Related documents
- Is amended by 24th Annual Supplement
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- Is amended by Movable Property Security Rights Act
LAWS OF KENYA
INSOLVENCY ACT
CAP. 53
- Published in Kenya Gazette Vol. CXVII—No. 101 on 18 September 2015
- Assented to on 11 September 2015
- Commenced
- Note: 30th November 2015— Parts I, III, V, 1st Schedule, 2nd Schedule; 18th January 2016—Parts II, VI, VII, VIII, IX, X, XI, XII, 3rd Schedule, 4th Schedule; 4th March 2016—Part XIII; 27th June 2016—Section 720
- [Amended by Movable Property Security Rights Act (Cap. 499A) on 16 May 2016]
- [Amended by Statute Law (Miscellaneous Amendments) Act, 2019 (Act No. 12 of 2019) on 23 July 2019]
- [Amended by Data Protection Act (Cap. 411C) on 25 November 2019]
- [Amended by Business Laws (Amendment) Act, 2020 (Act No. 1 of 2020) on 18 March 2020]
- [Amended by Finance Act, 2020 (Act No. 8 of 2020) on 30 June 2020]
- [Amended by Business Laws (Amendment) (No. 2) Act, 2021 (Act No. 1 of 2021) on 30 March 2021]
- [Revised by 24th Annual Supplement (Legal Notice 221 of 2023) on 31 December 2022]
Part I – PRELIMINARY PROVISIONS
1. Short title and commencement
2. Interpretation
3. Objects and application of this Act
Part II – INSOLVENCY PRACTITIONERS
4. Circumstances in which person acts as insolvency practitioner
5. Consequences of acting without authorisation
6. Qualifications for person to act as insolvency practitioners
7. Duty of Cabinet Secretary to declare certain bodies to be recognised as professional bodies for the purposes of this Act
8. Application to act as insolvency practitioner
9. Grant or refusal of authorisation
10. Power of Official Receiver to revoke authorisation
11. Right to appeal against decisions of Official Receiver
Part III – BANKRUPTCY OF NATURAL PERSONS
Division 1 — Bankruptcy: introductory provisions
12. Interpretation: Part III
In this Part—"bankruptcy application" means an application for a debtor to be adjudged bankrupt;"bankruptcy order", in relation to a debtor, means an order of the Court adjudging the debtor bankrupt;"creditor's application" means a bankruptcy application made in accordance with section 17 by one or more creditors of a debtor;"debtor" means a natural person who owes money to one or more creditors; and, if a trust, partnership or other unincorporated body owes money to a creditor, includes all of the trustees of the trust, all of the partners of the partnership and all of the members of the body;"debtor's application” means a bankruptcy application made in accordance with section 32 by a debtor;"statutory demand" means a demand for payment of a debt made as referred to in section 17(3)(a) or (4)(a).13. Nature of bankruptcy
14. Alternatives to bankruptcy
A debtor who is insolvent may as an alternative to bankruptcy—15. Who is entitled to make a bankruptcy application
16. Proceedings on a bankruptcy application
Division 2 — Bankruptcy applications by creditors
17. Creditor may apply for bankruptcy order in respect of debtor
18. When court can make bankruptcy order on application by secured creditor
19. Expedited creditor's application
If a creditor's application is made wholly or partly in respect of a debt that is the subject of a statutory demand, the application may be made before the end of the twenty-one day period referred to in section 17 if—20. Proceedings on creditor's application
21. Creditor's execution process not to be issued or continued
22. Power of relevant court to stay execution processes by other creditors or allow them on terms
23. Execution process issued by other court
24. No restriction on execution process if bankruptcy application withdrawn or dismissed
The restrictions in sections 21 to 23 on issuing or continuing an execution process do not apply if an application is withdrawn or dismissed.25. When court may adjudge debtor bankrupt
26. When the Court may stay application
The Court may, at any time, stay an application by a creditor for bankruptcy on such terms, and for such period, as the Court considers appropriate.27. Orders if more than one application
28. Orders if there is more than one order
If an application made by a creditor for a bankruptcy order relates to more than one debtor, the Court may refuse to make such an order in respect of one or some of the debtors without affecting the application made in relation to the remaining debtor or debtors.29. Power of the Court to make order staying bankruptcy application, etc.
30. Court may stay application while underlying debt is determined
31. Court may allow one creditor to be substituted for another
In the case of a creditor's application, the Court may substitute another creditor for the creditor making the application if—(a)the applicant creditor has not proceeded with due diligence, or at the hearing of the application offers no evidence; and(b)the debtor owes the other creditor two hundred and fifty thousand shillings or more.Division 3 — Bankruptcy applications by debtors
32. When debtor may make application for bankruptcy order
33. Appointment of insolvency practitioner by the Court
34. Action on report of insolvency practitioner
35. Joint application can be made by two or more debtors
Two or more debtors, who are partners in a business partnership, may make a joint application under section 32.Division 4 — Appointment of interim trustee in respect of debtor's property
36. Appointment of interim trustee of debtor's property on application of creditor
37. Additional orders after appointment of interim trustee
38. Notice of appointment of interim trustee to be published
39. Execution process not to be issued after notice of appointment of trustee is published
40. Effect of staying execution
If execution is stayed under section 39, sections 109, 110, 111, 112, 113, 114 and 116 apply as if the order staying execution were a bankruptcy order.Division 5 — Adjudication of bankruptcy applications
41. Bankruptcy commences on making of bankruptcy order
A bankruptcy under this Act commences on the date and at the time when a bankruptcy order is made in respect of the debtor.42. Date and time of bankruptcy order to be recorded
43. Registrar of the Court to notify trustee of bankruptcy order
As soon as practicable after the Court has made a bankruptcy order in respect of a debtor, the Registrar of the Court shall forward a copy of the order to the Official Receiver.44. Official Receiver to nominate bankruptcy trustee
45. Presumption that act was done, or transaction was entered into or made, after bankruptcy
If a doubt arises as to whether an act was done, or a transaction entered into or made, before or after the time when a bankruptcy commenced, it is to be presumed, until the contrary is proved, that the act was done, or the transaction was entered into or made, after that time.46. Bankruptcy order to be binding on all persons
A bankruptcy order becomes binding on the bankrupt and all other persons—47. Official Receiver to maintain public register of undischarged and discharged bankrupts
Division 6 — What happens on and after bankruptcy commences
48. What happens or is to happen on and after bankruptcy commences
49. Official Receiver to serve notice on bankrupt requiring the bankrupt to lodge statement of the bankrupt's financial position
50. Bankrupt to lodge statement of financial position with bankruptcy trustee
51. Creditors entitled to inspect and take copies of statement of bankrupt's financial position
52. Official Receiver to convene first meeting of creditors
53. Circumstances in which Official Receiver may decide not to convene first meeting of creditors
54. Documents to be sent with notice of meeting
55. Power of creditors to requisition meeting
56. Execution process not to be begin or continue after bankruptcy order advertised
57. Effect of bankrupt's death after bankruptcy order
If a bankrupt dies after being adjudged bankrupt, the bankruptcy continues in all respects as if the bankrupt were still alive.58. Creditors' role at creditors' meetings
The role of the creditors in the bankruptcy primarily—(a)to attend meetings of the creditors;(b)to submit proofs of the debts of the bankrupt; and(c)to examine the bankrupt at those meetings.Division 7 — Appointment and functions of bankruptcy trustees
59. Power to appoint bankruptcy trustee
60. Consequences of failure of creditors' meeting to appoint bankruptcy trustee
61. Power of Official Receiver acting as bankruptcy trustee to appoint another person to act instead
62. Special case in which the Court may appoint bankruptcy trustee
63. Powers of bankruptcy trustee
64. Bankruptcy trustee not to sell bankrupt's property before first creditors' meeting
65. Title of purchaser from bankruptcy trustee
The title of a purchaser of the bankrupt's property from a bankruptcy trustee under a document that is made in the exercise of the bankruptcy trustee's power of sale in the First Schedule may not be questioned except on account of fraud.66. Bankruptcy trustee to bank money and power to invest surplus
67. Bankruptcy trustee may assign right to sue under this Act
68. Proceedings by bankruptcy trustee when bankrupt is partner in business partnership
69. Discharge or transfer of indenture of apprenticeship or articles of agreement on bankruptcy of employer
70. Bankruptcy trustee may apply for directions by the Court
71. Application to the Court to reverse or modify bankruptcy trustee's decision
72. Bankruptcy trustee to keep proper accounting records
73. Bankruptcy trustee’s final statement of receipts and payments
74. Audit of bankruptcy trustee's accounts
75. Removal of bankruptcy trustee and vacation of office
76. When Official Receiver is released from obligations as bankruptcy trustee
77. When bankruptcy trustee, not being the Official Receiver, is released from obligation
78. Vacancy in office of bankruptcy trustee
79. General control of bankrupt trustee by the Court
80. Liability of bankruptcy trustee for misapplication of money, etc.
Division 8 — Creditor’s' meetings and creditors’ committee
81. Kinds of creditors' meetings
There are two kinds of creditors' meetings—82. Subsequent meetings of creditors
83. Meeting and resolution not defective for lack of notice
A meeting of creditors convened by notice to creditors, and a resolution passed at the meeting, is valid even if some creditors may not have received the notice, unless the Court orders otherwise.84. Appointment of Chairperson to conduct creditor’s' meetings
85. Power of Chairperson to adjourn creditors' meeting
The Chairperson of a creditors' meeting may adjourn the meeting from time to time and place to place.86. Bankruptcy trustee to report to creditors' meeting
If the bankruptcy trustee attends a creditors' meeting or an adjournment of the meeting, the bankruptcy trustee shall—87. Who can attend creditors' meeting
88. Bankrupt may be required to attend creditors' meeting and be questioned
89. Attendance at creditors' meeting by non-creditors
A person who is not a creditor of the bankrupt may attend a creditors' meeting with the consent of—90. Minutes and record of creditors' meeting
91. Number of persons required for creditors' meeting to be valid
92. Who can represent creditors and bankrupt at creditors' meeting
93. Passing of resolutions at creditors' meetings
94. What votes can be counted for passing of resolutions at creditors' meeting
95. Who may vote at creditors' meeting
Creditors of the bankrupt who are entitled to vote, or their representatives, may vote at a creditors' meeting, but this rule is subject to sections 96 to 98.96. When secured creditor may vote at creditors' meeting
A debt that is secured only entitles the creditor to vote at a creditors' meeting if the creditor has—97. When creditor under bill of exchange or promissory note may vote at creditors' meeting
98. Person disqualified from voting at creditor's meeting through preferential effect
99. Entitlement of partner's creditor to prove debt at creditors' meeting
The bankruptcy of a partner of a firm who is indebted to a creditor jointly with one or more of the other partners entitles the creditor to prove the debt for the purpose of voting at any creditors' meeting, and to vote.100. Creditors may appoint expert or committee to assist bankruptcy trustee
101. Creditors' right to inspect documents
A creditor who has lodged a creditor's claim, or an advocate or a certified public accountant who is acting for the creditor, is entitled at any reasonable time to inspect or take copies of—102. Committee of creditors may be established
103. Exercise by Cabinet Secretary of functions of creditor's committee
Division 9 — Bankrupt's property after bankruptcy
104. Status of property acquired during bankruptcy
105. Property vests in replacement bankruptcy trustee
If the bankruptcy trustee is replaced, the property and powers vested in the former bankruptcy trustee under this Act vest in the replacement bankruptcy trustee.106. Property held in trust by bankrupt
Property held by the bankrupt in trust for another person vests in the bankruptcy trustee, who shall assume control of the property and deal with it for the benefit of the beneficiaries of the trust.107. Court may order money due to bankrupt to be assigned to bankruptcy trustee
108. Certain payments to be applied in accordance with the Second Schedule
The bankruptcy trustee shall apply the following payments in accordance with the Second Schedule (Priority of payments to preferential creditors—109. When execution creditor may retain execution proceeds
110. Effect of notice to judicial enforcement officer of bankruptcy
111. Judicial enforcement officer to retain proceeds of execution for fourteen days after sale
112. Purchaser under sale by judicial enforcement officer acquires good title
On the sale by the judicial enforcement officer of a debtor's property on which execution has been levied, the purchaser, if acting in good faith, acquires a good title to the property as against the bankruptcy trustee.113. Court may set aside rights conferred on bankruptcy trustee
114. Transaction in good faith and for value after bankruptcy
115. Executions and attachments in good faith
If a bankrupt acquires property, or property passes to a bankrupt, after the bankruptcy has commenced, an execution or attachment against the property is valid as against the bankruptcy trustee if it—116. When execution or attachment completed for purposes of sections 109 and 115
For the purposes of sections 109 and 115—117. Bankruptcy trustee's interest in property passes to transferee
If the bankruptcy trustee's interest in property is acquired by or passes to a bankrupt after bankruptcy has commenced—(a)the bankruptcy trustee's interest in the property ends; and(b)that interest passes in the manner, and to the extent necessary, to give effect to a transaction, execution, or attachment to which section 114 or 115 applies.Division 10 — Disclaimers of bankrupt's property
118. Bankruptcy trustee may disclaim onerous property
119. Effect of disclaimer
A disclaimer by the bankruptcy trustee—120. Position of person who suffers loss as result of disclaimer
121. Bankruptcy trustee may be required to elect whether to disclaim
The bankruptcy trustee loses the right to disclaim onerous property if—122. Liability for rentcharge on bankrupt's land after disclaimer
123. Transmission of interest in land
124. Bankruptcy trustee cannot claim interest in land if bankrupt remains in possession until discharge
125. Bankruptcy trustee may transfer shares and other securities
126. Bankruptcy trustee may disclaim liability under shares
A bankruptcy trustee may disclaim any liability under shares owned by the bankrupt in any company by disclaiming the shares as onerous property under section 118, but sections 120 and section 121 do not apply to a disclaimer of liability under shares.127. Bankruptcy trustee may disclaim liability under shares
128. Bankruptcy trustee may be required to elect whether to disclaim liability under shares
The bankruptcy trustee loses the right to disclaim liability under shares if—129. Transfer of shares after disclaimer
130. Company may prove for unpaid calls
Division 11 — Goods held by bankrupt under credit purchase transaction
131. Interpretation: Division 11
In this Division—"cash price", in relation to a sale of goods, means—132. Restrictions on creditor dealing with goods
133. Bankruptcy trustee's powers in relation to goods that are subject to a credit purchase transaction
134. Creditor in possession of goods may prove in bankruptcy if bankruptcy trustee has not exercised powers
135. Creditor may assign goods to bankruptcy trustee
If—(a)the bankrupt purchased goods under a credit purchase transaction before the time the bankruptcy commenced; and(b)at that time the creditor either—(i)has not taken possession of the goods; or(ii)has taken possession of them and has not sold or disposed of, or parted with possession of them,the creditor may assign the goods to the bankruptcy trustee, and, if the creditor does so, may prove in the bankruptcy for the net balance due to the creditor under the transaction.Division 12 — Second bankruptcies
136. Status of bankrupt's property on second bankruptcy
137. Effect of notice to bankruptcy trustee of application for bankruptcy
Division 13 — Persons jointly adjudged bankrupt
138. Separate accounts to be kept for each bankrupt
If two or more persons are adjudged bankrupt jointly, the bankruptcy trustee shall keep distinct accounts in respect of—139. How joint and separate estates are to be applied
Division 14 — Duties of bankrupt
140. General duty of bankrupt
141. Bankrupt to disclose property acquired before discharge
142. Bankrupt to deliver property to bankruptcy trustee on demand
143. Court may impose charge on bankrupt's property
144. Bankrupt to give bankruptcy trustee accounting records and other documents
145. Bankrupt to give bankruptcy trustee information relating to property
A bankrupt shall—146. Bankrupt to give bankruptcy trustee information relating to income and expenditure
147. Bankrupt to notify bankruptcy trustee of change in personal information
148. Bankrupt to give bankruptcy trustee financial information
148A. Principles of Data Protection
The principles of personal data protection set out in the Data Protection Act (Cap. 411C) shall apply with necessary modifications to the processing and handling, by the bankruptcy trustee, of the bankrupt's personal data.[Act No. 24 of 2019, 2nd Sch.]Division 15 — Restrictions on bankrupt during bankruptcy
149. Interpretation: Division 15
In this Division—"building", in relation to a bankrupt, includes a reference to a part of a building in which the bankrupt holds a proprietorial interest;"place" includes building, premises, aircraft, ship, or other means of transporting people or goods;"relevant property", in relation to a bankrupt, means—150. Bankrupt can be required to contribute to payment of debts
151. Onus of proof if bankrupt defaults in making payment
If a bankrupt fails to make a payment required under section 150, the onus is on the bankrupt in any proceedings arising out of the failure to show that the failure was not deliberate.152. Prohibition of bankrupt entering business
153. Warrant to search for and seize bankrupt's property
154. Seizure of bankrupt's property
155. Bankrupt to vacate land or buildings if required to do so
156. Bankrupt's right to inspect documents
A bankrupt is entitled at any reasonable time to inspect and to take copies of—157. Restrictions on bankrupt dealing with property
158. Bankrupt prohibited from taking steps to defeat beneficial interests of others in bankrupt's property
159. Responsibility of bank to notify bankruptcy trustee of bankrupt's account
160. Official Receiver entitled to require bank to search records relating to bankrupt's account
Division 16 — Provision allowed for bankrupt during bankruptcy
161. Bankrupt entitled to retain certain assets
162. Bankrupt may retain certain assets with consent of creditors
A bankrupt may retain necessary tools of trade and necessary household furniture and effects that are worth more than the maximum value fixed in accordance with section 161, if the bankrupts' creditors consent to it by an ordinary resolution passed at a creditors' meeting.163. Retention of assets not to affect rights under charge or credit purchase transaction
164. Retention provisions not to confer rights to other assets
The fact that the net value of the assets that the bankrupt retains is less than the maximum values specified in section 161 does not give the bankrupt any rights in relation to other assets in the bankrupt's estate.165. Relative or dependant entitled to exercise bankrupt's right to retain assets
If the bankrupt has died, a relative or dependant of the bankrupt, who has been approved for this purpose by the bankruptcy trustee or the Court, may exercise the right to retain assets under section 161 or 162 for the benefit of the bankrupt's relatives and dependants.166. Bankruptcy trustee may make allowance to bankrupt
The bankruptcy trustee may make an allowance out of the property of the bankrupt to the bankrupt, or to any relative or dependant of the bankrupt, for the support of the bankrupt and the bankrupt's relatives and dependants.167. Bankruptcy trustee may allow bankrupt to retain money
Division 17 — Powers of bankruptcy trustee and the Court to examine bankrupt and others
Subdivision 1 — Examination by bankruptcy trustee
168. Bankruptcy trustee may summon bankrupt and others to be examined
169. Conduct of examination of person summoned by bankruptcy trustee
170. Expenses of person summoned by bankruptcy trustee or the Court
A person who is summoned for examination by the bankruptcy trustee—171. Entitlement of examinee to be represented
172. Creditor may inspect record of examination
A creditor, or the creditor's advocate, is entitled at any reasonable time to inspect the record of the examination of a person conducted in accordance with section 169.173. Report of examination not to be published without court's consent
174. Examination provisions also apply when bankruptcy trustee appointed interim trustee in respect of debtor's property
Sections 168 to 173 also apply when the bankruptcy trustee has been appointed as interim trustee in respect of all or part of a debtor's property under section 36 and, for that purpose, references in sections 168 to 173 to the bankrupt are to be read with as if they were references to the debtor.175. No lien over bankrupt's documents and other records
176. Offences relating to conduct of examinations by bankruptcy trustee
Subdivision 2 — Public examination before the Court
177. Court to hold public examination if bankruptcy trustee or creditors require
178. Bankruptcy trustee to serve notice of examination on bankrupt
179. Bankruptcy trustee to lodge report with the Court before start of examination
Before the public examination of a bankrupt before the Court begins, the bankruptcy trustee shall lodge with the Court a report on—180. Conduct of public examination before the Court
181. Bankruptcy trustee to ensure record of examination is kept
182. When examination ends
183. Consequence of bankrupt's failing to attend examination
If the bankrupt does not appear for the examination at the appointed time and has no reasonable excuse—184. Bankrupt entitled to be paid expenses for attending examination
185. Power to extend examination companies controlled by bankrupt and bankrupt's associates
186. No privilege against self-incrimination, but statements not generally admissible in criminal proceedings against their maker
187. Offences relating to examinations of bankrupts
188. Entitlement of examinee to be represented
Division 18 — Status of bankrupt's contracts
189. Bankruptcy trustee may continue or disclaim bankrupt's contracts entered into before bankruptcy commenced
If a bankrupt is a party to a contract, the bankruptcy trustee may—190. Contract terminated by other contracting party
191. Transaction with bankrupt made in ignorance of bankruptcy
192. Bankrupt's co-contractor may sue and be sued if there is a joint contractual liability
If the bankrupt is jointly liable under a contract with another person, that other person may sue and be sued on the contract without the bankrupt being joined as a party to the proceeding.193. Bankruptcy trustee may recover advocate's costs
Division 19 — Irregular transactions involving bankrupt
194. Application of Division 19
195. Power to extend certain periods specified in this Division
For the purposes of this Division, a two year period or a six months period referred to in this Division can be extended—196. Insolvent transactions may be cancelled by bankruptcy trustee
A transaction by a bankrupt can be cancelled on the bankruptcy trustee's initiative if it—197. Meaning of insolvent transaction for purposes of sections 196
198. Insolvent transaction presumed
For the purposes of section 196, a transaction that was entered into within the six months before a bankrupt is adjudged bankrupt is presumed, until the contrary is proved, to have been made at a time when the bankrupt is unable to pay the bankrupt's debts.199. When series of transactions are to be regarded as single transaction
200. Insolvent charges can be cancelled on bankruptcy trustee's initiative
A charge over any property of a bankrupt can be cancelled on the bankruptcy trustee's initiative if—201. Charge for new consideration or replacement charge not affected
202. Presumption that bankrupt unable to pay due debts
A bankrupt who gave a charge within the six months immediately preceding the commencement of the bankruptcy is presumed, until the contrary is proved, to have been unable to pay the bankrupt's debts immediately after the charge was created.203. Charge for unpaid purchase price given after sale of property
204. Appropriation of payments by bankrupt to secured creditor
205. Charge agreed before specified period not to be cancelled
A charge or a security right given by the bankrupt under an agreement to give the charge or create a security right that was made or made effective against third parties before the two years immediately before the bankruptcy is not liable to be cancelled under section section 200.[Act No. 13 of 2017, Sch.]206. Cancellation of gifts made within two years before bankruptcy
A gift made by a bankrupt to another person can be cancelled on the bankruptcy trustee's initiative if the bankrupt made the gift within the two years immediately preceding the commencement of the bankruptcy.207. Cancellation of gifts made by bankrupt made within five and two years before bankruptcy
208. Procedure for cancelling irregular transactions
209. Court may order retransfer of property or payment of an equivalent value
210. Limits on what can be recovered
The Court may not make an order under section 209 against a person if the person proves that when the person received the property or interest in the property—211. Bankruptcy trustee may recover difference in value if transaction is found to be under value
212. Court may order recipient of bankrupt's contribution to property of another to pay value to bankruptcy trustee
213. Court's powers in relation to bankrupt's contribution to recipient's property
214. How bankruptcy trustee is to use repayment of bankrupt's contribution to property
Division 20—Processing of creditors' claims against bankrupt's estate
215. Interpretation: Division 20
216. What debts are provable debts
217. Procedure for proving debt: creditor to submit claim form
218. Bankruptcy trustee required to examine creditor's claim
219. Bankruptcy trustee to give creditor notice of grounds of rejection
As soon as practicable after rejecting a creditor's claim, or a part of it, the bankruptcy trustee shall give the creditor a notice rejecting the claim or part and specifying the grounds for the rejection.220. Bankruptcy trustee's power to obtain evidence of debt
221. Notice by bankrupt or creditor to bankruptcy trustee to allow or reject creditor's claim
222. Court may cancel creditor's claim
223. Power of court to quash or vary bankruptcy trustee's decision rejecting creditor's claim
224. Parties to proceedings relating to creditor's claim
225. Court may make order as to costs
On the hearing of an application made under section 221, 222 or 223, the Court may, if it considers it appropriate to do so, make an order—226. Secured creditor’s options in relation to property that is subject to a charge
227. Power of Court to order disposal of property that is subject to a charge
228. Realisation of property that is subject to a security
229. Valuation of charge held by creditor and claim for balance due
230. Offence for secured creditor to make false claim
231. Bankruptcy trustee's powers when secured creditor values property subject to charge and proves for balance
232. Secured creditor who surrenders charge may with approval of the Court withdraw claim or submit a new claim
233. Bankruptcy trustee may estimate amount of uncertain creditor's claim
If a creditor's claim is subject to a contingency or is for damages, or if, for some other reason, the amount of the claim is uncertain, the bankruptcy trustee may estimate the amount of the claim.234. Application to the Court to determine amount of uncertain creditor's claim
235. Creditor's claim payable six months or more after commencement of bankruptcy
236. Bankruptcy trustee's duty when mutual dealings have occurred between the bankrupt and other persons
237. Creditor may claim pre-bankruptcy interest
A creditor may claim interest up to the date on which the bankruptcy commences—238. Post-bankruptcy interest payable at prescribed rate if surplus remains
239. Additional post-bankruptcy interest on contract or judgment debt if surplus remains
240. Meaning of prescribed rate for purposes of sections 238 and 239
For the purposes of sections 238 and 239, the prescribed rate of interest is the rate for the time being prescribed by the insolvency regulations for the purposes of those sections.241. Creditor required to deduct trade discounts
A creditor shall deduct from the creditor's claim any trade discount that the creditor would have given a debtor if the debtor had not become bankrupt.242. Secured creditor can prove as unsecured creditor if security is void or partly void
If a creditor's security over assets of the bankrupt is wholly or partly void under a provision of this or any other Act, the creditor may prove as an unsecured creditor—243. Judgment creditor may prove for costs
A person who obtained an order for costs against the bankrupt before the commencement of the bankruptcy may prove for the amount of those costs even if that amount is not fixed until after that commencement.244. Company may prove for unpaid calls
245. When guarantor for bankrupt may prove claim
Division 21 — Distribution of Bankrupt's Estate
246. Interpretation: Division 21
In this Division, "preferential claim" means a claim in respect of a debt listed in paragraphs 2, 3 or 4 of the Second Schedule.247. Preferential debts: priority of debts
248. Priority ranking of debts owed to bankrupt's spouse
249. Person who makes payment on account of preferential creditor to be subrogated to the rights of that creditor
If a payment has been made to a person on account of a preferential creditor out of money advanced by another person for that purpose, the other person has, in the bankruptcy, the same right of priority in respect of the money so advanced as the preferential creditor would have if the payment had not been made.250. Priority given to landlord or other person who distrains on goods and effects of bankrupt
251. Creditors to have priority over creditors of joint bankrupt
If a bankrupt is a partner of a firm, any creditor to whom the bankrupt is indebted jointly with the other partners of the firm is not entitled to receive money obtained from the realisation of the bankrupt's separate property until the claims of all of the other creditors have been paid in full.252. Final distribution of bankrupt's estate
253. Final meeting of creditors
Division 22 — Discharge of Bankrupt from Bankruptcy
254. Automatic discharge three years after bankrupt lodges statement of financial position
255. Effect of automatic discharge
The automatic discharge of the bankrupt has the same effect as if the Court made an order for the bankrupt's discharge.256. Right of creditor to object to automatic discharge
257. Objection can be withdrawn
258. Bankrupt may apply for early discharge
259. When bankrupt is to be publicly examined before the Court concerning discharge
260. Bankruptcy trustee to lodge report with the Court in specified circumstances
261. When creditor required to give notice of opposition to discharge
262. Power of the Court to grant or refuse discharge
263. Court may restrict bankrupt from engaging in business after discharge
264. Court may quash order discharging bankrupt
265. Effect of quashing order discharging bankrupt from bankruptcy
266. Bankrupt may apply for absolute discharge on ground that conditions of discharge are too onerous
267. Debts from which bankrupt is released on discharge
268. Discharge to be conclusive evidence of bankruptcy and the validity of bankruptcy proceedings
A discharge of a bankrupt from bankruptcy is conclusive evidence of the bankruptcy and of the validity of the proceedings in course of the bankruptcy.269. Discharge not to release partners of bankrupt and others
The discharge of a bankrupt does not release a person who, at the commencement of the bankruptcy, was—270. Discharged bankrupt to assist bankruptcy trustee
271. Official Receiver to record in public register decision of the Court refusing to discharge bankrupt, etc.
lf the Court refuses to discharge a bankrupt or makes an order discharging the bankrupt but suspends the discharge, the Official Receiver shall record that information in the relevant public register kept the Official Receiver under Division 2 of Part XII.Division 23 — Annulment of Bankruptcy Orders
272. Court may annul bankruptcy order in certain circumstance
273. When Official Receiver may annul bankruptcy order
274. Effect of annulment of bankruptcy order
Division 24 — Composition during bankruptcy
275. Interpretation: Division 24
In this Division—"confirming resolution" means a special resolution passed by a bankrupt's creditors in accordance with section 276 confirming a preliminary resolution;"preliminary resolution" means a special resolution passed by a bankrupt's creditors in accordance with section 276.276. Creditors may accept composition by passing preliminary resolution
277. Composition not effective unless approved by confirming resolution
278. Compositions with members of partnership
279. Composition not binding unless approved by the Court
280. Procedure for court approval of composition
281. Deed of composition to be executed
282. Effect of deed of composition
When the Court has confirmed the deed and quashed the bankruptcy order—283. Bankrupt remains liable for unpaid balances of certain debts
284. Deadlines for steps to approve composition and execute deed
285. Procedure following approval of composition by the Court
286. How composition may be enforced
287. Jurisdiction of the Court in relation to composition and deed of composition
288. Law and practice in bankruptcy to apply to deed of composition
The Court shall decide a question arising under a deed of composition according to the law and practice of bankruptcy, in so far as that law and practice is relevant.Division 25 — Bankruptcy offences
289. Offences in relation to debts
290. Offences in relation to property
291. Offence in relation to written statement to creditor, etc.
292. Offence in relation to documents, etc.
293. Offence in relation to fictitious losses or expenses
A bankrupt commits an offence if, during the twelve months immediately preceding the making of the application to the Court for a bankruptcy order in respect of the bankrupt, or at any time after the application was made, the bankrupt attempts to account for any part of the bankrupt’s property by means of fictitious losses or expenses.294. Offences in relation to credit, etc
295. Offences in relation to obtaining consent of creditors
A bankrupt commits an offence if the bankrupt—296. Offence for bankrupt to leave Kenya without consent
297. General penalties for bankruptcy offences
A bankrupt who is found guilty of an offence under a provision of sections 289 to 296 is liable on conviction to a fine not exceeding two million shillings or to imprisonment for a term not exceeding five years, or to both.298. Failure to keep and preserve proper record of transactions
299. Failure to keep proper records with intent to conceal
300. When bankrupt presumed not to have kept or preserved proper records
301. Offence by bankrupt in relation to management of companies
302. Other bankruptcy offences
Part IV – ALTERNATIVES TO BANKRUPTCY: NATURAL PERSONS
Division 1 — Voluntary arrangements
Subdivision I — Ordinary procedure
303. Interpretation: Division 1
304. When application for interim order can be made
305. Effect of application for interim order
306. Power of the Court to make interim order
307. Provisional supervisor to report on debtor's proposal
308. Debtor's proposal and provisional supervisor's report
309. When provisional supervisor is to convene creditors' meeting to consider debtor's proposal
310. Conduct of creditors' meeting: consideration of debtor's proposal
311. Approval of debtor's proposal
312. Effect of approval of debtor's proposal by meeting of creditors or by the Court
313. Additional effect on undischarged bankrupt
314. Right to challenge decision taken at creditors’ meeting
315. Implementation and supervision of voluntary arrangement
Subdivision 2 — Expedited Procedure
316. Expedited voluntary arrangement procedure: availability
317. Duty of Official Receiver to report result to the Court
As soon reasonably practicable after the arrangements under section 316 have been implemented, the Official Receiver shall report to the Court whether the proposed voluntary arrangement has been approved or rejected.318. Approval of expedited voluntary arrangement
319. Power of Official Receiver to make application for annulment of bankruptcy order where debtor is an undischarged bankrupt
320. Revocation of expedited voluntary arrangement
Subdivision 3 — Criminal Conduct under the Division
321. Offence for debtor to make false representation for purpose of obtaining creditors' approval
322. Prosecution of delinquent debtors
Division 2 — Summary instalment orders
323. What is a summary instalment order?
A summary instalment order is an order made by the Official Receiver directing the debtor to pay the debtor's debts—324. Who can apply for summary instalment order
The Official Receiver may make a summary instalment order on the application of—325. Requirements for applications made by debtors
326. Official Receiver may make summary instalment order
327. Power of Official Receiver to make additional orders
In addition to an order for the payment of the debts in instalments, the Official Receiver may make all or any of the following orders—328. Appointment of supervisors
329. Role of supervisors
330. Power of Official Receiver to require supervisor or past supervisor to provide documents
331. Termination of supervisor's appointment for failure to supervise adequately
If of the opinion that the supervisor has failed to supervise the debtor's compliance adequately, the Official Receiver shall terminate the supervisor's appointment and appoint a replacement supervisor.332. Period for payment of instalments
The payment of instalments under a summary instalment order can be spread over a period not exceeding—333. Variation or discharge of summary instalment orders
334. Effect of summary instalment orders
335. Restrictions on bringing proceedings against debtors while summary instalment order has effect
336. Supervisor to give notice of summary instalment order to creditors
337. Public register of debtors subject to current summary instalment order
338. When summary instalment order ceases to be current
A summary instalment order is not current if it has been discharged or all the instalments required to be paid under the order have been paid in accordance with the order.339. Claims of creditors when summary instalment has effect
340. Payment of debtor's earnings to supervisor
341. Consequences of default by debtor to pay amount due under summary instalment order
342. Offence for debtor to obtain credit while summary instalment order has effect
Division 3 — No-asset procedure
343. Division 3: introduction
This Division prescribes a procedure for dealing with a debtor who has no realisable assets.344. Application for entry to no-asset procedure
345. Criteria for entry to no-asset procedure
346. Debtor disqualified from entry to no-asset procedure in certain cases
The Official Receiver shall not admit a debtor to the no-asset procedure if satisfied, on reasonable grounds, that—347. Official Receiver to notify creditors
As soon as practicable after receiving an application from a debtor for entry to the no-asset procedure, the Official Receiver shall send a summary of the debtor's assets and liabilities to each known creditor of the debtor.348. Restrictions on debtor obtaining credit after application made
349. When debtor admitted to no-asset procedure
350. Public register of persons admitted to no-asset procedure
351. Creditors may not enforce debts of debtor admitted to no-asset procedure
352. Debtor's duties after entry to no-asset procedure
353. Offence for person admitted to no-asset procedure to obtain credit
354. How debtor's participation in the no-asset procedure is terminated
A debtor's participation in the no-asset procedure terminates when—355. When Official Receiver may terminate no-asset procedure
356. Official Receiver may apply for preservation order on ground of debtor's misconduct
357. Effect of termination of debtor's participation in no-asset procedure
358. Creditor may apply to Official Receiver for termination of debtor's participation in no-asset procedure
A creditor may apply to the Official Receiver for termination of the debtor's participation in the no-asset procedure on the ground—359. Discharge of debtor's participation in no-asset procedure
360. Effect of discharge of debtor's participation in no-asset procedure
361. Discharge does not release debtor's business partners and others
A discharge under section 359 does not release a person who, at the date of discharge, was—Part V – ADMINISTRATION OF INSOLVENT DECEASEDS' ESTATES
Division 1 — Introductory provision
362. Interpretation: Part V
Division 2 — Functions of the Court in respect of administration of insolvent estates
363. Court may order that estate be administered under this Part
364. Application by executor or administrator, etc
365. Application by creditor or beneficiary for order under this Part
366. Notice of application by creditor or beneficiary
If an application has been lodged by a creditor or beneficiary under section 365, the applicant shall give notice of the application—367. Court may order administration by Official Receiver or the Public Trustee instead of executor or administrator
368. Certificate lodged by the Public Trustee has effect as application and order
369. Estate vests in trustee
370. Trustee to realise, administer and distribute estate
The trustee shall, as soon as practicable after the estate vests in the trustee, realise, administer, and distribute the assets in accordance with the law and practice of bankruptcy, subject to any modifications in this Part.371. Entitlement of surviving spouse to household furniture and effects
372. Trustee may make allowance to surviving spouse
Division 3 — Trustee's responsibilities with respect to administration of insolvent deceased's estate
373. Application of Division 3
This Division applies if the Court has made an order that the estate of a deceased person be administered under this Part.374. Trustee's functions and powers in respect of insolvent deceased's estate
The trustee has, in relation to the estate, the same functions and powers as a bankruptcy trustee has in relation to the property of a bankrupt.375. Distribution of insolvent deceased's estate
376. How any surplus is to be paid
377. Creditor's notice to executor or administrator
If an order that a deceased's estate be administered under this Part is notified to the deceased's executor or administrator, the executor or administrator may obtain a proper discharge for any payment of money or disposition of property by the executor or administrator only if the payment or disposition is consistent with the terms of the order.378. Power of trustee to act in relation to deceased's irregular transactions
379. Trustee may cancel execution against insolvent deceased debtor's estate
The trustee may cancel an execution against the deceased debtor's estate unless it was completed more than three months before the date of the order that the estate be administered under this Part.380. Certain acts of executor or administrator valid if done in good faith
A payment made, or an act done or omitted to be done, in good faith by an executor or administrator in respect of a deceased's estate before the executor or administrator had notice of an intention to apply for an order that the estate be administered under this Part is not invalidated by any other provision of this Act.Part VI – LIQUIDATION OF COMPANIES
Division 1 — Introductory Provisions
381. Scheme of Part VI
382. Distinction between "members" and "creditors" voluntary liquidation
In this Part—383. Interpretation: Part VI
384. The circumstances in which a company is unable to pay its debts
385. Liability as contributories of present and former members
386. Liability of past directors and shareholders
387. Position of limited companies that were formerly unlimited
388. Position of unlimited companies that were formerly limited
389. Nature of contributory's liability
The liability of a contributory creates an ordinary contract debt due from the contributory at the time when the contributor's liability began, but payable at the times when calls are made to enforce the liability.390. Death of contributories not to affect their liability
391. Liability of contributories who are adjudged bankrupt
If a contributory is adjudged bankrupt, either before or after being placed on the list of contributories, the following provisions apply—392. Liability of contributories to contribute to debts of company registered but not formed under Companies Act
Division 2 — Voluntary liquidation (introductory and general)
393. Circumstances in which company may be liquidated voluntarily
394. Notice of resolution to liquidate
395. When liquidation commences
The voluntary liquidation of a company commences when the resolution for voluntary liquidation is passed.396. Consequences of resolution to liquidate
397. Share transfers and attempts to alter member's status after liquidation resolution to be void
The following are void if made after the commencement of a voluntary liquidation of a company—398. Making and effect of declaration of solvency by directors of company
Division 3 — Members' voluntary liquidation
399. Appointment of liquidator in members' voluntary liquidation
400. Power to fill vacancy in office of liquidator
401. General company meeting at each year's end
402. Final meeting prior to dissolution: members' voluntary liquidation
403. Effect of company’s insolvency
404. Conversion to creditors' voluntary liquidation
As from and including the date on which the creditors' meeting is held in accordance with section 403—(a)this Part has effect as if—(i)the directors' declaration under section 398 had not been made; and(ii)the creditors' meeting and the company meeting at which it was resolved that the company be liquidated voluntarily were the meetings referred to in section 406; and(b)the liquidation becomes a creditors' voluntary liquidation.Division 4 — Creditors' voluntary liquidation
405. Application of Division 4
406. Meeting of creditors to be convened by company
407. Directors to lay statement of financial position before creditors
408. Creditors' voluntary liquidation: appointment of liquidator
409. Creditors may appoint liquidation committee
410. Creditors' meeting if liquidation converted under section 404
If, in the case of a liquidation that was under section 404 converted to a creditors' voluntary liquidation, a creditors' meeting is held in accordance with section 403, any appointment made or committee established by that meeting is taken to have been made or established by a meeting held in accordance with section 406 (meetings of creditors).411. Cessation of directors' powers
On the appointment of a liquidator, all the powers of the directors cease, except so far as the liquidation committee, or if there is no such committee, the creditors, sanction their continuance.412. Vacancy in office of liquidator: creditors' voluntary liquidation
413. Meetings of company and company's creditors to be held every twelve months
414. Final meeting prior to dissolution: creditors' voluntary liquidation
Division 5 — Provisions applying to both kinds of voluntary liquidation
415. Property of company to be distributed among members after satisfaction of liabilities
416. Appointment or removal of liquidator by the Court
417. Notice of appointment to be published by liquidator
418. Power of liquidator to accept shares or membership rights as consideration for sale of company's property
419. Dissenting member may require liquidator to refrain from giving effect to arrangement under section 418 or to purchase member's shares
420. Questions relating to liquidation may be referred to the Court for determination
421. Restrictions on directors' powers to appoint or nominate liquidator of company in voluntary liquidation
422. Saving for certain rights
The voluntary liquidation of a company does not prevent a creditor or contributory from seeking to have the company liquidated by the Court, but in the case of an application by a contributory, the Court is required to be satisfied that the rights of the other contributories will not be detrimentally affected by such a liquidation.Division 6 — Liquidation by the Court
423. Jurisdiction of High Court to supervise liquidation of companies
424. Circumstances in which company may be liquidated by the Court
425. Applications to the Court for liquidation of companies
426. Application for liquidation of company on grounds of public interest
427. Powers of Court on hearing of liquidation application
428. Power to stay or restrain proceedings against company when liquidation application has been made
429. Dispositions of property by company after commencement of liquidation to be void unless the Court otherwise orders
430. Attachments and other forms of execution against company in liquidation to be void
If a company is being liquidated by the Court, any attachment, sequestration, distress or execution instigated against the assets of the company after the commencement of the liquidation is void.431. When liquidation of company by the Court commences
432. Consequences of liquidation order
433. Official Receiver may require certain persons to submit statement relating to company's affairs
434. Duty of Official Receiver to conduct investigation into failure of company
435. Public examination of officers and former officers of company
436. Consequences of failure to attend public examination
437. Appointment and powers of provisional liquidator
438. Functions and powers of Official Receiver in relation to office of liquidator
439. Power of Official Receiver to appoint liquidator in certain cases
440. Creditors' choice to prevail if meetings of creditors and contributors nominate different liquidators
441. Appointment of liquidator by the Court following administration or voluntary arrangement
442. Creditors' meeting may appoint liquidation committee
443. General functions of liquidator when company is liquidated by the Court
444. Liquidator to assume control of company's property when liquidation order made
When—445. Company's property to vest in liquidator
446. Duty of liquidator to convene final general meeting of company's creditors
447. Power of the Court to stay liquidation
448. Settlement of list of contributories and application of assets
449. Recovery of debts due from contributory to company
450. Power of the Court to make calls from contributories
451. Power of the Court to order money due to company to be paid into Central Bank
452. Order made by the Court against contributory to be conclusive evidence that money ordered to be paid is due
453. Power of the Court to fix deadlines for proving claims
The Court may fix deadlines by which creditors are required to prove their debts or claims or are to be excluded from the benefit of any distribution made before those debts are proved.454. Court to adjust rights of contributories
The Court shall adjust the rights of the contributories among themselves and distribute any surplus among the persons entitled to it.455. Power of the Court to make orders enabling creditors and contributories to inspect company's records
456. Payment of expenses of liquidation
457. Power to arrest absconding contributory
458. Powers of the Court to be cumulative
Powers conferred on the Court by this Part are in addition to any existing powers to bring legal proceedings against a contributory or debtor of the company, or the assets of a contributory or debtor, for the recovery of calls or other amounts.459. Power of the Court to delegate its powers to liquidator
Division 7 — Liquidators
460. Style and title of liquidators
461. Offence to make corrupt inducement affecting appointment of liquidator
A person who gives, or agrees or offers to give, to any member or creditor of a company any valuable consideration with a view to obtaining the person's own appointment or nomination, or to obtaining or preventing the appointment or nomination of some other person, as the company's liquidator commits an offence and on conviction is liable to a fine not exceeding two million shillings.462. Liquidator's functions: voluntary liquidation
463. Liquidator's functions: creditors' voluntary liquidation
464. Liquidator's functions: liquidation by the Court
465. Liquidator's functions: supplementary powers
466. Enforcement of liquidator's duties to lodge, deliver and make returns, accounts and other documents
467. Circumstances in which liquidator may be removed from office in the case of a voluntary liquidation
468. Liquidator may be removed only by the Court or by general meeting of creditors in the case of company being liquidated by the Court
469. Release of liquidator in the case of company liquidated voluntarily
470. Release of liquidator in the case of company liquidated by the Court
Division 8 — Provisions applying to all kinds of liquidation
471. Preferential debts (general provision)
472. Preferential charge on property of company distrained within three months before making of liquidation order
473. Expenses of liquidation to have priority over claims under floating charge
474. Share of assets to be made available for unsecured creditors where floating charge relates to company's property
475. Power of the Court to appoint special manager of company's business or property when company is in liquidation or provisional liquidator appointed
476. Power of liquidator to disclaim onerous property
477. Special provisions relating to disclaimer of leaseholds
478. Effect of disclaimer in relation to land subject to rentcharge
479. General powers of the Court in respect of disclaimed property
480. Powers of the Court in respect of leaseholds held by company in liquidation
481. Creditor not entitled to retain benefit of execution or attachment against liquidator unless creditor completes execution or attachment before commencement of liquidation
482. Duties of judicial enforcement officers charged with execution of writs and other processes involving companies in liquidation
483. Power of the Court to rescind contracts entered into by company in liquidation
484. Power of liquidator to transfer assets of company to its employees
485. Company in liquidation required to state that it is in liquidation in all invoices, letters and other communications
486. Interest on debts to be paid if surplus permits
487. Certain documents relating to company in liquidation to be exempt from stamp duty
488. Records of company in liquidation to be evidence
When a company is in liquidation, all records of the company and of the liquidator are (as between the contributories of the company) evidence of the truth of all matters purporting to be recorded in them, until the contrary is proved.489. Liquidator to lodge periodic statements with Registrar of Companies with respect to current position of liquidation
490. Effect of resolutions passed at adjourned meetings of company's creditors and contributories
If a resolution is passed at an adjourned meeting of a company's creditors or contributories, the resolution is for all purposes taken to have been passed on the date on which it was in fact passed, and not as having been passed on any earlier date.491. Court may order meetings to be held to ascertain wishes of creditors or contributories
492. Judicial notice to be taken of documents of the Court
In all proceedings under this Part, all courts and tribunals, all judges and persons acting judicially, and all officers of a court or tribunal, or employed in enforcing the process of a court or tribunal, are required to take judicial notice of—493. Affidavits required to be sworn for purposes of this Part
Division 9 — Dissolution of companies after liquidation
494. Dissolution (voluntary liquidation)
495. Early dissolution of company
496. Consequence of notice given under section 495(3)
497. Dissolution otherwise than under sections 494 - 496
Division 10 — Offences relating to conduct before and during liquidation and criminal proceedings relating to those offences
498. Offence involving commission of fraudulent acts in anticipation of liquidation
499. Offence involving misconduct committed in course of liquidation of company
500. Offences involving transactions to defraud creditors of company in liquidation
501. Offence to falsify documents in relation to company in liquidation
502. Offence to make material omission from statement relating to financial position of company in liquidation
503. Offence to make false representations to creditors of company in liquidation
504. Power of the Court to make orders against delinquent directors, liquidators, etc.
505. Power of the Court to make orders against officers of company and others found to have participated in fraudulent trading by company in liquidation
506. Power of the Court to make orders against officers of company engaging in wrongful trading
507. Supplementary provisions relating to proceedings under sections 505 and 506
508. Director of company in insolvent liquidation prohibited from being director of, or being involved with, any other company that is known by a prohibited name
509. Circumstances in which persons are personally liable for debts of company
510. Prosecution of delinquent officers and members of company in liquidation
511. Obligations arising under section 510
Part VII – LIQUIDATION OF UNREGISTERED COMPANIES
512. Meaning of "unregistered company" for purposes of this Part
For the purposes of this Part, "unregistered company" includes any association and any company, other than a company registered under the Companies Act (Cap. 486).513. Liquidation of unregistered companies
514. Circumstances in which unregistered company can be liquidated
515. Company incorporated outside Kenya may be liquidated though dissolved
516. Contributories in liquidation of unregistered company
517. Power of the Court to stay or restrain proceedings
The provisions of this Part with respect to staying or restraining legal proceedings against a company after the making of an application for liquidation and before the making of a liquidation order extend, if the application to stay or restrain is made by a creditor, to legal proceedings against a contributory of an unregistered company.518. Actions stayed on liquidation order
If an order has been made for liquidating an unregistered company, no legal proceedings may be begun or continued against a contributory of the company in respect of any debt of the company, except by approval of the Court, and subject to such terms as the Court may impose.519. Provisions of this Part to be cumulative
Part VIII – ADMINISTRATION OF INSOLVENT COMPANIES
Division 1 — Introductory provisions: nature and objective of administration
520. Interpretation: Part VIII
In this Part—"administrator", in relation to a company, means a person appointed under this Part to manage the company's affairs and property, and, if the context requires, includes a former administrator;"creditors' meeting" means a meeting of creditors of a company under administration that is convened by the administrator as provided by the insolvency regulations;"enters administration" has the meaning given by section 521;"floating charge" means a charge that is a floating charge on its creation;"holder of a qualifying floating charge" in respect of a company's property has the meaning given by section 534 (holder of floating charge may appoint administrator of company);"market value" means the amount that would be realised on a sale of property in the open market by a willing vendor;"objective of administration" means an objective specified in section 522.521. What is administration?
For the purposes of this Act—522. The objectives of administration
Division 2 — Appointment of administrators otherwise than by the Court
523. Who can appoint an administrator?
A person may be appointed as administrator of a company—524. Duty of administrator
The administrator of a company shall perform the administrator's functions as quickly and efficiently as is reasonably practicable.525. Status of administrator
An administrator is an officer of the Court, whether or appointed by the Court or not.526. Qualification for appointment of administrators
A person may be appointed as administrator of a company only if the person is an authorised insolvency practitioner.527. Administrator not to be appointed if company is already under administration
528. Administrator not to be appointed if company is in liquidation
529. Administrator not to be appointed in respect of banking, finance and insurance companies
Division 3 — Appointment of administrators by the Court
530. What is an administration order?
An administration order is an order appointing a person as the administrator of a company and providing for the administration of the company by that person.531. Conditions for making administration orders
The Court may make an administration order in relation to a company only if satisfied—532. Who may make an application to the Court to for an administration order in respect of company
533. Powers of the Court on hearing application for administration order
Division 4 — Appointment of administrator by holder of floating charge
534. Holder of floating charge may appoint administrator
535. Restrictions on the power of holder of floating charge to appoint administrator
536. Administrator not to be appointed if relevant floating charge is not enforceable
A person may not be appointed as administrator under section 534 if the floating charge on which the appointment depends is unenforceable.537. Holder of relevant floating charge to notify the Court on appointing administrator
538. When administrator's appointment takes effect
The appointment of an administrator under section 534 takes effect when the requirements of section 537 are satisfied.539. Duty of holder of relevant floating charge to notify appointment to administrator and other persons
540. Power of the Court to order person invalidly appointed to be indemnified against liability
Division 5 — Appointment of Administrator by Company or Directors
541. Administrator may be appointed by company or by its directors
542. Restrictions on power of company or its directors to appoint administrator
lf an administrator of a company—543. Other restrictions on power of company or its directors to appoint administrator
544. Circumstances in which company or its directors may not appoint administrator
An administrator of a company may not be appointed under section 541 if—545. Notice to be given of intention to appoint administrator
546. Person giving notice of intention to appoint administrator to lodge certain documents with the Court
547. Further restrictions on making appointments under section 541
548. Person appointing administrator under section 541 to lodge certain documents with the Court
549. What happens if no one is entitled to notice of intention to appoint administrator
If no person is entitled to notice of intention to appoint under section 545(1) so that section 547 does not apply, the statutory declaration accompanying the notice of appointment is ineffective unless it includes the statements and information required under section 546(2), in which case section 548(2)(c) does not apply.550. When appointment of administrator under this Division takes effect
The appointment of an administrator under section 541 takes effect when the requirements of section 548 are satisfied.551. Person making appointment to notify appointment to administrator and others
552. Appointment under section 541 not to take effect in certain cases
If, before the requirements of section 548 are satisfied, the company enters administration under an administration order, or because of an appointment under section 534—553. Power of the Court to order person invalidly appointed to be indemnified against liability
Division 6 — Applications for administration—special cases
554. Power of the Court to make administration order in respect of company on application made by holder of qualifying floating charge even if company may be able to pay its debts
555. Holder of qualifying floating charge may intervene in application made by person who is not the holder of such a charge
If—556. Other circumstance in which holder of qualifying floating charge may make application for administration order
557. Power of liquidator of company to make an application for its administration
Division 7 — Effect of administration orders
558. Administration order in respect of company prevents making of application for liquidation order and suspends pending applications for liquidation order
559. Moratorium on insolvency proceedings while administration order has effect
560. Moratorium on other legal process while administration order has effect
560A. Considerations to take into account on applications for approval to lift moratorium
561. Interim moratorium when application for administration order has been made
562. Company's business documents to state that company's affairs are under administration
Division 8 — Process of Administration
563. Announcement of administrator's appointment
564. Relevant persons to provide administrator with statement of company's affairs
565. Deadline for submitting statement of affairs
566. Administrator to make statement setting out administrator's proposals for achieving the purpose of the administration
567. Conduct of creditors' meetings
The person presiding at a creditors' meeting shall ensure that it is conducted in the manner prescribed by the insolvency regulations.568. Requirement to convene initial creditors' meeting
569. When administrator is not required to convene meeting
570. Business to be conducted at initial creditors' meeting and obligation of administrator to report outcome to the Court and others
571. Administrator's proposals can be revised
572. Consequences of failure to obtain approval of administrator's proposals
573. Power of administrator to convene further creditors' meetings
574. Creditors' meeting may establish creditors' committee
575. Creditors' meeting can be conducted by correspondence
Division 9 — Functions and Powers of Administrator
576. Specific functions of administrator
The administrator of a company has the functions and powers specified in the Fourth Schedule.577. Power of administrator to remove and appoint directors of company
The administrator of a company—578. Power of administrator to convene meetings of members and creditors of company
The administrator of a company may convene a meeting of members or creditors of the company.579. Power of administrator to seek directions from the Court
580. General powers of administrator
581. Company under administration not to perform management functions without administrator's consent
582. Power of administrator to distribute company's assets to creditors
583. Power of administrators to make special payments in certain cases
The administrator of a company may make a payment otherwise than in accordance with section 582 or paragraph 13 of the Fourth Schedule if the administrator believes it likely to assist achievement of the purpose of administration.584. Duty of administrator to assume control of property of company
Immediately on being appointed as administrator of a company, the administrator shall assume control of all the property to which the administrator believes the company is entitled.585. Duty of administrator to manage affairs and property of company
586. Administrator is agent of company
In performing and exercising the administrator's functions and powers under this Part, the administrator of a company acts as its agent.587. Power of administrator to dispose of, and deal with, charged property: floating charge
588. Power of administrator to dispose of, and deal with, charged property: non-floating charge
589. Power of administrator to dispose of goods that are subject to credit purchase transaction
590. Protection for secured and preferential creditors
591. Administrator's conduct of administration can be challenged
592. Power of the Court to examine conduct of administrator's administration of the company
593. Automatic end of administration
The appointment of an administrator automatically ends at the end of twelve months from and including the date on which it took effect.594. Circumstances in which administrator's term of office can be extended
595. Court may terminate administration on application of administrator
596. Termination of administration when objective achieved
597. Court may terminate administrator's appointment on application of creditor
598. Court to terminate administrator's appointment on making of public interest liquidation order
599. Procedure for moving from administration to creditors' voluntary liquidation
600. Moving from administration to dissolution
601. Discharge of administration order if administrator's appointment is terminated
The Court shall discharge an administration order if—602. Administrator to lodge copy of order of the Court terminating appointment with Registrar of Companies
Division 10 — Termination of appointment and replacement of administrators
603. Resignation of administrator
604. Court may remove administrator from office
The Court may, by order, remove an administrator from office if satisfied that circumstances exist that make it inappropriate for the administrator to continue in office.605. Administrator to vacate office on ceasing to be qualified
606. Filling vacancy in office of administrator
Sections 607 to 611 apply to an administrator who—607. Power of the Court to replace administrator
608. Power of holder of floating charge to appoint replacement administrator appointed under section 534
If the administrator was appointed under section 534, the holder of the floating charge under which the appointment was made may replace the administrator.609. Power of company to appoint replacement administrator appointed under section 541(1)
610. Power of directors of company to appoint replacement administrator appointed under section 541(2)
611. Power of the Court to replace administrator in certain other circumstances
612. Court may replace administrator when there is a competing floating charge-holder
613. Creditors' meeting may replace administrator appointed by company or directors
614. Discharge from liability on administrator's vacating office
615. Former administrator's remuneration and expenses payable of company's property and to have priority over holders of floating charges
Division 11 — Supplementary provisions
616. Joint and concurrent administrators
617. Offences committed by joint administrators
618. Administrators acting concurrently
If two or more persons are appointed to act concurrently as the administrator of a company, a reference to the administrator of a company in this Part is to any of the persons appointed or to any combination of them.619. Power to appoint administrators to act concurrently
620. Presumption of validity of acts of administrator
An act of the administrator of a company is valid even if the administrator's appointment or qualification is subsequently found to be defective.621. Majority decision of directors
A reference in this Part to act done or omitted to be done by the directors of a company includes the same act done or omitted to be done by a majority of the directors of a company.622. Power to extend time limits
623. Certain specified period can be varied by consent
Part IX – COMPANY VOLUNTARY ARRANGEMENTS
Division 1 — Proposals for company voluntary arrangements
624. Interpretation: Division 1
In this Division—"prescribed publication", in relation to a company, means—625. Proposal for voluntary arrangement
626. Procedure if provisional supervisor is not the liquidator or administrator
627. Provisional supervisor to convene meetings of company and of its creditors
628. Conduct of meetings of company and its creditors
629. Approval of proposal for voluntary arrangement
630. Approved proposal to take effect as voluntary arrangement and to be binding on company and its creditors
631. Certain persons may challenge decisions relating to approved voluntary arrangement by making application to the Court
632. Offences involving false representations and fraudulent acts by company officers
633. Implementation of approved voluntary arrangement
634. Prosecution of delinquent officers of company
635. When voluntary arrangement comes to an end prematurely
For the purposes of this Division, a voluntary arrangement the approval of which has taken effect under section 630(1) ends prematurely if, when it ceases to have effect, it has not been fully implemented in respect of all persons bound by the arrangement because of section 630(2).PART IXA- PRE-INSOLVENCY MORATORIUM
[Act No. 1 of 2021, s. 12]Division 1 — Introductory Provisions
[Act No. 1 of 2021, s. 12]636. Interpretation: Part 2
637. Application of Part 2
This Division has effect with respect to—638. Eligible companies
A company is eligible to obtain a moratorium if it—639. Banking and insurance companies ineligible to obtain moratorium
The following companies are ineligible companies for the purposes of section 638:640. Companies under administration, etc., ineligible to obtain moratorium
641. Certain projects companies ineligible
642. [Repealed by Act No. 1 of 2021, s. 17]
Division 2 — Obtaining a moratorium
[Act No. 1 of 2021, s. 18]643. What steps company's directors have to take to obtain a moratorium
644. What directors have to do to obtain moratorium
645. Duration of moratorium
646. What happens when moratorium takes effect
647. Duty of monitor to publish and give notice that moratorium has taken effect
648. Notification of end of moratorium to be given by monitor
Division 3 — Effects of moratorium
[Act No. 1 of 2021, s. 25]649. Effect of moratorium on creditors and others
650. [Deleted by Act No. 13 of 2017, Sch.]
651. Security not to be enforced unless it would benefit the company
Security given by a company at a time when a moratorium has effect in relation to the company can be enforced only if, at that time, reasonable grounds existed for believing that the security would benefit the company.[Act 1 of 2021, s. 27]652. Application of sections 653 to 657 to company in respect of which a moratorium has effect
653. Company invoices and other documents to state monitor's name and that moratorium has effect
654. Restrictions on company obtaining credit during moratorium
655. Restrictions on disposal of property and making payments by company
656. Restriction on company paying debts and other liabilities
657. Circumstances in which company may dispose of property and goods that are subject to a security or held under credit purchase transaction
Division 4 — Monitors
[Act No. 1 of 2021, s. 32]658. Monitor's to monitor activities of company during moratorium
659. Withdrawal of monitor's consent to act
660. Creditors and others may challenge monitor's conduct during moratorium by application made to the Court
661. Creditor may pursue claim against monitor for loss
662. Replacement of monitor by the Court
663. [Repealed by Act No. 1 of 2021, s. 39.]
664. [Repealed by Act No. 1 of 2021, s. 40.]
665. [Repealed by Act No. 1 of 2021, s. 41.]
666. [Repealed by Act No. 1 of 2021, s. 42.]
667. [Repealed by Act No. 1 of 2021, s. 43.]
668. [Repealed by Act No. 1 of 2021, s. 44.]
Division 5 — Extension of moratorium
[Act No. 1 of 2021, s. 45]669. Extension of moratorium
On the application of the directors, the Court may extend a moratorium for a period of at least thirty days if the Court believes that the extension is desirable in order to achieve the aims for which the moratorium was initially obtained under section section 643.[Act No. 1 of 2021, s. 46]670. Conditions for extension of moratorium
671. Decisions to extend or further extend moratorium
672. [Repealed by Act No. 1 of 2021, s. 49.]
Division 6 — Supplementary provisions
[Act No. 1 of 2021, s. 50]673. [Repealed by Act No. 1 of 2021, s. 51.]
674. Member or creditor of company may challenge actions of directors
675. Offences under this Division
676. [Deleted by Act No. 13 of 2017, Sch.]
Part X – PROVISIONS APPLICABLE TO COMPANIES THAT ARE EITHER IN LIQUIDATION OR UNDER ADMINISTRATION
677. Interpretation: Part X
In this Part—"deliver", in relation to documents or other property, includes surrender and transfer;"relevant office-holder" means—678. Realising property of company that is in liquidation or under administration
679. Duty of certain persons to co-operate with relevant office-holder
680. Power of the Court to conduct inquiry into insolvent company's dealings, etc., on application made by relevant office-holder
681. Court's enforcement powers under section 680
682. Power of the Court to set aside transaction that is under value
683. Power of the Court to void certain preferences
684. What "relevant time" means in sections 682 and 683
685. Orders under sections 682 and 683: ancillary provisions
686. Power of the Court to set aside certain extortionate credit transactions
687. Circumstances in which floating charge on company's undertaking or property to be invalid
688. Lien in respect of company's documents unenforceable if it would deny their possession to relevant office-holder
689. Supply of utility services to companies in liquidation or under administration
690. Appointment of administrative receiver in respect of company prohibited
Part XI – LEGAL PROCEEDINGS UNDER THIS ACT
Division 1 — General provisions relating to legal proceedings under the Act
691. Enforcement of company's obligations to lodge documents with, or give notice to, the Registrar of Companies
692. Power of the Court to grant injunctions in certain cases
693. Liability of officer who are in default
694. Offences by bodies corporate
695. Admissibility in evidence of statement prepared for purpose of provision of this Act or the insolvency regulations
696. Legal proceeding under this Act not to be invalidated or set because of a defect unless person detrimentally affected
697. Power to make insolvency procedure rules
Division 2 — Appeals and reviews, etc.
698. Power of the Court to review, rescind or vary order made under this Act
The Court may review, rescind, or vary any order of the Court under this Act.699. Right of appeal to Court of Appeal
700. Suspension of bankruptcy, liquidation or administration pending determination of appeal
Part XII – ADMINISTRATION OF THIS ACT
Division 1 — Official Receiver and Deputy Official Receivers
701. Appointment of Official Receiver and others
702. Deputy Official Receiver may act on behalf of Official Receiver
A Deputy Official Receiver may act for, or in the place of, the Official Receiver or another Deputy Official Receiver, and in that capacity has all the authority and powers of the Official Receiver or Deputy Official Receiver for whom, or in whose place, he or she acts.703. Incorporation of Official Receiver as a corporation sole
704. Vacation of office by Official Receiver and Deputy Official Receiver
705. Protection of Official Receiver and Deputy Official Receivers from liability
Neither the Official Receiver nor a Deputy Official Receiver is liable in civil proceedings for any act that the Official Receiver or Deputy Official Receiver has done or omitted to do for the purpose of performing or exercising in good faith any function or power imposed or conferred on the Official Receiver or a Deputy Official Receiver by or under this Act or any other written law.706. Official Receiver and Deputy Official Receivers may charge fees
707. Rates of Official Receiver's fees
708. Insolvency Services Account to be established and maintained
709. Official Receiver to pay certain unclaimed dividends and undistributed balances into Insolvency Services Account
The Official Receiver shall from time to time pay into the Consolidated Fund out of the Insolvency Services Account so much of the amounts standing to the credit of that Account as represents—(a)dividends which were declared before such date as the National Treasury may from time to time determine and have not been claimed; and(b)balances ascertained before that date that are too small to be divided among the persons that may otherwise be entitled to them.Division 2 — Public registers relating to bankrupts and others
710. Application of Division 2
This Division applies to a public register established under section 47, 337 or 350.711. Official Receiver to ensure access to public registers
712. Purposes of public registers
713. General information to be included in public registers
714. Information kept indefinitely on public register after multiple insolvency events
715. Restricted information that may be included in public register relating to bankruptcies
716. When Official Receiver may omit, remove, restrict access to, or amend, information contained in a public register
717. Right of members of public to inspect registers
718. Information contained in public registers may be used for statistical or research purposes
Nothing in this Division prevents the use of information contained in the public registers for statistical or research purposes if the information—719. Government and Official Receiver not liable for certain acts and omissions
Neither the Government nor the Official Receiver may be sued for any act or omission in relation to the maintenance of a public register under this Division done or omitted to be done in good faith and with reasonable care.Part XIII – SUPPLEMENTARY PROVISIONS
720. Cross border insolvency
The United Nations Commission on International Trade Law (Model Law on Cross-Border Insolvency) has the force of law in Kenya in the form set out in the Fifth Schedule.721. Representation of bodies corporate at meetings
722. Courts, Official Receiver and others to publish orders and notices on their respective websites
723. Official Receiver, bankruptcy trustees, liquidators and administrators to notify creditors of prescribed steps in the insolvency process
723A. Information by insolvency practitioner
724. Certain transactions relating to bankrupt's estate exempt from stamp duty
Stamp duty is not payable in respect of—725. Re-direction of bankrupt's correspondence
726. Supply of utility services to bankrupts and others
727. Order for production of documents by Kenya Revenue Authority
728. Cabinet Secretary to prepare annual report
Not later than three months after the end of 2015 and each subsequent calendar year, the Cabinet Secretary shall prepare a report about the operation of this Act during that year and arrange for a copy of the report to be laid before each House of Parliament.729. Service of documents, etc., for the purposes of this Act
730. Power of Cabinet Secretary to make insolvency regulations for the purposes of this Act
731. Act to bind the Government
This Act binds the Government.732. Repeal of Bankruptcy Act and revocation of subsidiary legislation (Cap. 53, sub. leg)
733. Transitional provisions: insolvency of natural persons
734. Transitional provisions: Winding up and insolvency of companies
735. Power of Cabinet Secretary to make savings and transitional regulations
History of this document
31 December 2022 this version
Revised by
24th Annual Supplement
30 March 2021
30 June 2020
Amended by
Finance Act, 2020
Read this version
18 March 2020
25 November 2019
Amended by
Data Protection Act
Read this version
23 July 2019
16 May 2016
18 September 2015
11 September 2015
Assented to
Documents citing this one 662
Judgment 462
Gazette 174
Act 10
| 1. | Employment Act | 6043 citations |
| 2. | Income Tax Act | 842 citations |
| 3. | Co-operative Societies Act | 430 citations |
| 4. | Banking Act | 377 citations |
| 5. | Insurance Act | 292 citations |
| 6. | Movable Property Security Rights Act | 38 citations |
| 7. | Limited Liability Partnership Act | 29 citations |
| 8. | National Payment System Act | 21 citations |
| 9. | Industrial Training Act | 9 citations |
| 10. | National Rating Act | 2 citations |
Bench Bulletin 9
Bill 5
Legal Notice 2
| 1. | The Retirement Benefits (Income Drawdown Funds) Regulations | |
| 2. | The Social Health Insurance Regulations, 2024 |
Subsidiary legislation
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Title
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| The Insolvency Regulations | Legal Notice 47 of 2016 |