discharged or when all instalments required by the order have been paid in accordance with the order.

Creditors who prove their debt to the supervisor can be included in the debtor's estate administration under the summary instalment order; creditors may object to acceptance decisions, the Official Receiver can direct on objections, persons becoming creditors after the order may elect inclusion and may receive dividends only after earlier included creditors have been paid.

If the supervisor (using power from a summary instalment order) directs the debtor's employer to pay the debtor's earnings, the employer must pay those earnings (or part) to the supervisor; such payments are recoverable as a debt from the employer and the supervisor's receipt discharges the employer. Section 340(3) provides qualifying circumstances including consent of the supervisor or Official Receiver and payment to a person with a better legal claim.

When a debtor fails to make a payment under a summary instalment order, the supervisor must give notice of the failure to the Official Receiver.

It is an offence for a debtor subject to a summary instalment order to obtain credit, incur liability, or enter credit purchase transactions of one hundred thousand shillings or more.

This Division prescribes a procedure for dealing with a debtor who has no realisable assets.

A debtor who meets section 345's criteria may apply to the Official Receiver for entry to the no-asset procedure; the application must include prescribed forms and a statement of financial position, and the Official Receiver may reject it if, in their opinion, it is incorrect or incomplete.

Lists the criteria a natural person (debtor) must meet to enter the no-asset bankruptcy procedure, including having no realisable assets, not having been previously admitted to the no-asset procedure or adjudged bankrupt, having total debts between one hundred thousand and four million shillings, and lacking means to repay those debts.

A debtor is disqualified from entry to the no-asset procedure if the debtor has concealed assets intending to defraud creditors.

The Official Receiver must send each known creditor a summary of the debtor's assets and liabilities after receiving an application from a debtor for entry to the no-asset procedure.

Debtors who have applied for the no-asset procedure must inform credit providers before obtaining credit over ten thousand shillings; failing to do so is an offence punishable by a fine up to five hundred thousand shillings or imprisonment up to six months, or both.

A debtor is admitted to the no-asset procedure when the Official Receiver sends the debtor a prescribed notice; the Official Receiver must also notify known creditors and publish notice as prescribed.

The Official Receiver must establish and keep a public register of persons admitted to the no-asset procedure and of persons discharged from it, and must maintain that register in accordance with Division 2 of Part XI.

Creditors may not enforce debts of a debtor who has been admitted to the no-asset procedure.

Debtors in the no-asset procedure must assist the Official Receiver, notify changes enabling repayment, and must not obtain credit over 100,000 shillings without informing the credit provider.

It is an offence for a person admitted to the no-asset procedure to obtain credit, incur liability to obtain credit for another, or enter a credit purchase transaction when the sums involved are one hundred thousand shillings or more; conviction may lead to a fine up to one million shillings, imprisonment up to twelve months, or both.

The Official Receiver may terminate a debtor's participation in the no-asset procedure under section 355.

The Official Receiver may terminate a debtor's no-asset procedure in specified circumstances and must notify known creditors as soon as practicable after termination.

The Official Receiver may apply to the Court for an order to preserve a debtor's assets when the debtor has concealed assets or misled the Official Receiver; the Court may make such a preservation order and may set its terms.

If a debtor's participation in the no-asset procedure ends, the debtor becomes liable to pay any penalties and interest that may have accrued.

A creditor may apply to the Official Receiver to end a debtor's participation in the no-asset procedure if the debtor did not meet the admission criteria.

A debtor is automatically discharged from the no-asset procedure after twelve months from admission, unless a deferral notice specifies a different discharge date; the Official Receiver must specify that alternative date in the deferral notice and must send copies of the deferral notice to known creditors.

When a debtor enters the no-asset procedure their debts that became unenforceable are cancelled and the debtor is no longer liable to pay them (including penalties and interest), except for debts involving fraud or fraudulent forbearance; such excluded debts become enforceable on discharge under section 359 and the debtor is liable for penalties and interest that may have accrued.

Discharge does not release debtor's business partners and others.

Definition: "a newspaper circulating in the area in which the company carries on business."

Directors may propose a voluntary arrangement and must provide for a supervisor to be appointed; only an authorised insolvency practitioner may act as that supervisor, and if the company is under administration or in liquidation the appointment is by the administrator or liquidator respectively.

If a provisional supervisor (who is not the company's liquidator or administrator) handles a director's proposal and no moratorium is being sought, the provisional supervisor must produce a report stating specified opinions and particulars; if the supervisor fails or dies the proposers must submit the report (or the proposers or supervisor may do so if it is impracticable for the supervisor to act); and the Court may order replacement of the provisional supervisor on an application under subsection (4).

The provisional supervisor must convene the company and creditors' meetings described in section 626(2) as required by whether they are or are not the liquidator or administrator; directors may give notice of proposal modifications at least seven days before the meetings.

Meetings convened under section 627 decide whether to approve the directors' proposal (with or without modifications). At the start of a creditors' meeting the meeting must elect one of their number as Chairperson. At the first creditors' meeting the Chairperson must divide creditors into three voting groups: secured, preferential and unsecured. A modification to the directors' proposal can only be approved with the company's consent and may provide for replacing the provisional supervisor with another authorised insolvency practitioner. Secured creditors' relative rights as to assets and proceeds are protected (consent or position no worse than in liquidation with specified sub-conditions). Meetings are to be conducted in accordance with any rules prescribed by the insolvency regulations, may be adjourned, and the result of a meeting must be reported to the Court and those who attended (and known entitled non-attendees) must be given notice immediately after reporting.

Rules for approval of a directors' proposal at company and creditors' meetings, rights to apply to Court and to be heard, Court powers, and the thirty‑day deadline for applications.

A directors' proposal becomes a company voluntary arrangement on the day after Court approval (or a later date specified), and on that event the provisional supervisor becomes the supervisor unless replaced.

Certain specified persons may apply to the Court to challenge decisions approving a voluntary arrangement.

Company officers must not make false representations or fraudulently do or omit acts to obtain members' or creditors' approval of a voluntary arrangement proposal.

When a voluntary arrangement takes effect the supervisor must implement the arrangement and monitor compliance; creditors or any other person dissatisfied with a supervisor's act, omission or decision may apply to the Court which may quash, modify or give directions and, if not satisfied, shall confirm the act; the supervisor may apply to the Court for liquidation or appointment of an administrator.

The Director of Public Prosecutions must investigate reports about company matters; persons must produce documents and assist the Director for such investigations; supervisors, officers and agents must assist prosecutions when proceedings begin.

When voluntary arrangement comes to an end prematurely

Defines terms used in Part 2, including "agreement", "beginning of the moratorium", "lodgement date", "monitor", "moratorium" and "person".

Part 2 applies to companies eligible for a moratorium.

Eligible companies must comply with any requirements prescribed by the insolvency regulations.

Companies licensed under section 5 of the Banking Act to carry on banking, financial or mortgage finance business are ineligible to obtain a moratorium.

Lists categories of companies that are ineligible to obtain a moratorium (companies under administration; in liquidation; with an existing voluntary arrangement; with a provisional liquidator; where an administrator under section 541 held office during the prior twelve months; where a prior voluntary arrangement ended prematurely and an order under section 630(5)(a) was made within the prior twelve months; companies with an administrative receiver).

A company is treated as ineligible under section 638 if, on the lodgement date, it is a project company of a public-private partnership project that includes step-in rights.

Section 642 has been repealed.

Directors must submit the documents required under subsection (2) to the monitor, and if the monitor requests, must provide further information; the monitor may rely on those documents unless it has reason to doubt their accuracy.

Directors must provide the documents and statements listed in Section 644(1) to obtain a moratorium, including eligibility statement, monitor's consent, prospects of achieving aims, funds availability during the moratorium, and other financial information specified by regulations.

A moratorium begins when the documents specified in section 644(1) are lodged with the Court and generally ends after thirty days from and including the day it takes effect, subject to extension under section 669; if the provisional supervisor fails to convene either meeting within the required period the moratorium ends at the end of the last day of that period, and a moratorium extended under section 669 ends at the end of the day to which it is extended.

When a moratorium takes effect for a company, the company's directors must immediately notify the monitor.

A monitor must publish and notify that a moratorium has taken effect (publication in Gazette, newspapers, website if any), notify certain creditors, and lodge a copy with the Registrar; failure without reasonable excuse is an offence with fines.

A monitor must give notice that a moratorium has ended by publishing in the Gazette (and where specified, newspapers or the company's website), notify certain creditors, and lodge a copy with the Registrar; failure without reasonable excuse is an offence with fines up to 200,000 shillings and further daily fines up to 20,000 shillings.

During the moratorium certain insolvency steps are restricted, including that the Court may not make an order for the liquidation of the company, and when the Court gives approval it may impose conditions.

Section 650 deleted by ActNo. 13 of 2017, Sch.

Security given by a company during a moratorium may be enforced only if there were reasonable grounds to believe the security would benefit the company at that time.

Sections 653 to 657 apply to a company in respect of which a moratorium currently has effect.

Company invoices and other documents must state the monitor's name and include a statement that the moratorium has effect in respect of the company.

Companies under a moratorium must not obtain credit exceeding twenty-five thousand shillings from persons not informed of the moratorium; breaching this is an offence for the company and defaulting officers, with fines and possible imprisonment.

Companies may dispose of property only where the statutory conditions are met; disposals in contravention are offences for the company and defaulting officers with fines and possible imprisonment for officers.

A company must not make payments of debts and other liabilities except where there are reasonable grounds that the payment will benefit the company and the payment is approved by the monitor, or where required by section 657(6) or made in accordance with a Court order.

A company may transfer or dispose of secured property or goods under credit purchase if the security-holder or owner consents or the Court approves; if the Court approves, directors must file the order with the Registrar within 14 days, and failure to do so is an offence with fines.

During the moratorium the monitor must monitor the company's activities to see if it will have sufficient funds; directors must provide information to the monitor on request; the monitor may rely on that information unless it has reason to doubt it; directors who fail to provide information commit an offence liable to fines.

A monitor may withdraw consent to act for specified reasons; if consent is withdrawn the moratorium ends; the monitor must notify the company and known creditors and lodge the notice with the Registrar; failing to give the notice is an offence with fines.

Creditors, company directors, members or other persons affected by a moratorium who are dissatisfied with the monitor's acts, omissions or decisions may apply to the Court for an order under subsection (3).

Allows a creditor to apply to pursue a claim against the monitor for loss in specified circumstances and lets the Court make orders about pursuing such claims.