M-Wakili

Insolvency Act 18of 2015 Compressed - as Plain Text by MWakili

SPECIAL ISSUE Kenya Gazette Supplernent No.

159 (Acts No.

l8) "o.k:- ^oult$- *s'S$B.

REPUBLIC OF KENYA KENYA GAZETTE SUPPLEMENT ACTS, 2015 NAIROBI, 15th September, 2015 Act- PAGE The Insolvency Act,2015.

.1023 $$llffcfL Fdf; i,Ar ffiP0f;ffrc RHcEIVED 00 oeT 2015 F,0, Hgx jsa{g.E0l00 NAIEggI, HENYA l=iir1: lEl FAIiEII PRINTED AND PUBLISHED BY THE C,OVERNMENT PRINTER.

NAIROBI 1023 THE INSOLVENCY ACT No.18 of 2015 Date of Assent: I lth September,2015 Date of Commencement: See Section l ARRANGEMENT OF SECTIONS Section PART I-PRELIMINARY PROVISIONS l-Short title and commencement.

2-Interpretation.

3-Objects and application of this Act.

PART II - INSOLVENCY PRACTITIOI\ERS 4-Circumstances in which person acts as insolvency practitioner.

5 -Consequences of acting without authorisation.

6-Qualifications for person to act as insolvency practitioner.

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.

l0-Power of Official Receiver to revoke authorisation.

11-Right to appeal against decisions of Official Receiver.

PART III_BANKRUPTCY OF NATURAL PERSONS Division l-Bankruptcy: Introductory provisions 12 -lnterpretation : Part III.

I3 -Nature of bankruptcy.

14 -Alternatives to bankruptcy.

l5-Who is entitled to make a bankruptcy application.

l6-Proceedings on a bankruptcy application.

1024 Insolvency 20ts No.18 Division 2-Bankruptcy applications by creditors l7-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.

20-Proceedings on creditor's application.

Zl-Creditor's execution process not to be issued or continued.

Z2-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24-No restriction on execution process if bankruptcy application withdrawn or dismissed.

25-When court may adjudge debtor bankrupt.

26-When court may stay application.

27 -Orders if more than one application.

28-Orders if there is more than one order.

29-Power of court to make order staying bankruptcy application, etc.

30-Court may stay application while underlying debt is determined.

3l-Court may allow one creditor to be substituted for another.

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.

L025 20ts Insolvency No.18 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.

Division 5 -Adjudication of bankruptcy applications 4l -Bankruptcy commences on making of bankruptcy order.

42-Date and time of bankruptcy order to be recorded.

43-Registrar of the Court to notify trustee of bankruptcy order.

44-Official Receiver to nominate bankruptcy trustee.

45-Presumption that act was done, or transaction was entered into or made, after bankruptcy.

46-Bankruptcy order to be binding on all 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.

5l-Creditors entitled to inspect and take copies of statement.

t026 Insolvency 2015 No.18 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 begin or continue after bankruptcy order advertised.

57-Effect of bankrupt's death after bankruptcy order.

58-Creditors' role at creditors' meetings.

Divlslon 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 bankruptey trustee.

63-Powers of bankruptoy trustee.

64-Banlffuptcy trustee not to sell bankrupt's property before first creditors' meeting.

65-Title of purchaser from bankruptcy trustee.

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.

7l-Application to the Court to reverse or modify bankruptcy trustee's decision.

to27 2015 Insolvency No.18 72-Bankruptcy trustee to keep proper accounting records.

73-Bankmptcy trustee's final statement of receipts and payments.

74-Audit of banknrptcy 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 oblightions.

78-Vacancy in office of bar*ruptcy trtrstee.

79-General control of bankruptcy tnrstee by the Court.

8O-Liability of bankruptcy trustee for misapplication of Dlvision E-Creditors' meetiags and credltorst commlttee 8I -Kinds of creditors' rneetings.

82 - Subsequent meetings of oeditors.

83-Meeting and resolution not defective for lack of notice.

84-Appointment of chairperson to conduct creditors' meetings.

85-Power of chairperson to adjourn creditors' meeting.

86-Bankruptcy bustee to report to creditors' meeting.

87-Who can attend creditors' rneeting.

S8-Bankrupt may be required to attend creditors' meeting and be questioned.

S9-Attendance at creditors' meeting by non-creditors.

90-Minutes and record of creditors' meeting.

91-Number of persons required for creditors' meeting to be valid.

92-VIho can represent creditors and bankrupt at creditors' meeting.

1028 Insolvency 2015 No.18 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.

96-When secured creditor may vote at creditors' meeting.

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.

l00-Creditors may appoint expert or committee assist bankruptcy trustee.

101-Creditors' right to inspect documents.

lO2-Committee of creditors may be established.

lO3-Exercise by Cabinet Secretary of functions of creditor's committee.

Division 9-Bankrupt's property after bankruptcy l04-Status of property acquired during bankruptcy.

l05-Property vests in replacement bankruptcy trustee.

106-Property held in trust by bankrupt.

107-Court may order money due to bankrupt to be assigned to bankruptcy trustee.

lO8-Certain payments to be applied in accordance with the Second Schedule.

109-When execution creditor may retain execution proceeds.

1lO-Effect of notice to judicial enforcement officer of bankruptcy.

lll-Judicial enforcement officer to retain proceeds of execution for fourteen days after sale.

ll2-Purchaser under sale by judicial enforcement officer acquires good title.

L029 2015 Insolvency No.18 1l3-Court may set aside rights conferred on bankruptcy trustee.

Il4-Transaction in good faith and for value after bankruptcy.

1l5-Executions and attachments in good faith.

116-When execution or attachment completed for purposes of section 109 or I 15.

1l7-Bankruptcy trustee's interest in property passes to transferee.

Division 10 - Disclaimers of bankrupt's property 1l8-Bankruptcy trustee may disclaim onerous property.

1 19-Effect of disclaimer.

l20-Position of person who suffers loss as result of disclaimer.

l2l-Bankruptcy trustee may be required to elect whether to disclaim.

L22-Liability for rentcharge on bankrupt's land after disclaimer.

L23-Transmission of interest in land.

124-Bar*,ruptcy trustee cannot claim interest in land if bankrupt remains in possession until discharge.

l25-Bankruptcy trustee may transfer shares and other securities.

126-Bankruptcy trustee may disclaim liability under shares.

l27Bankruptcy trustee may disclaim liability under shares.

l28-Bankruptcy trustee may be required to elect whether to disclaim liability under shares.

L29-Transfer of shares after disclaimer.

l3O-Company may prove for unpaid calls.

Division 1l-Goods held by bankrupt under credit purchase transaction 13I -Interpretation: Division 11.

1030 Insolvency 20r5 No.18 132-Restrictions on creditor dealing with goods.

133-Bankruptcy trustee's powers in relation to goods that are subject to a credit purchase transaction.

l34-Creditor in possession of goods may prove in bankruptcy if bankruptcy trustee has not exercised powers.

l35-Creditor may assign goods to bankruptcy trustee.

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 l38-Separate accounts to be kept for each bankrupt.

139-How joint and separate estates are to be applied.

Divislon l4-Duties of bankrupt l40-General duty of bankrupt.

l41-Bankrupt to disclose property acquired before discharge.

l42-Bankrupt to deliver property to bankntptcy trustee on demand.

143-Court may impose charge on banknrpt's propefty.

144-Bankrupt to give bankruptcy trustee accounting records and other documents.

145-Bankrupt to give bankruptcy trustee information relating to property.

146-Bankrupt to give bankruptcy trustee information relating to income and expenditure.

147-Bankrupt to notify bankruptcy trustee of change in personal information.

l48-Bankrupt to give bankruptcy trustee financial information.

Division l5-Restrictions on bankrupt during bankruptcy 149-Interpretation: Division 15.

1031 Insolvency No.18 150-Bankrupt can be required to contribute to payment of debts.

151-Onus of proof if bankrupt defaults in making payment.

1 52 - Prohibition of bankrupt entering business.

153-Warrant to search for and seize bankrupt's property.

1 54 - Seizure of bankrupt's property.

155-Bankrupt to vacate land or buildings if required to do so.

156-Bankrupt's right to inspect documents.

l57-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.

Divlsion 16-Provlsion allowed for bankrupt during bankruptcy 161-Bankrupt entitled to retain eertain assets.

162-Bankrupt may retain certain assets with consent of creditors.

163-Retention of assets not to affect rights under charge or credit purchase transaction.

164-Retention provisions not to confer rights to other assets.

165-Relative or dependant entitled to exercise bankrupt's right to retain assets.

166-Bankruptcy trustee may make allowance)e to bankrupt.

167*Bankruptcy trustee may allow bankrupt to retain money.

to32 No.

L8 Insolvency 20ls Division l7-Powers of bankruptcy trustee and the Court to examine bankrupt and others Subdivisi.on 7 -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.

l70-Expenses of person summoned by bankruptcy trustee or the Court.

171-Entitlement of examinee to be represented.

t72-Creditor may inspect record of examination.

173-Report of examination not to be published without court's consent.

17 -Examination provisions also apply when bankruptcy trustee appointed interim trustee in respect of debtor's property.

175-No lien over bankrupt's documents and other records.

176-Offences relating to conduct of examinations by bankruptcy trustee.

Subdivision 2-Public exarnination 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.

l79-Bankruptcy trustee to lodge report with the Court before start of examination.

l80-Conduct of public examination before the Court.

i81-Bankruptcy trustee to ensure record of examination is kept.

I 82-When examination ends.

183-Consequence of bankrupt's failing to attend examination.

184-Bankrupt entitled to be paid expenses for attending examination.

1033 2015 Insolvency No.

L8 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.

l88-Entitlement of examinee to be represented.

Division l8-Status of bankrupt's contracts l89-Bankruptcy trustee may continue or disclaim bankrupt's contracts entered into before bankruptcy commenced.

l90-Contract terminated by other contracting party.

l9l-Transaction with bankrupt made in ignorance of bankruptcy.

l92-Bankrupt's co-contractor may sue and be sued if there is a joint contractual liability.

193-Bankruptcy trustee may recover advocate's costs.

Division l9-Irregular transactions involving bankrupt l94-Application of Division 19.

195-Power to extend certain periods specified in this Division.

196-Insolvent transactions may be cancelled by bankruptcy trustee.

197 -Meaning of insolvent transaction for purposes of section 196.

I 98 -Insolvent transaction presumed.

199-When series of transactions are to be regarded as single transaction.

2OO-Insolvent charges can be cancelled on bankruptcy trustee's initiative.

20l-Charge for new consideration or replacement charge not affected.

202-Presumption that bankrupt unable to pay due debts.

1034 Insolvency 2015 No.18 2O3-Charge for unpaid purchase price given after sale of property.

ZA4-Appropriation of payments by bankrupt to secured creditor.

205-Charge agreed before specified period not to be cancelled.

206-Cancellation of gifts made within two years before 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.

2l0-Limits on what can be recovered.

2ll-Bankruptcy trustee may recover difference in value if transaction is found to be undervalue.

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.

2l9-Bankruptcy trustee to give creditor notice of grounds of rejection.

Z20-Bankruptcy trustee's power to obtain evidence of debt.

1035 Insolvency No.18 22l-Notice by bankrupt or creditor to bankruptcy trustee to allow or reject creditor's claim.

222 -CotxL may cancel creditor' s claim.

223-Power of court to quash or vary bankruptcy trustee' s decision rejecting creditor' s claim.

zz4-Parties to proceedings relating to creditor's claim.

225-Court may make order as to costs.

226-Secured creditor's options in relation to property subject to a charge.

227 -Power of the Court to order disposal of property that is subject to a charge.

228-Realisation of property that is subject to a security.

229-Yaluation 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 that is subject to a 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.

234-Application to court to determine amount of uncertain creditor's claim.

Z3l-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.

238-Posrbankruptcy interest payable at prescribed rate if surplus remains.

z3g-Additional post-bankruptcy interest on contract or judgment debt if surplus remains.

1036 No.18 Insolvency 2015 240-Meaning of prescribed rate for purposes of sections 238 and239.

241-Creditor required to deduct trade discounts.

Z42-Secared creditor can prove as unsecured creditor if security is void or partly void.

Z43-Judgment creditor may prove for costs.

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 2I 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.

250-Priority given to landlord or other person who distrains on goods and effects of bankrupt.

2lt-Creditors to have priority over creditors of joint bankrupt.

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.

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.

to37 Insolvency No.18 261-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-Coutmay quash order discharging bankrupt.

265-Effect of quashing order discharging bankmpt from banlcuptcy.

266-Banknrpt 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 baril<ruptcy and validity of bankruptcy proceedings.

269-Discharge not to release partners of bankrupt and others.

270-Discharged barfrrupt to assist bankruptcy trustee.

27l-Official Receiver to rccord in public register decision of the Court refusing to discharge banknrpt, etc.

Dlvlslon 23-Annulment of bankruptcy orders 272-Court may annul bankruptcy order in certain circumstances.

273-When Official Receiver may annul bankruptcy order.

274-Effect of annulment of bankruptcy order.

Division 24- Composition during bankruptcy 27 5 -Interpretation: Division 24.

276-Creditors may accept composition by passing preliminary resolution.

277 -Composition not effective unless approved by confirming resolution.

27 8 - Compositions with members of partnership.

1038 Insolvency No.18 279-Composition not binding unless approved by the Court.

280-Procedure for approval of by the Court.

281-Deed of composition to be executed.

Z82-Effect of deed of composition.

283-Bankrupt remains liable for unpaid balances of certain debts.

Z84-Deadlines for steps to approve 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.

Division 25 -Bankruptcy offences 289-Offences in relation to debts.

29O-Offences in relation to property.

29l-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.

294-Offences in relation to credit, etc.

295-Offences in relation to obtaining consent of creditors.

296-Offence for bankrupt to leave Kenya without consent.

297 -General penalties for bankruptcy offences.

298-Failure to keep and preserve proper record of transactions.

299-Failure to keep proper records with intent to conceal.

1039 2015 Insolvency No.18 300-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 l-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.

31O-Conduct of creditors' meeting: consideration of debtor's proposal.

3I I -Approval of debtor's proposal.

3l2-Effect of approval of debtor's proposal by meeting of creditors or by the Court.

3I3 - Additional effect on undischarged bankrupt.

314-Right to challenge decision taken at creditors' meeting.

3l5-Implementation and supervision of voluntary arrangement.

S ubdivision 2 - Expedited procedure 316-Expedited voluntary arrangement procedure: availability.

317-Duty of Official Receiver to report result to the Court.

1040 Insolvency 2015 No.18 3I8 -Approval of expedited voluntary arangement.

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.

Subdivisian 3-Criminal conduct under the Division 321-Offence for debtor to make false representation for purpose of obtaining creditors' approval.

322 -Prcsecution of delinquent debtors.

Divlslon 2-Summary instalment orders 323-What is a summary instalment order? 324-Who can apply for summary instalment order.

325-Requirements for applieations made by debtors.

326-Official Receiver may make summary instalment order.

327 -Power of Official Receiver to make additional 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.

332-Period for payment of instalments.

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.

1041 2015 Insolvency No.18 338-When surnmary instalment order ceases to be current.

339-Claims of creditors when summary instalment order 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.

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.

347 -Offici.al Receiver to notify creditors.

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.

3lZ-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.

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.

1042 Insolvency 2015 No.18 358-Creditor may apply to Official Receiver for termination of debtor's participation in no asset procedure.

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.

PART V-ADMIMSTRATION OF INSOLVENT DECEASEDS' ESTATES Division I -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.

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.

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.

1043 2015 Insolvency No.18 374-Trustee's functions and powers in respect of insolvent deceased' s estate.

375 - Distribution of insolvent deceased's estate.

376-How any surplus is to be paid.

377 -Creditor's notice to executor or administrator.

378-Power of trustee to act in relation to deceased's irregular transactions.

379-Trustee may cancel execution against insolvent deceased's estate.

38O-Certain acts of executor or administrator valid if done in good faith.

PART Vr-LTQUIDATION OF COMPANIES Division 1 -Introductory provisions 381-Scheme of Part VI.

382-Distinction between "members"' and "creditors"' voluntary liquidation.

3 83 - 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.

390-Death of contributories not to affect their liabitrity.

39l-Liability of contributories who are adjudged bankrupt.

392-Liability of contributories to contribute to debts of company registered but not formed under Companies Act,20l5.

to44 Insolvency 2015 No.18 Division 2-Yoluntary liquidation (introductory and general) 393-Circumstances in which company may be liquidated voluntarily.

394-Notice of resolution to liquidate.

395 - When liquidation coilrmences.

396-Consequences of resolution to liquidate.

397-Share transfers and attempts to alter member's status after liquidation resolution to be void.

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.

Division 4- Creditors' voluntary liquidation 405-Application of Division 4.

406-Meeting of creditors to be convened by company.

4O7-Directors to lay statement of financial position before creditors.

4O8-Creditors' voluntary liquidation: appointment of liquidator.

409-Creditors may appoint liquidation committee.

4l0-Creditors' meeting if liquidation converted under section 404.

41I -Cessation of directors' powers.

4l2-Yacancy in office of liquidator: creditors' voluntary liquidation.

413-Meetings of company and company's creditors to be held every twelve months.

1045 Insolvency No.18 414-Final meeting prior to dissolution: creditors' voluntary liquidation.

Division S-Provisions applying to both kinds of voluntary liquidation 4l5-Property of company to be distributed among members after satisfaction of liabilities.

416-Appointment or removal of liquidator by the Court.

4l7-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.

4l9-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.

42l-Restrictions on directors' power to appoint or nominate liquidator of company in voluntary liquidation.

422-Saving for certain rights.

Division 6-Liquidation by the Court 423-Jurisdiction of High Court to supervise liquidation of companies.

424-Circtmstances in which company may be liquidated by the Court.

425-Applications to the Court for liquidation of 426-Application for liquidation of company on grounds of public interest.

427 -Powers of the Court on hearing of liquidation application.

428-Power to stay or restrain proceedings against company when liquidation application has been made.

1046 Insolvency 2015 No.18 429-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.

431-When liquidation of the 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.

M2-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.

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.

LO47 Insolvency No.18 448-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.

454-Cowt to adjust rights of contributories.

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.

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.

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.

1048 Insolvency 2015 No.18 467 -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 case of company being liquidated by the Court.

Division 8-hovisions applying to all kinds of liquidation 47 I -Preferential debts (general provision).

4l2*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-Sharc 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 rent charge.

479-General powers of the Court in respect of disclaimed property.

48O-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 1049 Insolvency No.18 completes execution or attachment before cornmencement 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.

489-Liquidator to lodge periodie statements with Registrar of Companies with respect to cunent position of liquidation.

490-Effect of resolutions passed at adjourned meetings of company's creditors and contributories.

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.

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 4es(3).

497-Dissolution otherwise than under sections 494 to 496.

1050 No.

18 Insolvency 2015 Division 10-Offences relating to conduct before and during liquidation and criminal proceedings relating to those offences 498-Offences involving commission of fraudulent acts in anticipation of liquidation.

499-Offences involving transactions to defraud creditors of company in liquidation.

500-Offence involving misconduct committed in course of liquidation of company.

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.

5O3-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.

5O7-Supplementary provisions relating to proceedings under sections 505 and 506.

5O8-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.

5O9-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 1051 Insolvency No.18 5l2-Meaning of "unregistered company" for purposes of this Part.

5I3 -Liquidation of unregistered companies.

514-Circumstances in which unregistered company can be liquidated.

5l5-Company incorporated outside Kenya may be liquidated though dissolved.

5l6-Contributories in liquidation of unregistered company.

517-Power of the Court to stay or restrain proceedings.

5l8-Actions stayed on liquidation order.

5l9-Provisions of this Part to be cumulative.

PART VIII-ADMINISTRATION OF INSOLVENT COMPAI{IES Division 1-Introductory provisions: nature and objective of administration 52O-Interpretation: Part VIII.

52 1 -Vlhat is administration? 522 -The objectives of administration.

Division 2-Appointment of administrators otherwise than by the Court 523-Who can appoint an administrator? 524 -Duty of administrator.

525 - Status of administrator.

526 - Qualification for appointment of administrators.

527-Adnrnistrator not to be appointed if company is already under administration.

s28-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 administrator by the Court 530-What is an administration order? 1052 Insolvency 2015 No.l.8 53 1 -Conditions for making administration orders.

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-Appointrnent of adrninistrator by holder of floating charge 534-Hoider of floating charge may appoint administrator.

S35-Resricdons on the power of holder of floating charge to appoint administrator.

536-Administrator not to be appointed if relevant floating charge is not enforceable.

537-Holder of relevant floating charge to notify the Court on appointing administrator.

538 - When administrator' s appointment takes effect.

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.

Divlslon S-Appointment of adminlstrator 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.

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.

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.

1053 20lS Insolvency No.18 547-Further restrictions on making appointments under section 541.

'l 541 548-Person appointing administrator under section to lodge certain documents with the Court.

549-What happens if no one is entitled to notice of intention to appoint administrator.

550-When appointment of administrator under this Division takes effect.

551-Person making appointment to notify appointment to administrator and others.

552-Appointment under section 550 not to take effect in certain cases.

553-Power of the Court to order person invalidly appointed to be indemnified against liability.

Division 6-Applications for administration-special i cases , 554-Power of the Court to make administration order in I 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.

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 adminisffation.

Division 7-Effect of administration order 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.

1054 Insolvency 2015 No.18 561-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.

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.

57 I -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.

577-Power of administrator to remove and appoint directors of company.

578-Power of administrator to convene meetings of members and creditors of company.

1055 2015 Insolvency No.

L8 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.

584-Duty of administrator to assume control of property of company.

585-Duty of administrator to manage affairs and property of company.

586-Administrator is agent of company.

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.

594-Circumstances in which administrator's term of office can be extended.

595-Court may terminate administration on application of adminisfrator.

596-Termination of administration when objective achieved.

597-Court may terminate administrator's appointment on application of creditor.

1056 Insolvency 2015 No.lt 598-Court to terminate administrator's appointment on making of public interest liquidation order.

599-hocedure for moving from administration to creditors' voluntary liquidation.

600-hocedure for moving from administration to dissolution.

601-Discharge of administration order administrator' s appointment is terminated.

602-Administrator to lodge copy of order of the Court terminating appointment with Registrar of Companies.

Dlvlsion l0-Termination of appointment and replacement of administrators 603 -Resignation of administrator.

604-Court may remove administrator from office.

605-Administrator to vacate office on ceasing to be qualified.

606-Filling vacancy in office of administrator.

607-Power of the Court to replace administrator.

608-Power of holder of floating charge to appoint replacement administrator appointed under section 534.

609-Power of company to appoint replacement administrator appointed under section 541 ( I ).

610-Power of directors of company to appoint replacement administrator appointed under section s4t(2).

6l I -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.

I 1057 20fS Insolvency No.lt 6I5 * Former administrator' s remuneration and expenses payable of company's property and to have priority over holders of floating charges.

Divlslon I1 - Supplementary provlslons 616-Joint and concurrent administrators.

617 * Offenges committed by joint administrators.

6I8 -Administrators acting concurrently.

619-Power to appoint administrators to act concurrently.

620-Presumption of validity of acts of administrator.

621 -Majority decision of directors.

622*Power to extend time limits.

623-Cetarn specified periods can be varied by consent.

PAR,T IX - COMPANY VOLT'NTARY ARRANGEMENTS Dlvlslon 1-Proposals for company voluntary arrangements 624-Interpretation: Division l.

625 - Proposal for voluntary arrangement.

626-Procedure if supervisor is not the liquidator or administrator.

627 - Provisional supervisor to convene meetings of oompany 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 ereditors.

631-Certain persons may challenge decisions relating to approved voluntary arrangement by making application to the Coun.

632-Offonces involving false representations and fraudulent acts by company officers.

1058 Insolvency 2015 No.18 633-Implementation of approved voluntary arrangement.

634-Prosecution of delinquent officers of company.

635-When voluntary arrangement comes to an end prematurely.

Division 2-Moratoria on debt payments when company's directors propose voluntary arrangement 7I provisions S ubdivision - ntroductory 636-Interpretation: Division 2.

637-Application of Division 2.

638 -Eligible companies.

639-Banking and insurance companies ineligible to obtain moratorium.

640-Companies under administration, etc.

ineligible to obtain moratorium.

641-Certain project companies ineligible to obtain moratorium.

642*Companies with large outstanding liabilities ineligible.

Subdivision 2 - Obtaining a moratorium 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 provisional supervisor to publish and give notice that moratorium has taken effect.

648-Notification of end of moratorium to be given by provisional supervisor.

S ubdivision 3 - Effe cts of moratorium 649-Effect of moratorium on creditors and others.

650-Effect of moratorium on property that is subject to uncrystallised floating charge.

1059 2015 Insolvency No.18 651-Security not to be enforced unless it would benefit the company.

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 provisional supervisor'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.

Subdivision 4 - Provisional supervisors 658-Provisional supervisor to monitor activities of company during moratorium.

659-Withdrawal of provisional supervisor's consent to act.

660-Creditors and others may challenge provisional supervisor's conduct during moratoriumby application made to the Court.

661-Creditor may pursue claim against provisional supervisor for loss.

662-Replacement of provisional supervisor by the Court.

S ubdivision 5C onsideration of propo - s al for and impkme ntation of v oluntary arrange me nt 663-Provisional supervisor to convene meetings of the company and its creditors.

664-Conduct of meetings of company and its creditors.

665-Approval of proposal for voluntary arrangement.

666-Voluntary arrangement binding on company and creditors.

1060 Insolvency 201s No.18 667-Right to challenge decisions relating to approved voluntary arrangement.

668 -Implementation of voluntary arrangement.

ES ubdivision 6 - xtension of moratorium 669-Circumstances in which moratorium may be extended.

670-Conditions for extension of moratorium.

671-Decisions to extend or further extend moratorium.

672-Meeting of company or creditors may establish moratorium committee.

S ubdivision 7 - Supplementary provisions 673-Effect of certain decisions of meetings of company and company's creditors.

674-Member or creditor of company may challenge actions of directors.

675-Offences under this Division.

676-Certain provisions in floating charge documents to be void.

PART X-PROYISIONS THAT ARE APPLICABLE TO COMPAIYTES THAT AR EITHER IN LIQUIDATION OR UNDER ADMIMSTRATION 677 -lnterpretation: Part X 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 undervalue.

683-Power of the Court to void certain preferences.

684-What "relevant time" means in sections 682 and 683.

1051 2015 Insolvency No.18 685-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, etc.

690-Appointment of administrative receiver in respect of company prohibited.

PART XI-LEGAL PROCEEDINGS UNDER.

TIIIS ACT Division l-General provlslons relating to legal proceedings under the Act 691-Enforcement of company's obligations to lodge documents with, or give notice to, Registrar of Companies.

692-Power of the Court to grant injunctions in certain cases.

693-Liability of officers who are in default, 694-Offences by bodies corporate, 595-Admissibility in evidence of statement prepared for purpose of provision of this Act or the insolvency regulations.

696-L,egal proceeding under this Act not to be invalidated or set because of a defect unless person detrimentally affected.

597*Power to make insolvency procedure rules.

Divlsion 2-Appeals, reviews, etc.

698-Power of the Court to review, rescind or vary order made under this Act.

699*Right of appeal to the Court of Appeal, to62 No.

L8 Insolvency 2015 700-Suspension of bankruptcy, liquidation or administration pending determination of appeal.

PART XII_ADIVINISTRATION OF THIS ACT Division 1-Official Receiver and Deputy Official Receivers 701-Appointment of Official Receiver and others.

702-Deptty Official Receiver may act on behalf of Official Receiver.

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.

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.

Division 2-Public registers relating to bankrupts and others 7l0-Application of Division 2.

7ll-Official Receiver to ensure access to public registers.

7t2-Purposes of public registers.

7l3-General information to be included in public registers.

7l4-Information kept indefinitely on public register after multiple insolvency events.

7l5-Restricted information that may be included in public register relating to bankruptcies.

I 1053 2015 Insolvency No.18 716-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.

7l8-Information contained in public registers may be used for statistical or research purposes.

7l9-Government and Official Receiver not liable for certain acts and omissions.

PART XIII-SUPPLEMENTARY PROVISIONS 720 - Cross border insolvency.

72t-Representation of bodies corporate at meetings.

722-Courts, Official Receiver and others to publish orders and notices on their respective websites.

723 -Offtcial Receiver, bankruptcy trustees, liquidators and administrators to notify creditors of prescribed steps in the insolvency process.

724-Certain transactions relating to bankrupt's estate exempt from stamp duty.

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.

729-Service of documents, etc.

for the purposes of this Act.

730-Power of Cabinet Secretary to make insolvency regulations for purposes of this Act.

731-Act to bind the Government.

732-Repeal of Bankruptcy Act and revocation of subsidiary legislation.

733-Transitional provisions: insolvency of natural persons.

734-Transitional provisions: Winding up and insolvency of companies.

1064 Insolvency 20r5 No.18 735-Power of Cabinet Secretary to make savings and transitional regulations.

SCHEDULES FIRST SCHEDULE-POWERS OF BANKRUFTCY TRUSTEES SECOND SCHEDULE -PREFERENTIAL DEBTS THIRD SCHEDULE-POWERS OF LIQUIDATOR IN A LIQUIDATION FOURTH SCHEDULE-POWERS OF ADMINISTRATOR,S FNNH SCIIEDULE_CROSS BORDER INSOLVENCY 1065 Insolvency No.18 TIIE TNSOLVENCY ACT, 2015 AN ACT of Parliament to amend and consolidate the law relating to the insolvency of natural persons and incorporated and unincorporated bodies; to provide for and to regulate the bankruptcy of natural persons; to provide alternative procedures to bankruptcy that will enable the affairs of insolvent natural persons to be managed for the benefit of their creditors; to provide for the liquidation of incorporated and unincorporated bodies (including ones that may be solvent); to provide as an alternative to liquidation procedures that will enable the affairs of such of those bodies as become insolvent to be administered for the benefit of their creditors; and to provide for related and incidental matters.

ENACTED by the Parliament of Kenya as follows- PART I-PRELIMINARY PR,OYISIONS 1.

(1) This Act may be cited as the Insolvency Act, Shorttitleand 2015.

commencement' (2) The provisions of this Act shall come into operation on such date as the Cabinet Secretary may, by notice in the Gazette, appoint and different dates may be appointed for different provisions.

(3) Notwithstanding sub section (2), any provision that has not been brought into force within nine months after the publication of this Act shall come into force on the expiry of that period.

2.

(1) In this Act, unless the context otherwise Interpretation' requires- "affairs", in relation to a nafural person or company, includes a business carried on by the person or company and any dealings conducted in the course of the business; "amount" means an amount of money; "apply to" includes apply in relation to; "associate"- (a) in relation to a company, means- 1066 Insolvency 20ts No.18 (i) its holding company or its subsidiary; (ii) a subsidiary of its holding company; (iii) a holding company of its subsidiury; (iv) a person who controls the company (whether alone or with the person's associates or with other associates of the company); or (v) any other company in which a director of the company is also a director; (vi) a natural person who is employed by the company; (b) in relation to a partner of a partnership, means- (i) any other partner of the partnership; (ii) a member of the partner's family or of the family of another partner of the partnership; (iii) a natural person who is employed by the partnership; or (c) in relation to a natural person, means- (i) a member of the person's family; (ii) a company controlled directly or indirectly, by the person whether alone or with associates; (iii) an associate of the person's associates; or (iv) any person (including a company) who employs the person or by whom the person is employed; "authorised insolvency practitioner" means a person who holds an authorisation granted under section 9; "bank" means a bank to which the Banking Act cap'488 applies; "bankrupt" means a debtor who has been adjudged bankrupt under Part III and has not been discharged from bankruptcy; "the Bankruptcy Act" means- Cap.5 (a) the Bankruptcy Act repealed by this Act; and LO67 2015 Insolvency No.18 (b) the rules made under that Act; "bankruptcy trustee", in relation to a bankrupt or a bankruptcy, means the trustee of the bankrupt's estate; "business" includes trade and profession; "business records", in relation to a bankrupt, includes accounting records, receipts, bills, invoices and any other documents relating to the bankrupt's business; "company" means a company or foreign company cap389 registered under the Companies Act, 2015, and includes- (a) a building society within the meaning of the Building Societies Act; (b) a limited liability partnership within the meaning of the Limited Partnerships Act, 201 1; and (c) a body (whether incorporated or not) of a class No.42or2011 prescribed by the insolvency regulations for the purposes of this definition; "conditional sale agreement" means an agreement for the sale of goods under which payment of the whole or a part of the purchase price is deferred and a security interest in the goods is created or provided for in order to secure the payment of the whole or a part of the purchase price; "connected with", in relation to a company, has the meaning given by subsection (4); "control of' or "control over", in relation to documents or other property, includes having possession of, or custody over, the documents or property; "correspondence" includes correspondence by electronic means; "the Court" means the High Court, and if there is an insolvency division of that Court, means that division; "creditor" includes a person entitled to enforce a final judgment or final order; "credit purchase transaction" means a hire-purchase agreement, a conditional sale agreement, a chattel leasing agreement or a retention of title agreement; "debt" means an obligation or liability of a person to pay money or money's worth to another person; and includes (except when the context otherwise provides)- 1068 Insolvency 2015 No.18 (a) a liability under a written law; (b) a liability for a breach of trust; (c) a liability under a contract or bailment or in tort; and (d) a liability arising from an obligation to make restitution; "debtor" means a person who owes a debt; "document" means information recorded in any form; and in particular includes a sufirmons, notice, order or gther legal process and a register (whether in hard cop!'or electronic form); "electronic form" in relation to a document or information, means the storage or keeping of the document or information in the form of data, text or images by means of guided or unguided electromagnetic energy, or both; "execution process" means any of the following: cap'21'subleg' (a) issuing or proceeding with any of the following orders or warrants under a judgment or order obtained against the debtor in any court in its civil jurisdictions- (i) an order or warrant for the possession, seizure, or sale of any property; (ii) an order of attachment; (b) obtaining a garnishee order in favour of a judgment creditor under the Civil Procedure Rules; (c) obtaining an order that a judgment creditor may sue a sub-debtor under the Civil Procedures Rules; (d) having a charging order nisi made absolute under the Civil Procedure Rules; (e) beginning or continuing proceedings in any court for the appointment of a receiver of property, except an application for the appointment of a person as interim trustee under section 36; (0 exercising a power of re-entry under a lease, or a power terminating a lease; 1059 Insolvency No.l8 G) seizing or selling property by levying distress for rent; "execution process" means any of the following: Cap.

2l, sub leg.

(a) issuing or proceeding with any of the following orders or warrants under a judgment or order obtained against the debtor in any court in its civil jurisdictions- an order or warrant for the possession, seizure, or sale of any property; (ii) an order of attachment; (b) obtaining a garnishee order in favour of a judgment creditor under the Civil Procedure Rules; (c) obtaining an order that a judgment creditor may sue a sub-debtor under the Civil Procedures Rules; (d) having a charging order nisi made absolute under the Civil Procedure Rules; (e) beginning or continuing proceedings in any court for the appointment of a receiver of property, except an application for the appointment of a person as interim trustee under section 36; (o exercising a power of re-entry under a lease, or a power terminating a lease; (e) seizing or selling property by levying distress for fent; "functions" includes duties and responsibilities; "goods" includes all chattels personal other than things in action and money, and all emblements, industrial growing crops and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale; "hire-purchase agreement" means a hire-Purchase caP' 507' agreement as defined in section 2(1) of the Hire Purchase Act; "insolvency regulations" means regulations made under this Act and in force; 1070 Insolvency 2015 No.18 'Judicial enforcement officer" means a bailiff or other officer of a court who is charged with carrying out a process involving the execution or enforcement of an order or judgement of the court; "landlord", in relation to a letting of premises, includes any person to whom rent or other money is payable in respect of the occupation or use of the premises; "liquidation application", in relation to a company, means an application to the Court for a liquidation order in respect of the company; "liquidation order", in relation to a company, means an order of the Court for the liquidation of the company by the Court; "member", in relation to a company, includes a person who is not a member of a company but to whom shares in the company have been transferred, or transmitted by operation of law; "notice" means notice in writing; "officer", in relation to a company, means the chief executive officer, or any director, manager or secretary, of the company; "partnership" means a partnership within the meaning of the Partnership Act; "person" includes a partnership, an unincorporated association, a corporation, a co-operative society or an organization, the successors of a partnership, association, corporation, society or organization, and heirs, executors, liquidators of the succession, administrators or other legal representative of a person; "powers" includes rights and authorities; "preferential creditor" means a person to whom a preferential debt is owed; "preferential debts", in relation to a natural person or a company, means the debts listed in the Second Schedule; "property" includes money, goods, choses in action, land and every description of property, whether real or personal, legal or equitable, and whether located in Kenya or elsewhere, and includes obligations, easements and LOTL 2015 Insolvency No.18 every description of estate, interest and profit, present or future, vested or contingent in, arising out of or incidental to property; "prescribed bankruptcy level" has the meaning given by subsection (5); "property" includes things in action; "provable claim", in relation to a bankrupt, means a claim that is provable by a creditor in proceedings under Part III; "purchaser", in relation to a credit purchase transaction, means the person to whom goods are disposed of under the transaction, and, if the rights of that person are transferred by assignment or by operation of law, includes the person for the time being entitled to those rights; "records" means information stored in documents or in an electronic database or by electronic means; "the Registrar" (except when used in reference to the Court) means the Registrar of Companies; "register", "registered" and "registration", in relation to a notice or other document required or permitted to be lodged with, or sent or notified to, the Registrar under this Act, means respectively register, registered and registration in the Register of Companies in relation to the company to which the notice or other document relates; "relative", in relation to a person, means- (a) the parents, spouse, child, brother, or sister of that person; (b) the parents, child, brother or sister of the spouse of that person; or (c) a nominee or trustee for any of the persons specified in paragraph (a) and (b); "relevant court", in relation to a matter other than one that is specifically entrusted to the High Court by a provision of this Act, means the court exercising or having responsibility for exercising jurisdiction in respect of that matter; "the repealed Companies Act" means- to12 Insolvency 2015 No.18 (a) the Companies Act repealed by the Companies Act,2015; and (b) the rules or regulations made under that Act; "retention of title agreement" means an agreement for the sale of goods to a company, being an agreement- (a) that does not constitute a charge on the goods; but (b) under which, if the seller is not paid and the company is wound up, the seller will have priority over all other creditors of the company with respect to the goods or any property representing the goods; "secured creditor" means- (a) a person holding a security on or against the property of the debtor or (any part of it) to secure a debt due or accruing due to the person from the debtor; or (b) a person whose claim is based on, or secured by, a negotiable instrument held as collateral security and on which the debtor is only indirectly or secondarily liable; "security" means any mortgage, charge, lien or other security; "security agreement" means an agreement under which property becomes subject to a security for the payment of an obligation; "service provider" means any entity or person who supplies fuel, water, electricity, telecommunications, or such other services as may be prescribed; "shares" include stocks; "special resolution" means a resolution of creditors passed in accordance with this Act; "terms" includes conditions; "transfer" includes conveyance, assignment and surrender; "under administration", in relation to a company, has the meaning given by section 521; L073 2015 Insolvency No.18 "unsecured creditor", in relation to a natural person or a company, means a creditor of the person or company who is not a secured creditor; "written" or "in writing" includes respectively "written in electronic form" and "in elecffonic form".

(2) For the purposes of the application of this Act to a debt, it does not matter- (a) whether the debt is present or future; (b) whether it is certain or contingent; or (c) whether its amount is fixed or liquidated, or is capable of being ascertained by fixed rules or as a matter of opinion.

(3) For the purposes of this Act, a person is a member of the family of a natural person if the person is the parent, spouse, brother, sister, child, uncle, aunt, nephew, niece, stepfather, stepmother, stepchild, or adopted child of the person concerned and, in case of an adopted child, the child's adopted parents.

(4) For the purposes of this Act, a person is connected with a company if the person- (a) is an officer of the company or an associate of such an officer; or (b) is an associate of the company.

(5) For the purposes of this Act, the prescribed bankruptcy level is the amount for the time being specified in the Insolvency Regulations.

3.

(1) The objects of this Act are- Objects and application ofthis (a) to establish and provide for the operation of a Act.

framework for the efficient and equitable administration of the estates of insolvent natural persons and unincorporated entities comprising natural persons, and the assets of insolvent companies and other bodies corporate, that maintains a fair balance between the interests of those persons, entities, companies and bodies and those of their creditors; (b) in the case of insolvent natural persons and unincorporated entities comprising natural 1074 No.18 Insolvency 2015 persons, and insolvent companies and other bodies corporate whose financial position is redeemable- (i) to enable those persons and entities to continue to operate as going concerns so that ultimately they may be able to meet their financial obligations to their creditors in full or at least to the satisfaction of those creditors; and (ii) to achieve a better outcome for the creditors as a whole than would likely to be the case if those persons and entities were adjudged bankrupt; (c) in the case of insolvent companies and other bodies corporate whose financial position is redeemable- (i) to enable those companies and bodies to continue to operate as going concerns so that ultimately they may be able to meet their financial obligations to their creditors in full or at least to the satisfaction of those creditors; and (ii) to achieve a better outcome for the creditors as a whole than would likely to be the case if those companies and bodies were liquidated; and (d) in the case of insolvent natural persons and unincorporated entities comprising natural persons, and insolvent companies and other bodies corporate whose financial position is irredeemable-to provide an orderly system for adjudging those persons bankrupt and for the efficient and optimal administration and distribution of their estates for the benefit of their creditors; (e) in the case of insolvent companies and other bodies corporate whose financial position is irredeemable-to provide an orderly system for liquidating the affairs of those companies and bodies and for the efficient and optimal LO75 2015 Insolvency No.18 administration and distribution of their assets for the benefit of their creditors.

(2) This Act applies to natural persons, partnerships, limited liability partnership, companies and other corporate bodies established by any written law.

PART II - INSOLVENCY PRACTITIONERS 4.

(1) A person acts as an insolvency practitioner Circumstances in in relation to a natural person if the person acts- which person acts as insolvency (a) as the bankruptcy trustee or interim trustee in practitioner.

respect of the person's property or as permanent or interim trustee in the sequestration of the person's estate; (b) as a trustee under a deed that is- (i) a deed of composition made for the benefit (ii) of the person's creditors; or a trust deed for the creditors of the person; or (c) as supervisor of a voluntary arrangement approved under Division I of Part IV.

(2) A person acts as an insolvency practitioner in relation to a company if the person acts as- (a) the liquidator, provisional liquidator, (b) administrator of the company; a supervisor of a voluntary :urangement approved (c) under Part VIII; or a supervisor of a voluntary arrangement approved under Part IX.

(3) A reference in this section to a natural person includes, except in so far as the context otherwise requires, a reference to a partnership other than a limited liability partnership.

5.

(1) A person who, not being the holder of an Consequences of authorisation, purports to act as an insolvency practitioner acting without in relation to a company or a natural person commits an authorisation.

offence and is on conviction liable to a fine not exceeding five million shillings.

(2) This section does not apply to the Official Receiver.

to76 Insolvency 2015 No.18 6.

(l) Subject to subsection (2) and (3), a person is Qualifications for qualified to act as an insolvency practitioner only if the person to act as insolvency person- practitioners.

(a) satisfies the requirements of the insolvency regulations with respect to education, practical training and experience; (b) is a member of a professional body recognised under section 7; and (b) satisfies the requirements (if any) of the rules governing the body.

(2) A natural person is disqualified from being or acting as an insolvency practitioner if the person- (a) has been adjudged bankrupt, or the person's estate has been sequestrated and, in either case, the person has not been discharged; (b) is subject to a disqualification order made under the law relating to companies; or (c) is unable to perform the functions of an insolvency practitioner because of physical or mental infirmity.

(3) A body corporate is not eligible to be an insolvency practitioner, but this subsection does not extend to an employee of a body corporate.

(4) A natural person who, during the two years immediately preceding the commencement of this Part, was carrying on any of the activities referred to in section a(1) or (2) is, unless disqualified under subsection (2), taken to be qualified to be and to act as an insolvency practitioner on and after that commencement, but ceases to be so qualified unless the person has, within the twelve months after that coflrmencement, complied with the requirements of subsection (1).

7.

(1) The Cabinet Secretary shall, by notice Duty of Cabinet published in the Gazette, declare one or more professional Secretary to declare ce(ain bodies to be recognised professional bodies for the bodies to be purposes of this Act.

recognised as professional (2) The Cabinet Secretary may declare a professional bodies for the purposes of this body to be a recognised professional body only if it- Act.

1077 20ts Insolvency No.18 (a) regulates the practice of a profession; and (b) maintains and enforces rules authorising its members to act as insolvency practitioners to ensure that members- (i) are fit and proper persons to act as insolvency practitioners; and (ii) meet acceptable requirements relating to education practical training and experience.

(3) A reference to the members of a recognised professional body includes a reference to persons who are, whether members of that body or not, governed by its rules in the practice of the relevant profession.

(4) The Cabinet Secretary may revoke a notice made under subsection (1) if it appears to the Cabinet Secretary that the professional body no longer meets the requirements of subsection (2).

(5) A notice made by the Cabinet Secretary under this section takes effect from the date of the notice or such other date as is specified in it.

(6) The Cabinet Secretary may, in revoking a notice made under subsection (1), exempt a specified member, or a specified class of members, of the professional body concerned from the effect of the revocation and to authorise the member, or the members of that class, to continue acting as an insolvency practitioner or as insolvency practitioner for such period as the Cabinet Secretary determines and notifies in writing to the member or members concerned.

(7) In this section, "profession" means a profession involving carrying on any of the activities referred to in section 4(l) or (2).

8.

(1) A person who wishes to act as an insolvency Application to act practitioner may apply to the Official Receiver for an as insolvency authorisation to act as an insolvency practitioner for practitioner.

the purposes of this Act.

(2) The Official Receiver shall refuse an application under subsection (1) that- (a) is not made in the manner prescribed by the insolvency regulations ; 1078 Insolvency 20ts No.18 (b) does not contain or be accompanied by such information as the Official Receiver may reasonably require for purposes of determining the application;or (c) does not comply with subsection (3); or (d) is not accompanied by the fee so prescribed.

(3) The applicant shall include in, or attach to, the application evidence- (a) that the applicant is qualified to act as an insolvency practitioner; and (b) that the applicant- (i) has a professional indemnity insurance policy or has provided security for the proper performance of the functions of an insolvency practitioner; and (ii) that policy or security meets the requirements prescribed by the insolvency regulations with respect to acting as a practitioner; and (c) that the applicant is a fit and proper person to act as an insolvency practitioner.

(4) The Official Receiver may direct that notice of the application be published in the Gazette or in such other publication as the Official Receiver specifies.

(5) Information to be provided to the Official Receiver under this section is, if the Official Receiver so requires, to be in such form or verified in such manner as the Official Receiver may specify.

(6) An application made under subsection (1) may be withdrawn at any time before it is granted or refused.

9.

(1) As soon as practicable after receiving an Grant or refusal of application made under section 8, the Official shall either authorisation.

grant or refuse the application.

(2) The Official Receiver shall grant an application made under section 8 if satisfied that- (a) the application complies with the requirements of that section; and 7079 2Ol5 Insolvency No.lB (b) that the applicant is qualified to act as an insolvency practitioner and is a fit and proper person to act as such.

(3) The Official Receiver may not refuse an application for an authorisation without having given the applicant an opportunity to be heard.

(4\ On granting an authorisation under this section, the Official Receiver shall notify the applicant in writing of the authorisation and specify the date on which the authorisation is to take effect.

(5) An authorisation granted under this section continues in force for such period, and subject to such reasonable conditions, as are specified in the authorisation.

10.

(1) The Official Receiver may revoke an Power of Official authorisation granted under subsection (l) if satisfied that Receiver to revoke the holder of the authorisation- authorisation.

(a) is no longer qualified to act as an insolvency practitioner; (b) is no longer a fit and proper person to act as an insolvency practitioner; (c) has been found guilty of an offence under this Act, or of an offence under any other Act involving fraud, dishonesty or breach of trust; (d) has contravened or failed to comply with, or is contravening or failing to comply with, a condition of the authorisation; or (d) in making the application for an authorisation, has provided the Official Receiver with false or misleading information.

(2) An authorisation granted under this section may be revoked by the Official Receiver at the request, or with the consent, of the holder of the authorisation.

(3) The Official Receiver may not revoke an authorisation (otherwise than at the request or with the consent of its holder) without having given its holder an opportunity to be heard.

(4) A revocation of an authorisation does not take effect until the period within which an appeal within which 1080 Insolvency 20ts No.18 the holder of the authorisation can appeal against the revocation has expired or, if within that period, the holder lodges such an appeal, until the appeal is finally determined or is withdrawn, whichever first occurs.

11.

(l) A person whose application for an Right to appeal authorisation to act as an insolvency practitioner is refused against decisions of Official may appeal to the Court against the refusal.

Receiver.

(2) A person whose authorisation to act as insolvency practitioner is revoked otherwise than at the person's request or with the person's consent may appeal to the Court against the refusal.

(3) Such an appeal may be entertained only if- (a) it is lodged with the Court within thirty days after the decision of the Official Receiver refusing the application or revoking the authorisation is notified to the applicant or holder of the authorisation, or within such extended period as the Court may allow; and (b) is in the form, and complies with any other requirements, prescribed by the insolvency regulations for the purposes of this section.

(4) The Official Receiver is entitled to be served with a copy of the appeal and to appear at the hearing of the appeal as respondent.

(5) On the hearing of an appeal lodged in accordance with this section, the Court shall, if it considers that the refusal of the appellant's application, or the revocation of the appellant's authorisation, was not warranted, make an order quashing the decision of the Official Receiver refusing the application, or revoking the authorisation, but otherwise, it shall make an order confirming the Official Receiver's decision.

(6) The Court may make such ancillary or consequential orders as it considers appropriate, including an order as to payment of costs of the appeal proceedings.

PART III-BANKRI]PTCY OF NATURAL PERSONS Division l-Bankruptcy: introductory provisions l2.lnthis Part- Interprctation: "bankruptcy application" means an application for a Part III.

debtor to be adjudged bankrupt; 1081 2015 Insolvency No.18 "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 32by 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.

(1) Bankruptcy occurs when the Court makes an Nature of order in respect of a debtor adjudging the debtor bankruptcy.

bankrupt- (a) on the application of one or more creditors of the debtor made in accordance with section 17; or (b) on the application of the debtor made in accordance with section 32.

(2) If a person is adjudged bankrupt- (a) the property of the person vests in the bankruptcy trustee or, if there is no bankruptcy trustee, the Official Receiver; (b) the person becomes restricted as to the business activities that the person can undertake; and (c) the Official Receiver is entitled to recover assets that the person has transferred within the two years immediately preceding the bankruptcy.

14, A debtor who is insolvent may as an alternative Altematives to to bankruptcy- bankruptcy.

(a) enter into a voluntary {rrrangement in accordance with Division I of Part IV; (b) make a proposal to creditors in accordance with Division 2 of Part IV; (c) pay creditors in instalments under a summary instalment order under Division 3 of that Part; or 1082 No.

L8 Insolvency 2015 (d) enter the no asset procedure in accordance with Division 4 of that Part.

15.

(1) A bankruptcy application may be made to Who is entitled to the Court in accordance with the provisions of this Part- make a bankruptcy (a) by one of the person's creditors or jointly by two application.

or more one of them; (b) by the debtor; or (c) by the supervisor of any person who is for the time being bound by a voluntary arrangement proposed by the debtor and approved under Division I of Part IV.

(2) On the hearing of such an application, the Court may, subject to and in accordance with the provisions of this Part, make a bankruptcy order.

(3) An application may be made by a person referred to in subsection (1)(a) or (b) only if the debtor- (a) is domiciled in Kenya; (b) is personally present in Kenya on the date on which the application is made; or (c) at any time during the three years immediately preceding that date- (i) has been ordinarily resident, or has had a place ofresidence; or (ii) has carried on business in Kenya.

(a) In subsection (3)(c), the reference to a debtor carrying on business includes- (a) the carrying on of a business by a firm or partnership of which the debtor is a member, and (b) the carrying on of a business by an agent or manager for the debtor for such a firm or partnership.

16.

(1) A bankruptcy application may not be Proceedings on a withdrawn without the approval of the Court.

bankruptcy application.

(2) The Court has a general power to dismiss a bankruptcy application or to stay proceedings on such an application on the ground that the Court is of the opinion 1083 201s Insolvency No.18 that a requirement of this Part or the insolvency regulations has not been complied with in a material respect.

(3) If the Court stays proceedings on a bafikruptcy application, it may do so on such terms as it ionsiders appropriate.

Division 2-Bankruptcy applications by creditors 17.

(1) One or more creditors of a debtor may make Creditor may an application to the Court for a bankruptcy order to be apply for bankruptcy order made in respect of the debtor in relation to a debt or debts in respect of owed by the debtor to the creditor or creditors.

debtor.

(2) Such an application may be made in relation to a debt or debts owed by the debtor only if, at the time the application is made- (a) the amount of the debt, or the aggregate amount of the debts, is equal to or exceeds the prescribed bankruptcy level; (b) the debt, or each of the debts, is for a liquidated amount payable to the applicant creditor, or one or more of the applicant creditors, either immediately or at some certain, future time, and is unsecured; (c) the debt, or each of the debts, is a debt that the debtor appears either to be unable to pay or to have no reasonable prospect of being able to pay; and (d) there is no outstanding application to set aside a statutory demand in respect of the debt or any of the debts.

(3) For the purposes of subsection (2)(c), a debtor appears to be unable to pay a debt if, but only if, the debt is payable immediately and either- (a) the applicant creditor to whom the debt is owed has served on the debtor a demand requiring the debtor to pay the debt or to secure or compound for it to the satisfaction of the creditor, at least twenty-one days have elapsed since the demand was served, and the demand has been neither complied with nor set aside in accordance with the insolvency regulations; or 1084 Insolvency 20ts No.18 (b) execution or other process issued in respect of the debt on a judgment or order of any court in favour of the applicant, or one or more of the applicants to whom the debt is owed, has been returned unsatisfied either wholly or in part.

(4) For the purposes of sgbsection (2)(c), a debtor appears to have no reasonable prospect of being able to pay a debt if, but only if, the debt is not immediately payable and- (a) the applicant to whom it is owed has served on the debtor a demand requiring the debtor to establish to the satisfaction of the creditor that there is a reasonable prospect that the debtor will be able to pay the debt when it falls due; (b) at least twenty-one days have elapsed since the demand was served; and (c) the demand has been neither complied with nor set aside in accordance with the insolvency regulations.

(5) This section is subject to sections 18 to 20.

(6) An overstatement in a statutory demand of the amount owing by the debtor does not invalidate the demand unless- (a) the debtor notifies the creditor that the debtor disputes the validity of the demand because it overstates the amount owing; and (b) the debtor makes that notification within the period specified in the demand for the debtor to comply with it.

(7) A debtor complies with a demand that overstates the amount owing by- (a) taking steps that would have complied with the demand had it stated the correct amount owing, such as by paying the creditor the correct amount owing plus costs; and (b) taking those steps within the period specified in the demand for the debtor to comply.

1085 20ts Insolvency No.18 18.

(l) A debt that is the debt, or one of the debts, When court can in respect of which a creditor's application is made need make bankruptcy order on not be unsecured if either- application by (a) secured creditor.

the application contains a statement by the person having the right to enforce the security that the creditor is willing, in the event of a bankruptcy order being made, to give up the security for the benefit of all the bankrupt's creditors; or (b) the application is expressed not to be made in respect of the secured part of the debt and contains a statement by that person of the estimated value at the date of the application of the security for the secured part ofthe debt.

(2) In a case to which subsection (lxb) applies, the secured and unsecured parts of the debt are to be treated for the purposes of sections 17 ,19 and20 as separate debts.

19.

If a creditor's application is made wholly or Expedited partly in respect of a debt that is the subject of a statutory creditor's demand, the application may application be made before the end of the twenty-one day period referred to in section 17 if- (a) there is a serious possibility that the debtor's property, or the value of any of that property, will be significantly reduced during that period; and (b) the application contains a statement to that effect.

20.

(l) The Court may not make a bankruptcy order Proceedings on on a creditor's application unless it is satisfied that the debt, creditor's or one of the debts, in respect of which the application was application.

made is either- (a) a debt which, having been payable at the date of the application or having since become payable, has been neither paid nor secured or compounded for; or (b) a debt that the debtor has no reasonable prospect of being able to pay when it falls due.

(2) If the application contains a statement of the kind referred to in section 19, the Court may not make a bankruptcy order until at least twenty-one days have elapsed since the service of the relevant statutory demand.

r 085 No.

18 Insolvency 2015 (3) The Court may dismiss the application if it is satisfied that thc deotcr is able to pay all of the debtor's debts or is satisfied- (a) that the debtor has made an offer to secure or compound for a debt in respect of which the application is made; (b) that the acceptance of that offer would have required the dismissal of the application; and (c) that the offer has been unreasonably refused.

(4) In determining for the purposes of subsection (3) whether the debtor is able to pay all of the debtor's debts, the Court shall take into account the debtor's contingent and prospective liabilities.

(5) In determining for the purposes of this section what constitutes a reasonable prospect that a debtor will be able to pay a delrt when it falls due, the Court shall presume that the prospect given by the information known to the creditor when the creditor entered into the transaction resulting in the debt was a reasonable prospect.

(5) Nothing in sections 17 to 19 prevents the Court from allowing a creditor's application to be amended by the omission of any creditor or debt and to be proceeded with as if action taken for the purposes of those sections had been taken only by or in relation to the remaining creditors or debts.

21.

(1) A creditor who makes an application for a Creditor's bankruptcy order in respect of a debtor may not issue an execution process not to be issued or execution process against the debtor in respect of the continued.

property of the debtor to recover a debt on which the application is based.

(2) If the creditor has already issued the execution process, the creditor may not continue it.

(3) The creditor may make an application to the relevant court for approval to issue or continue the execution process.

(4) On the hearing of an application made under subsection (3), the relevant court may make an order permitting the applicant to begin or continue the execution process but only if it is satisfied after considering all LO87 2015 Insolvency No.18 representations made to it that the interests of the other creditors will not be detrimentally affected.

(5) Any action taken in contravention of subsection (1) or (2) is void, 22.

(1) After a creditor's application has been made, Power of relevant the debtor or any creditor may apply to the relevant court court to stay execution for an order stopping the issue or continuance b',.

any other processes by other creditor of an execution process against the debtor in creditors or allow respect of the property of the debtor.

them on terms.

(2) On the hearing of an application under subsection (1), the Court may make an order- (a) stay the execution process on such terms as the Court considers appropriate; or (b) allowing the execution process to continue on such terms as the Court considers appropriate.

23.

(1) This section applies if an execution process Execution process has been issued by a court other than the High Court.

issued by other court.

(2) If it is proved to the issuing court that an application for a bankruptcy order in respect of the debtor has been made to the High Court, that court may either- (a) stay the execution process on such terms as it considers appropriate; or (b) permit the execution process to continue on such terms as it considers appropriate.

24.

The restrictions in sections 2l to 23 on issuing or No restriction on continuing an execution process do not apply if an execution process if bankruptcy application is withdrawn or dismissed.

application withdrawn or dismissed.

25.

(1) The Court may make a bankruptcy order in When court may respect of the debtor if the creditor has complied with adjudge debtor section t7.

bankrupt.

(2) The Court may refuse to adjudge a debtor bankrupt if- (a) the applicant creditor has not satisfied the requirements specified in section 17; (b) the debtor is able to pay the debtor's debts; or 1088 Insolvency 201s No.18 (c) it is just and equitable that the Court should not make a bankruptcy order.

26.

The Court may, at any time, stay an application When the Court by a creditor for bankruptcy on such terms, and for such may stay application.

period, as the Court considers appropriate.

27.

(1) If there is more than one bankruptcy Orders if more application in respect of a debtor, and one application has than one been stayed by an order of the Court, the Court may, if it application.

believes there is a good reason to do so, make a bankruptcy order in respect of the application that has not been stayed.

(2) On making a bankruptcy order under subsection (1), the Court shall dismiss the application that has been stayed on such terms as it considers appropriate.

28.

If an application made by a creditor for a Orders if there is bankruptcy order relates to more than one debtor, the Court more than one order.

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.

(1) This section applies if a debtor- Power of the Court to make (a) has made a disposition of all, or substantially all, order staying of the property of the debtor to a trustee for the bankruptcy application, etc.

benefit of the creditors of the debtor; (b) has made a proposal under Division I of Part IV; or (c) has applied for a summary instalment order under that Division.

(2) The debtor, the bankruptcy trustee or any creditor may apply for an order under this section.

(3) On the hearing of an application under this section, the Court may make any of the following orders: (a) an order staying the bankruptcy application; (b) an order staying any other bankruptcy application; (c) an order as to costs; (d) if it orders costs to be paid to the creditor who applied for the bankruptcy application-an order that the costs be paid out of the assets of the debtor.

1089 2015 Insolvency No.18 (4) This section does not limit the powers of the Court under section 39.

30.

(1) This section applies if a debtor appears in Court may stay opposition to a creditor's application and the debtor claims application while underlying debt is that the debtor- determined.

(a) does not owe a specified debt to the creditor; or (b) owes a specified debt to the creditor, but the debt is less than the prescribed bankruptcy level.

(2) The Court may, instead of refusing the application, stay the application so that the issue of- (a) whether the debt is owed; or (b) how much of the debt is owed, can be resolved at trial.

(3) As a condition of staying the application, the Court may require the debtor to give security to the creditor for any debt that may be established as owing by the debtor to the creditor, and for the cost of establishing the debt.

31.

In the case of a creditor's application, the Court Court may allow may substitute another creditor for the creditor making the one creditor to be substituted for application if- another.

(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.

(1) A debtor may make an application to the y*::_"::::.1? Court for an order adjudging the debtor bantrupt trrv ", [*"j[#,8* the grounds that the debtor is unable to pay the debtor's order.

debts.

(2) The Court may decline to deal with such an application if it is not accompanied by a statement of the debtor's financial position containing - (a) such particulars of the debtor's creditors and of the debtor's debts and other liabilities and assets as may be prescribed by the insolvency regulations; and I_.1 1090 Insolvency 2015 No.18 (b) such other information as may be so prescribed.

(3) The Court may reject a statement of the debtor's financial position if of the opinion that it is incorrect or incomplete.

(4) A debtor who makes an application under this section shall publish a notice of the application in- (a) a newspaper circulating within the region in which the debtor ordinarily resides; and (b) in such other publications (if any) as may be prescribed by the insolvency regulations for the purposes of this section.

(5) The Court may decline to hear the application if subsection (4) has not been complied with to its satisfaction.

33.

(1) Subject to section 34, on the hearing of a Appointment of debtor's application, the Court may not make a bankruptcy insolvency practitioner by the order if it appears to the Court- Court.

(a) that if a bankruptcy order were made the total amount of the applicant's debts, so far as unsecured, would be less than the small bankruptcies level; (b) that if a bankruptcy order were made, the value of the bankrupt's estate would be equal to or more than the prescribed minimum value; (c) that, during the five years immediately preceding the debtor's application, the debtor has- (i) neither been adjudged bankrupt; nor (ii) made a composition with the debtor's creditors in satisfaction of the debtor's debts or a scheme of arrangement of the debtor's financial affairs; and (d) that it would be appropriate to appoint an authorised insolvency practitioner to prepare a report under section 34.

(2) If, on the hearing of the application, it appears to the Court that it would be appropriate to make an appointment as referred to in subsection (lxd), the Court shall appoint an authorised insolvency practitioner in relation to the debtor- 1091 2015 Insolvency No.l8 (a) to prepare a report under section 34;' or (b) subject to Division 1 of Part IV, to act in relation to any voluntary arrangement to which the report relates as supervisor for the purpose of supervising its implementation.

(3) In this section- (a) "prescribed minimum value" means the amount for the time being specified in the insoivericy regulations for the purposes of this sectioq; (b) "small bankruptcies level" means the amount for the time being so specified for the purposes of this section.

34, (1) The insolvency practitioner appointed under Action on report section 33 shall- of insol ,ency (a) practrtioner.

inquire into the debtor's financial affairs; and (b) within such period as the Court may specify- submit a report to the Court stating whether the debtor is willing t3 make a proposal for ^ voluntary arrangement in accordance with Division 1 of Part IV.

(2) If the insolvency practitioner proposes to state that the debtor is willing to make such a proposal, that practitioner shall also state- (a) whether, in his or her opinion, a meeting of the debtor's creditors should be convened to consider the proposal; and (b) if, in that practitioner's opinion such a meeting should be convened-the date on which, and time and piace at which, the meeting should be held.

(3) On considering a report submitted under this subsection (1), the Court may- (a) without any application, make an interim order under section 306, if it considers it appropriate to do so for the purposes of facilitating the consideration and implementation of the debtor's proposal; or (b) if it considers it would be inappropriate to make such an order-make a bankruptcy order in respect of the applicant.

r092 Insolvency 2015 No.18 (4) An interim order made in accordance with subsection (3Xa) ceases to have effect at the end of such period as the Court may specify for the purpose of enabling the debtor's proposal to be considered by the debtor's creditors in accordance with the applicable provisions of Division I of Part IV.

(5) If the insolvency practitioner has proposed in the report that a meeting of the debtor's creditors should be convened, the insolvency practitioner shall, unless the Court otherwise directs, convene such a meeting for the time, date and place proposed in the report.

(6) Such a meeting is to be taken to have been convened under section 309 in which case subsections (2) and (3) of that section and sections 309 to 314 apply to the meeting.

35.

Two or more debtors, who are partners in a Joint application - can be made bv business partnership, ffi?y make a joint application under two or more ' section 32.

debtors.

Division 4-Appointment of interim trustee in respect of debtor's property 36.

(l) After a creditor's application has been made, Appointment of the creditor or any other creditor of the debtor may apply to interim trustee of debtor's property the Court for an order for the appointment of an authorised on application of insolvency practitioner as interim trustee in respect of all or creditor.

a specified part of the debtor?s property.

(2) The Court may make such an order at any time before a bankruptcy order is made in respect of the debtor.

(3) In making an order under subsection (l), the Court may authorise the interim trustee to do all or any of the following: (a) take control ofany property ofthe debtor; (b) sell any perishable property or property of the debtor that is likely to fall rapidly in value; (c) control the affairs or property of the debtor as directed by the Court.

(4) An order authorising the trustee to control a debtor's business may not extend beyond what, in the Court's opinion, is necessary to conserve the debtor's property.

1093 2015 Insolvency No.18 (5) The Official Receiver and any authorised insolvency practitioner are suitably qualified persons for the puqpose of subsection (1).

(6) In this section, "debtor's business" includes any business in which the debtor has a financial interest.

37.

(1) After the appointment of an interim trustee Additional ordcrs under section 36, the Court may, on an application made after appointment under subsection (2), make additional under of interim trustee.

orders that section.

(2) An application for the purpose of subsection (1) made by a creditor or the interim trustee or, with the approval of the Court, by any other person.

3E.

(1) As soon as practicable after the appointment Notice of of an interim trustee, the trustee shall publish a notice of the appointment of interim trustee to appointment- be published.

(a) in one or more newspapers circulating in Kenya; and (b) in such other publication as may be prescribed by the insolvency regulations for the purposes of this section.

(2) The appointment of the interim trustee does not take effect until subsection (1) has been complied with.

39.

(1) A creditor of the debtor may not issue an Execution process execution process under section 23 after notice of the not to be issued after notice of appointment of the interim trustee has been published.

appointment of trustee is (2) A creditor may not continue an execution process published.

already issued before notice of the appointment of the interim trustee has been published.

(3) A creditor or any other interested person may apply to the Court for an order allowing the issue or continuation of an execution process, and the Court may make an order on such terms as it considers appropriate.

(4) Any action taken in contravention of subsection (1) or (2) is void.

40.

If execution is stayed under section 39, sections Effect of staying 109, 110, 111,112,113, l14 and 116 apply as if the order execution.

staying execution were a bankruptcy order.

1094 Insolvency 2015 No.18 Division S-Adjudication of bankruptcy applications 41.

A bankruptcy under this Act commences on Bankruptcy date and at the time when a bankruptcy order is made commences on making of respect of the debtor.

bankruptcy order.

42.

(l) On making a bankruptcy order, the Court Date and time of shall record the date and time when the order was made.

bankruptcy order to be recorded.

(2) If the debtor is adjudged bankrupt on the application of the debtor, the Official Receiver shall record on the application the date and time when the debtor made the application.

43.

As soon as practicable after the Court has made a Registrar of the bankruptcy order in respect of a debtor, the Registrar of the Court to notify trustee of Court shall forward a copy of the order to the Official bankruptcy order.

Receiver.

44.

(1) As soon as practicable after receiving a copy Official Receiver of a bankruptcy order, the Official Receiver shall nominate to nominate bankruptcy a qualified person to be bankruptcy trustee in respect of the trustee.

debtor's property.

(2) In this subsection (1), "qualified person" means the Official Receiver or an authorised insolvency practitioner.

45, If a doubt arises as to whether an act was done, or Presumption that a transaction entered into or made, before or after the time act was done, or transaction was when a bankruptcy commenced, it is to be presumed, until entered into or the contrary is proved, that the act was done, or the made, after transaction was entered into or made, after that time.

bankruptcy.

46.

A bankruptcy order becomes binding on the Bankruptcy order to be bankrupt and all other persons- binding on all persons.

(a) on the expiry of the time within which an appeal may be lodged against the order; or (b) if an appeal is lodged in respect of the order within that period and the Court later confirms the order or the appeal is later withdrawn-on the confirmation of the order or the withdrawal of the appeal, and the order can no longer be questioned on the ground that it was invalid or that a prerequisite for making it did not exist.

1095 2015 Insolvency No.18 47.

(1) The Official Receiver shall establish and Official Receiver to maintain a public register of undischarged and discharged maintain public register of bankrupts.

undischarged and (2) discharged bankrupts.

The Official Receiver shall maintain the register in accordance with Division 2 of PartXIl.

Division 6-What happens on and after bankruptcy commences 48.

(1) When a bankruptcy order commences- What happens or is to happen on (a) all proceedings to recover the bankrupt's debts and after bankruptcy are stayed; and commences.

(b) the property of the bankrupt (whether in or outside Kenya), and the powers that the bankrupt could have exercised in respect of that property for the bankrupt's own benefit, vest in the Official Receiver.

(2\ Despite subsection (1), the Court may, on the application by a creditor or other person interested in the bankruptcy, allow proceedings that had already begun before the bankruptcy commenced to continue on such terms as the Court considers appropriate.

(3) Within thirty days after the date of the bankruptcy order, the Official Receiver shall, subject to subsection (4)- (a) publish a notice advertising the order- (i) once in the Gazette; and (ii) once in a newspaper widely circulating in the area in which the bankrupt resides; or (b) if the Court directs that the order be advertised in some other publication-publish such a notice in that other publication.

(4) If the bankrupt has appealed against the order or has applied for its annulment, the Court may order the Official Receiver not to advertise the bankruptcy order, but only if it is satisfied that there are compelling reasons for doing so.

(5) Subsection (1) is subject to section 106.

1096 Insolvency 2015 No.18 49.

(l) Within thirty days after receiving notice of a Official Receiver bankruptcy order, the Official Receiver shall serve on the to serve notice on bankrupt requiring bankrupt a notice- the bankrupt to lodge statement of (a) stating that a bankruptcy order has been made in the bankrupt's respect of the bankrupt; financial position.

(b) requiring the bankrupt to lodge with the Official Receiver a statement setting out the bankrupt's financial position; and (c) specifying a deadline for lodging the statement with the Official Receiver.

(2) The Official Receiver shall serve the notice at the address of the bankrupt given in the bankruptcy application or at the bankrupt's address last known to the Official Receiver.

(3) This section does not apply if the bankrupt has already lodged a statement under section 32.

50.

(1) Within fourteen days after being served with Bankrupt to lodge the notice in accordance with section 49 (or within such statement of financial position extended period not exceeding sixty days as the Official with bankruptcy Receiver may allow), the bankrupt shall lodge with the trustee.

Official Receiver a statement of the bankrupt's financial position setting out- (a) particulars ofthe bankrupt's assets; (b) the bankrupt's debts and liabilities; (c) the names, residences and occupations of the bankrupt's creditors; (d) the securities held by the bankrupt's creditors; (e) the dates when the securities were given; and (0 such other information as may be prescribed by the insolvency regulations or as the bankruptcy trustee may reasonably require.

(2) At any time after lodging with the bankruptcy trustee a statement of the bankrupt's financial position, the bankrupt may lodge additional or amended statements or answers with the bankruptcy trustee.

(3) A bankrupt who fails to comply with a requirement of subsection (l) commits an offence and on LO97 Insolvency 2015 No.18 conviction is liable to a fine nof!*"""ding one million shillings or to imprisonment for a term not exceeding two years, or to both.

(4) If, after being convicted of an offence under subsection (2), a bankrupt, without reasonable excuse, continues to fail to comply with the relevant requirement, the bankrupt commits a further offence on each day during which the.'failure continues and on conviction is liable to a fine rpt exceeding one hundred thousand shillings for each such offence.

.f 51.

(l) A person who in writing to be a Creditors entitled "f,*#t to inspect and take creditor of the bankrupt is entitled, at all reasonable times copies of (either personally or through an agentl- statement of bankrupt's (a) to inspect the stateffi of the bankrupt's financial position.

financial position; and" (b) to take a copy it or of part of it.

(2) A person who falsely claims to be a creditor is in contempt of the Court.

52.

(1) The Official Receiver shall, subject to Official Receiver subsection (5), convene the first meeting of the bankrupt's to convene first meeting of creditors within the prescribed period, unless the Official creditors.

Receiver decides, in accordance with section 53, not to hold the meeting.

(2) The Official Receiver shall convene the meeting by giving notice of the time, date and place of the meeting to- (a) thebankrupt; (b) each creditor named in the statement of the bankrupt's financial position; and (c) any other creditors known to the bankruptcy trustee.

a notice advertising the time, date and place of the meeting.

(3) The Official Receiver shall publish a notice advertising the time, date and place of the meeting- (a) in one or more newspapers circulating generally in Kenya; and 1098 Insolvency 2015 No.l.8 (b) in such other publications as the Official Receiver considers appropriate.

(4) For the purpose of subsection (1), the prescribed period is- (a) thirty days after the statement of the bankrupt's financial position is lodged with the Official Receiver; or (b) if the bankrupt is late in lodging the statement or fails to lodge a statement at all-thirty days after the date on which the bankruptcy order was made.

(5) The Official Receiver may delay convening the first meeting of creditors for a period not exceeding fourteen days if the Official Receiver considers that there are special circumstances justifying the delay.

53.

(1) The Official Receiver may decide not to Circumstances in convene a first creditors' meeting if the Official Receiver- which Official Receiver may (a) has sent to each creditor named in the statement decide not to convene first of the bankrupt's financial position, and to any meeting of other creditor known to the Official Receiver, a creditors.

notice that complies with section 54 and (b) 'has not, within fourteen days after sending the notice, received from a creditor a request to convene such a meeting.

(2) In deciding whether the meeting should or should not be convened, the Official Receiver shall have regard to- (a) the bankrupt's assets and liabilities; (b) the likely result of the bankruptcy; and (c) any other relevant matters.

(3) Within seven days after deciding not to convene a first meeting of creditors, the Official Receiver shall send to each creditor named in the statement of the bankrupt's financial position, and to any other creditor known to the Official Receiver, a notice stating- (a) the Official Receiver's view that a first creditors' meeting need not be convened; 2015 Insolvency No.18 (b) the reasons for not convening the meeting; and (c) that the Official Receiver will convene a meeting only if the Official Receiver receives from a creditor, within fourteen days after sending the notice, a request to convene such a meeting.

54.

(1) The Official Receiver shall send the Documents to be following documents with the notice of the first meeting of sent with notice of meeting.

creditors: (a) a summary of the bankrupt's statement of assets and liabilities; (b) extracts from, or a summary of, the bankrupt's explanation of the causes of the bankruptcy; and (c) any comments on the bankruptcy that the Official Receiver chooses to make.

(2) Subsection (1) does not apply if the Official Receiver has not received the statement of the bankrupt's financial position when the notice is sent.

(3) A failure in sending or receiving the documents in subsection (1) does not affect the validity of the proceedings at the meeting.

55.

(1) If, in the case of a bankruptcy, the Official Power of creditors Receiver has not yet convened a first meeting of creditors, to requisition has decided not to convene such a meeting, any creditor meeting.

or the bankrupt may request the Receiver to of Official convene such a meeting.

(Z) As soon as practicable aiter receiving a request under subsection (1), the Official Receiver shall convene a first meeting of creditors if the request appears to the Official Receiver to be made with the concurrence of not less than one-quarter in value of the bankrupt's creditors (including the creditor making the request).

56.

(1) A creditor may not begin or continue an Execution process execution process in respect of the bankrupt's property or not to be begin or continue after person for the recovery of a debt provable in the bankruptcy order bankruptcy, after the Official Receiver- advertised.

(a) has published an advertisement notifying the bankruptcy; or (b) has given notice of the bankruptcy to the creditor.

I 100 Insolvency 2015 No.18 (2) After the notice of the bankruptcy notice has been advertised, or after being given notice of the bankruptcy by the Official Receiver, a creditor may not seize or sell any property by means of distress for rent owed by the bankrupt.

(3) If the distress procedure has already begun, such a creditor may continue with the procedure only with the approval of the Court and subject to such conditions as the Court may specify.

57.

If a bankrupt dies after being adjudged bankrupt, Effect of ihe bankruptcy continues in all respects as if the bankrupt bankrupt's death after bankruptcy were still alive.

order.

58.

The role of the creditors in the bankruptcy Creditors' role at primarily- creditors' meetings.

(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.

(1) The power to appoint a person as a Power to appoint bankruptcy trustee in respect of a bankrupt's estate, or to bankruptcy fill a vacancy in such an appointment, is exercisable- trustee.

(a) except as provided by paragraph (b) or (c)-by a creditors' meeting; (b) under section 60 or 61-by the Official Receiver; (c) under section 62-by the Court.

(2) A power to appoint a person as bankruptcy trustee includes power to appoint two or more persons as joint bankruptcy trustees, but such an appointment is not effective unless it makes provision for the circumstances in which the trustees are required to act together and the circumstances in which one or more of them may act on behalf of the others.

(3) The appointment of a person as bankruptcy trustee takes effect only if the person accepts the appointment.

1101 20ts Insolvency No.18 (4) The appointment of a person as a bankruptcy trustee takes effect at the time specified in the document by which the person is appointed.

(5) This section does not affect the provisions of this Part under which the Official Receiver is, in specified circumstances, to be, or required to act as, the bankruptcy trustee in respect of a bankrupt's estate.

60.

(1) If a meeting convened under section 52 or Consequences of 55 is held but no one is appointed as bankruptcy trustee, the failurc of creditors' meeting Official Receiver shall decide whether or not there is a need to appoint to make such an appointment.

bankruprcy (2) trustee.

If the Official Receiver decides there is a need to make such an appointment, the Official Receiver shall make an appointment accordingly.

(3) If the Official Receiver decides that there is no need to make such an appointment, the Official Receiver shall notify the decision to the Court.

(4) On giving notice of the decision to the Court in accordance with subsection (3), the Official Receiver becomes bankruptcy trustee in respect of the bankrupt's estate.

61.

(l) The Official Receiver may, at any time Power of Official while acting as bankruptcy trustee in respect of a Receiver acting as bankruptcy trustee bankrupt's estate under a provision of this Division (other to appoint another than section 62), appoint another qualified person to act as person to act the bankruptcy trustee instead.

instead.

(2) Immediately after making such an appointment, the Official Receiver shall notify the appointment to the Court.

(3) The person appointed shall, as soon as practicable (and not later than seven days) after being appointed- (a) give notice of the appointment to each of the bankrupt's creditors; or (b) if, on application made to the Court, the Court so allows-advertise the appointment in accordance with the directions of the Court.

(4) In the notice or advertisement, the person appointed shall state- tto2 Insolvency 2015 No.18 (a) whether the person proposes to convene a general meeting of the bankrupt's creditors for the purpose of establishing a preditor's committee undersection 100; and (b) if the person does not propose to convene such a meeting-that the creditors are entitled under this Division to require one to be convened.

62.

(1) If a bankruptcy order is made when there is Special case in a supervisor of a sufirmary instalment order approved in which the Court may appoint relation to the bankrupt under Division 2 of Part IV, the bankruptcy Court may, if it considers it appropriate to do so on making trustee.

the order, appoint the supervisor of the order as bankruptcy trustee in respect of the bankrupt's estate.

(2) If an appointment is made under subsection (1), the Official Receiver is not required to decide under section 60(1) whether or not to convene a creditors' meeting.

(3) Section 61(4) and (5) apply to a bankruptcy trustee appointed under this section.

63.

(1) A bankruptcy trustee may- Powers of bankruprcy (a) with the approval of the creditor's committee, trustee.

exercise of any of the powers specified in Part 1 of the First Schedule; and (b) without that approval, exercise any of the general powers specified in Part 2 of that Schedule.

(2) With the approval of the creditors' committee or the Court, a bankruptcy trustee may appoint the bankrupt- (a) to superintend the management of the bankrupt's estate or any part of it; (b) to carry on the bankrupt's business (if any) for the benefit of the bankrupt's creditors; or (c) in any other respect to assist in administering the estate in such manner and on such terms as the bankruptcy trustee may direct.

(3) An approval given for the purposes of subsection (l)(a) or (2) is required to be a specific one and to relate to a particular exercise of the relevant power.

(4) A person dealing with the bankruptcy trustee in good faith and for value is not required to ascertain whether 1103 2015 Insolvency No.18 an approval required by subsection (lXa) or (2) has been given.

(5) If a bankruptcy trustee has done anything without the approval required by subsection (lXa) or (2), the Court or the creditor's committee (if any) may, for the purpose of enabling the bankruptcy trustee to meet the bankruptcy trustee's expenses out of the bankrupt's estate, ratify what that trustee has done.

(6) Part 3 of the First Schedule has effect with respect to the things that the bankruptcy trustee is able to do for the purposes of, or in connection with, the exercise of any of the bankruptcy trustee's powers under this Act.

(7) If, in exercising a power conferred by this Act, a bankruptcy trustee who is not the Official Receiver- (a) disposes of property comprised in the bankrupt's estate to an associate of the bankrupt; or (b) employs an advocate, the bankruptcy trustee shall, if there is a creditor's committee, give notice to the committee of that exercise of that power.

(8) A bankruptcy trustee may use his or her discretion in administering a bankrupt's property, but, in doing so, is required to have regard to the resolutions passed by the creditors at creditors' meetings.

il.

(l) A bankruptcy trustee may sell property of Bankruprcy the bankrupt before the first meeting of creditors only if- trustee not to sell bankrupt's property before (a) it is perishable or is likely to rapidly diminish in first creditors' value; meeting.

(b) in that trustee's opinion, its sale could be prejudiced by delay; or (c) expenses would, in that trustee's opinion, be incurred by the delay and, before sale, the bankruptcy trustee has consulted the creditors.

(2) The bankruptcy trustee shall ensure that the proceeds of the sale of a bankrupt's property in accordance with subsection (1) are in every case invested in accordance with section 66.

1r04 Insolvency 2015 No.lE 65.

The title of a purchaser of the bankrupt's property Title ofpurchaser from a banknrptcy trustee under a document that is made in from bankruprcy the exercise of the bankruptcy trustee's power of sale in the trustee.

First Schedule may not be questioned except on account of fraud.

ffi.

(l) A bankruptcy trustee shall establish and Bankruptcy maintain a bank account in respect of each bankrupt estate trustee to bank money and power administered by that trustee and shall pay into the relevant to invest surplus.

account all money that that trustee receives in that capacity.

(2) If money held by a bankruptcy trustee in respect of a bankrupt's estate is not immediately required to be paid in connection with the administration of the estate, the bankruptcy trustee may invest the money in an investment of a kind prescribed by the insolvency regulations for the purposes of this section.

(3) A bankruptcy trustee who invests money in accordance with subsection (2) shall credit to the bankrupt's estate the interest, dividends or other money that accrues in respect of the investment.

6il.

(1) A bankruptcy trustee may, if the Court has Bankruptcy first approved it, assign a right to sue that is conferred on trustEe may assign right to sue under the bankruptcy trustee by this Act.

this Act.

(2) An application for such an approval may- (a) be made only by the bankruptcy trustee or the person to whom it is proposed to assign the right to sue; and (b) be opposed only by a person who is a defendant to the bankruptcy trustee's action, if already begun, or a proposed defendant.

6E.

(1) If a member of a business partnership is koceedings by adjudged bankrupt, the Court may authorise the bankruptcy bankruptcy trustee when bankrupt is trustee to bring proceedings in the names of the bankruptcy partner in business trustee and the bankrupt's partner.

parhership.

(2) The bankruptcy trustee shall serve notice of the application partner on the er for authority to bring the proceedings, and the partner may oppose the application.

(3) The partner may apply to the Court for a direction that- (a) the partner is to be paid the partner's proper share of the proceeds of the proceedings; or 1105 20lS Insolvency No.lE (b) the partner is to be indemnified by the bankruptcy trustee against any costs incurred in the proceedings on the condition that the partner does not claim any benefit from them.

(4) Any purported release by the partner of the debt or demand to which the proceedings relate is void.

69.

(1) If a person is apprenticed or is an articled Diccharge or clerk to an employer who is adjudged bankrupt, either of transfcr of indonturc of them may give notice to the bankruptcy tustee or the appcnticoohlp or Official Receiver requesting that the indenture of articlcg of Egrlomont on apprcnticeship or articles of agreemcnt be discharged.

bankruptcy of (2) On receiving a notice under subsection (1), the omployor.

banknrptcy fiustee or Official Receiver shall discharge the indenture of apprenticeship or articles of agreement, but only if satisfied that it would be in the interests of the apprentice or clerk to do so.

(3) If money has been paid to the banknrpt by or on behalf of the apprentice or clerk as a fee, the bankruptcy fiustee may, on the application of the apprentice or clerk, or of the agent of the apprentice or clerk, pay from the bankrupt's estate such amount as the trusteo considers reasonable to or for the use of the apprentice or clerk, (4) In deciding whether to make a payment under subsection (3), the banknrptcy trustee shall take into consideration- (a) the amount paid by or on behalf of the apprentice; (b) the time during which the apprentice or clerk served with the bankrupt under the indenture or articles before the commencement of the (c) banknrptcy, and any other relevant circumstancb.

(5) On the application of any apprentice or articled clerk to the banknrpt, or an agent of the apprentice or articled clerk, the bankruptcy tustee or Official Receiver may, instead of acting under subsection (2), transfer the indenture of apprenticeship or articles of agrcement to some other person.

ca9.237 (6) Subsection (5) is subject to section 12 of the Industrial Training Act.

I 106 Insolvency 20ts No.18 (7) Any person dissatisfied with a decision of the bankruptcy trustee under subsection (3) may apply to the Court for an order quashing or varying the decision.

(8) On the hearing of an application made under subsection (7), the Court may make the order sought by the applicant or such other order as it considers appropriate.

70.

(1) A bankruptcy trustee may apply to the Court Bankruptcy for directions on any question concerning the operation of trustee may apply for directions by this Part.

the Court.

(2) A bankruptcy trustee who acts under a direction of the Court discharges the bankruptcy trustee's duty in relation to the matter for which the direction was sought, and it does not matter that the direction is later invalidated, ovemrled, or set aside or otherwise becomes ineffective.

(3) However, the bankruptcy trustee is not protected by subsection (2) if, in obtaining or following the Court's direction, the bankruptcy trustee was guilty of- (a) fraud; or (b) deliberate concealment or misrepresentation.

71.

(1) A person (including the bankrupt or a Application to the creditor) whose interests, monetary or otherwise, are Court to reverse or modify detrimentally affected by an act or decision to which this bankruptcy section applies may apply to the Court to reverse or modify trustee's decision.

the act or decision.

(2) This section applies to- (a) an act or decision of the bankruptcy ffustee; or (b) a decision of the Court in carrying out an examination under section 170.

(3) The application may be entertained only if is made- (a) within twenty-one days after the act or decision; or (b) within such extended period as the Court allows.

(4) On the hearing on an application made under subsection (1), the Court shall- (a) confirm the bankruptcy trustee's act or decision, with or without such modifications as it considers appropriate; or 7L07 2015 Insolvency No.18 (b) if it is of the opinion that the act or decision was unfair or umeasonable, quash it.

72.

(1) A bankruptcy trustee shall- Bankruptcy trustee to keep (a) keep proper accounting records for each proper accounting bankruptcy in the form and manner prescribed by records.

the insolvency regulations; and (b) if required by the Court to do so-verify those records by statutory declaration.

(2) A creditor or other person who has an interest in a particular bankruptcy is entitled to inspect the bankruptcy trustee's accounting records relating to the particular bankruptcy.

(3) After the end of three years from the discharge of a bankrupt, the bankruptcy trustee may dispose of the accounting records deposited with the bankruptcy trustee for the purposes of the bankruptcy by- (a) delivering them to the bankrupt or the bankrupt's personal representative, if requested; or (b) destroying or otherwise disposing of them.

73.

(l) The bankruptcy trustee shall prepare a final Bankruptcv statement'of receipt, und p'ayments that complies with :ff:fr":IJfl subsection (2)- receiPts and (a) pavments' as soon as practicable after the distribution of the final dividend has been determined; or (b) when the whole of the bankrupt's property has been realised, if there are insufficient assets to pay all the proofs of debt.

(2) A final statement of receipts and payments complies with this subsection if it- (a) shows in detail the receipts and payments in respect of the bankrupt's estate; and (b) can be inspected without fee by any creditor or other person who has an interest in it.

(3) The bankruptcy trustee shall publish the final statement of receipts and payments in the prescribed form, and advertise in the prescribed manner that it has been published.

1108 Insolvency 2015 No.18 74.

(1) If, in relation to a bankruptcy, the Official Audit of Receiver is not the bankruptcy trustee, the Official bankruprcy Receiver may from time to time audit- trustee's accounts, (a) the bankruptcy trustee's accounting records for any particular bankruptcy ; (b) any statement of accounts and statement of financial position prepared by the bankruptcy trustee under section 73; and (c) the account (if any) maintained by the bankmptcy trustee for the purposes of this Act.

(2) If, in relation to a banknrptcy, the Official Receiver is the bankruptcy trustee, the Auditor-General may from time to time audit the records, statements and account referred to in subsection (1)(a) to (b).

75.

(1) Except as othenvise provided by this Romoval of section, a banknrptcy trustee appointed in respect of a bankruptcy trustoo and vacation of banknrpt's estate may be removed from office only by- officc.

(a) an order of the Court; or (b) a creditor's meeting convened specially for that purpose in accordance with the insolvency regulations.

(2) If the Official Receiver is the bankruptcy trrustee, or the bankruptcy tustee is appointed by the official Receiver or by the Court (othenvise than under section 62), a creditors meeting may be convened for the purpose of replacing the banknrptcy ffustee, but only if- (a) the Official Receiver or that trustee considers it (b) appropriate to do so; (c) the Court so directs; or the meeting is requested by one of the banknrpt's creditors with the concurence of not less than one-quarter, in value, of the creditors (including the creditor making the request).

(3) A bankruptcy trustee who is not also the Official Receiver vacates office on ceasing to be authorised as an insolvency practitioner.

(4) A bankruptcy trustee who is not also the Official Receiver may resign office by giving to the Court not less than thirty days' notice of the resignation.

1109 2015 Insolvency No.lE (5) A bankruptcy trustee vacates office- (a) on giving notice to the Court that a final meeting has been held in accordance with section 253 and of the decision (if any) of that meeting; or (b) if the relevant bankruptcy order is annulled-on the annulment of the order.

76, (1) If a person has been appointed by the Court Whon Official to replace the Official Receiver on his or her ceasing to Receiver is rpleased from hold office as bankruptcy trustee in respect of a bankrupt's obligations as estate, the Official Receiver is released from such time as bankruprcy the Court orders.

tru8tae.

(2) If a person has been appointed by a general meeting of a banknrpt's creditors to replace the Official Receiver on his or her ceasing to hold office as bankruptcy trustee in respect of the banknrpt's estate, the Official Receiver is released from office from the time at which the Official Receiver gives notice to the Court that another person has been appointed as a replacement.

(3) If the Official Receiver, while acting as banknrptcy trustee, gives notice to the Cabinet Secretary that the administration of the bankrupt's estate is for practical purposes complete, the Official Receiver's release takes effect from such time as the Cabinet Secretary determines in writing.

(4) On being released under this section, the Official Receiver is, from the time specified in accordance with this section, discharged from all liability both in rospect of acts or omissions occurring in the course of, or in relatlon to, administering the estate of the bankrupt concerned.

77.

(1) This section applies when a person other Whcn bankruptcy than the Official Receiver ceases hold office as a trustoc ,not boing the Official bankruptcy trustee.

Rcceivor, is nloarcd fiom (2) If the person has been removed from office by a obligatione.

meeting of the banknrpt's creditors that has not resolved against the person's release or who has died, the person is released from the time at which a notice is given to the Court in accordance with the insolvency regulations that the person has ceased to hold offlee.

(3) If the person has been removed from office- 1l l0 Insolvency 20lS No.18 (a) by a general meeting of the bankrupt's creditors that has resolved against the bankrupt's release; (b) by the Court, the person is released from such time as the Official Receiver determines, on an application made by that person.

(4) If the person has vacated office under section 75(3), the person is released from such time as the Official Receiver determines, on an application made by that person.

(5) If the person has resigned office under section 75(4), the person is released from such time as may be determined in accordance with the insolvency regulations.

(6) If the person has vacated office under section 75(5)(a), the person is released- (a) if the final meeting referred to in that subsection has resolved against that person's release-such time as the Official Receiver determines, on an application made by that person; but (b) if that meeting has not so resolved-the time at which the person vacated office.

(7) When a bankruptcy order is annulled, the person is released from such time as the Court determines.

(8) On being released under this section, a bankruptcy trustee is, from the time specified in accordance with this section, discharged from all liability both in respect of acts or omissions occurring in the course of, or in relation to, administering the estate of the bankrupt concerned.

(7) Nothing in this section prevents the Court from exercising its powers under section 74 in relation to a person who has been released under this section.

78.

(l) This section applies to a vacancy in the Vacancy in office office of bankruptcy trustee that has arisen because- of bankruprcy trustee.

(a) the appointment of a person as bankruptcy trustee has failed to take effect; or (b) when such an appointment has taken effect, the person appointed has died, resigned or otherwise ceased to hold the office.

1111 20ts Insolvency No.18 (2) When this section applies to a vacancy, the Official Receiver holds office as bankruptcy trustee until the vacancy is filled.

(3) The Official Receiver may at any time convene a creditors' meeting for the purpose of filling such a vacancy.

(4) If the Official Receiver has not convened, and does not propose to convene, a creditors' meeting for the purpose of filling such a vacancy, any creditor of the bankrupt may request the Official Receiver to convene such a meeting.

(5) If such a request appears to the Official Receiver to be made with the concurrence of not less than one- quarter in value of the bankrupt's creditors (including the creditor making the request), the Official Receiver shall convene the requested meeting.

(6) A reference in this section to a vacancy includes a case in which it is necessary, in relation to particular property that is or may be included in a bankrupt's estate, to revive the trusteeship of the estate after the holding of a final meeting convened under section 253 or after the Official Receiver has given notice under section 76(2) or 77(2).

79.

(1) If, in relation to the bankruptcy trustee in Generalcontrolor respect of a bankrupt's estate, a person (including the f',H#J,f'* bankrupt or a creditor of the bankrupt) is dissatisfied with any act, omission to act or decision of that trustee, the person may apply to the Court for an order under subsection (2).

(2) On the hearing of such an application, the Court may- (a) confirm, reverse or modify the act, omission or decision concerned; or (b) give the bankruptcy trustee directions; or (c) make such other order as it considers appropriate.

(3) The Court may, on the application of a bankruptcy trustee, give directions in respect of the bankrupt's estate in relation to any particular matter arising under the bankruptcy.

ttt2 Insolvency 20ts No.lE 80.

(l) Any of the following persons make an Liability of application to the Court for an order under this section bankruptcy truetee for misapplication relating to a bankruptcy trustee's administration of a of money, otc.

bankrupt's estate: (a) the Official Receiver; O) the Attorney General; (c) a creditor of the bankrupt; (d) the bankrupt (whether or not there is, or is likely to be, a surplus available at the end of the bankruprcy).

(2) Approval of the Court is required for the making of such an application if it is to be made by the bankrupt or if it is to be made after the bankruptcy trustee has been released in accordance with section 77.

(3) If, on hearing an application made under subsection (1), the Court is satisfied that the bankntptcy trustee in respect of a banknrpt's estate has misapplied or retained, or become accountable for money or other property comprising the estate; the Court shall make either or both of the following orders: (a) an order directing the bankruptcy trustee, for the benefit of the banknrpt's estate, to repay, restore or account for the relevant money or other property, together with interest at such rate as the Court considers appropriate; (b) an order directing the bankruptcy finrstee to be disqualified from acting as such for such period as may be specified in the order.

(4) If, on hearing an application made under subsection (1), the Court is satisfied that the bankntpt's estate has sustained a loss as a result of misfeasance or a breach of fiduciary or other duty by the bankruptcy trustee in performing that trustee's functions, the Court shall make either or both of the following orders: Dlvlslon t-Credltors' meetlngs and creditorst conrmlttee 81.

There are two kinds of creditors' meetings: Kinds of cnditon' (a) the first meeting of creditors; and moctings.

(b) subsequent creditors' meetings.

1113 2OlS Insolvency No.l8 82.

(1) The bankruptcy trustee may at any time Subsequent convene a meeting of creditors after the first meeiing of ffil;*'." creditors.

(2) The bankruptcy trustee shall convene such a meeting if- (a) requested to do so by a creditor of the bankrupt; and (b) the request is made with the concurrence of not less than one-quarter in number and value of the creditors who have proved their debts.

(3) The bankruptcy trustee shall convene the meeting by giving notice of the time, date and place of the meeting to- (a) thebankrupt; and (b) each creditor named in the statement of the bankrupt's financial position; and (c) any other creditors known to the bankruptcy trustee.

(4) The bankruptcy trustee shall advertise the time, date and place of the meeting in the manner prescribed by the insolvency regulations for the purpose of this section.

(5) Nothing in this section limits the general effect of section 63(5) or Part 3 of the First Schedule.

E3.

A meeting of creditors convened by notice to Y:li:g:11.

creditors, and a res6lution passed at the *""ting, is valid []::T1"""#' even if sOme creditors may not have received the notice, lackofnotice.

unless the Court orders otherwise.

E4.

(1) The chairperson of a creditors' meeting is the Appointment of bankruptcy trustee or a person appointed by the bankruptcy chairperson to conduct trustee to be the chairperson.

crcditors' (2) if nor meetings, However, neither the bankruptcy trustee the person (if any) appointed by the bankruptcy trustee to be the chairperson attends the meeting, the creditors may appoint one of them to act as chairperson for the purpose of the meeting, but only if that person is entitled to vote at the meeting.

(3) A person appointed by the bankruptcy trustee or elected by the creditors to act as chairperson may tt14 No.18 Insolvency 2015 administer any oath that the bankruptcy trustee could have administered if the bankruptcy trustee had attended the meeting.

E5.

The chairperson of a creditors' meeting may Power of adjourn the meeting from time to time and place to place.

chairperson to adjourn creditors' meeting.

E6.

If the bankruptcy trustee attends a creditors' Bankruptcy meeting or an adjournment of the meeting, the bankruptcy trustee to report to creditors' trustee shall- meeting.

(a) report on the administration of the bankrupt's estate: (b) live any creditor any funher information that the creditor may properly require; and (c) on being reasonably required to do so, produce for the meeting or its adjournment all documents in the bankruptcy trustee's possession that relate to the bankrupt's property.

87.

(1) A person may aftend a creditors' meeting- Who can attend creditors' (a) by being physically present at the time, date and meeting.

place appointed for the meeting; or (b) if the bankruptcy trustee makes it available-by means of an audio or audio-visual link, so that all those participating in the meeting can hear and be heard by each other.

(2\ A creditor may also attend- (a) by voting by postal or electronic vote under section 94; or (b) by proxy on any resolution to be put to the meeting.

E8.

(l) The bankrupt shall, if required by the Bankrupt may be bankruptcy trustee, attend all creditors' meetings by being required to attend creditors' physically present or present by an audio or audio-visual meeting and be link.

questioned.

(2) The following persons may question the bankrupt about the bankrupt's property, conduct or dealings: (a) the bankruptcy trustee; (b) the chairperson of the meeting; 1115 2015 Insolvency No.18 (c) a creditor or a representative of a creditor.

(3) The chairperson of the meeting may allow only questions that relate to the bankrupt's property, conduct or dealings.

(4) The questioning may be on oath.

(5) The bankrupt shall sign a statement of the bankrupt's evidence given under the questioning, if required to do so by the bankruptcy trustee or the chairperson of the meeting.

(6) A bankrupt who, without reasonable excuse, fails to comply with subsection (5) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings.

89.

A person who is not a creditor of the bankrupt Attendance at may attend a creditors' meeting with the consent of- creditors' meeting by non- (a) the bankruptcy trustee; or creditors.

(b) the creditors attending the meeting, voting by ordinary resolution.

90.

(1) The bankruptcy trustee shall ensure that Minutes and minutes are kept of each creditors' meeting.

record of creditors' (2) The minutes are invalid unless signed by the meeting.

bankruptcy trustee or the chairperson of the meeting.

(3) The bankruptcy trustee may record the meeting, but only with the consent of each person attending the 91.

(1) A creditors' meeting is not valid unless Number of least the following persons attend: persons required for creditors' (a) the bankruptcy trustee or a person who meeting to be valid.

represents the bankruptcy trustee; (b) a creditor or a person who represents a creditor.

(2) The meeting lapses if those persons do not attend, in which case the bankruptcy trustee may convene another creditors' meeting.

92.

(l) Any of the following persons may represent Who can a creditor at a creditors' meeting: rcprcsent creditors and (a) bankrupt at creditors' (b) a certified public accountant; meeting.

rl ll16 No.

LE InsolvencY 2015 (c) a person who keeps the creditor's or bankrupt's accounting records; (d) in the case of a creditor-a person who is the creditor's authorised agent under a power of attorney; (e) a person who satisfies the bankruptcy trustee that the person represents the creditor or bankrupt: (0 in the case of a partnership-a partner.

(2) If the bankrupt attends a creditors' meeting, any of the following persons may represent the bankrupt: (a) an advocate; (b) a certified public accountant; (c) a person who keeps the creditor's or bankrupt's accounting records; (d) a person who satisfies the bankruptcy trustee that the person represents the creditor or bankrupt; (e) in the case of a partnership-a partner.

(3) In addition to the persons listed in subsection (1), a creditor may be represented- (a) in the case of the State-by any officer of the appropriate government department or agency; (b) in the case of a public body-by an officer of that body; (c) in the case of a company*by a director, or its chief executive or secretary or by a person authorised in writing by one of those persons.

93.

(l) At a creditors' meeting- Passing of resolutions at (a) an ordinary resolution is passed if a majority in creditors' number and value of the creditors, or their meetings.

proxies, who attend and who vote on the resolution vote in favour of it; and (b) a special resolution is passed if three-quarters in number and value of the creditors or their proxies who attend and who vote on the resolution vote in favour of it.

LLLT Insolvency 20ls No.18 (2) For the purposes only of deciding whether the requisite majority by value has voted in favour of a resolution, the following provisions apply: (a) the bankruptcy trustee may admit or reject proofs of debt; (b) the chairperson of the meeting may adjourn the meeting in order to admit or reject proofs of debq (c) a person whose debt has been admitted is a creditor.

(3) If a bankruptcy trustee or creditor alleges that a resolution of the creditors- (a) conflicts with this or any other Act or any rule of law; or (b) is unfair the bankruptcy trustee or creditor may apply to the Court for an order under subsection (4).

(4) If, on the hearing of an application made under subsection (3), the Court finds that the allegation is substantiated, it may make such order, and give such directions, as it considers appropriate to address the conflict or unfairness.

(5) This section is subject to section 311.

94.

(1) A creditor who is entitled to vote at a What votes can creditors' meeting may vote on a resolution to be put to the be counted for passing of meeting- resolutions at creditors' (a) by postal vote; or meeting.

(b) by electronic vote, if the voting paper for the resolution allows it, in accordance with the procedure specified in the voting paper.

(2) A postal or electronic vote can be counted only if it reaches the bankruptcy trustee at least seventy-two hours before the meeting begins.

(3) A voting paper for each resolution to be put to a creditors' meeting is required to accompany the notice of the meeting, together with instructions for returning the voting paper or electronic vote (if allowed by the voting paper under subsection (1)(b)) to the bankruptcy trustee at least two working days before the meeting begins.

1118 Insolvency 20ts No.18 95.

Creditors of the bankrupt who are entitled to vote, Who may vote at or their representatives, may vote at a creditors' meeting, but creditors' this rule is subject to sections 96 to 98.

meeting.

96.

A debt that is secured only entitles the creditor to When secured vote at a creditors' meeting if the creditor has- creditor may vote at creditors' (a) surrendered the charge; meeting.

(b) valued the charge; or (c) realised the charge.

97.

(1) A debt on, or secured by, a current bill of When creditor exchange or promissory note entitles the creditor to vote under bill of exchange or only if the creditor is willing to take the following steps: promissory note (a) qualifying may vote at to treat a liability as a charge in the creditors' creditor's hands; meeting.

(b) to estimate the value of the charge; (c) to deduct the value of the charge from the creditor's claim for the purposes of voting (but not for the purposes of distribution under this Purt); (d) to show the bill or note to the bankruptcy trustee when the bankruptcy trustee requires it.

(2) In this section, "qualifying liability" means the liability to the creditor on the bill or note of every person who- (a) is liable on the bill or note antecedently to the debtor; and (b) is not a bankrupt.

98.

(1) A person is not entitled to vote in favour of a Person resolution that would, if passed, directly or indirectly enable disqualified from voting at that person or any of the following persons to receive creditor's remuneration from the bankrupt's estate except as a creditor meeting through preferential sharing rateably with the other creditors.

Those persons effect.

are- (a) that person's business partner, employer or employee; (b) a creditor that that person represents; and (c) a business partner, employer, or employee of a creditor whom that person represents.

(2) A vote cast in contravention (1) is invalid.

1119 Insolvency 20ts No.18 99.

The bankruptcy of a partner of a firm who is Entitlement of indebted to a creditor jointly with one or more of the other partner's creditor to prove debt at partners entitles the creditor to prove the debt for the creditors' purpose of voting at any creditors' meeting, and to vote.

meeting.

100.

(l) A creditors' meeting may pass an ordinary Creditors may resolution- appoint expert or committee to (a) appointing an expert to assist the bankruptcy assist bankruptcy trustee in the administration of the bankrupt's trustee.

estate; and (b) providing for the expert's remuneration out of that estate.

(2) A creditors' meeting may, by ordinary resolution, appoint a committee of persons to assist the bankruptcy trustee in the administration of the bankrupt's estate, but if it does so, the members of such a committee are entitled to receive remuneration from the bankrupt's estate in their capacity as members of the committee only if it has been approved by an order of the Court.

101.

A creditor who has lodged a creditor's claim, or Creditors'right an advocate or a certified public accountant who is acting to inspect for the creditor, is entitled at any reasonable time to inspect documents.

or take copies of- (a) the bankrupt's accounting records; (b) the bankrupt's answers to questions under section (c) 88; the statement of the bankrupt's financial position; (d) all proofs ofdebt; or (e) the minutes of a creditors' meeting.

102.

(l) A general meeting of the creditors of a Committee of bankrupt may establish a creditors' committee to perform creditors may be the functions conferred on it by or under this Part.

established.

(2) A general meeting of the creditors of a bankrupt may not establish such a committee, or impose functions on such a committee, while the Official Receiver is the bankruptcy trustee in respect of the bankrupt's estate, except in relation to appointing a person to be bankruptcy trustee instead of the Official Receiver.

103.

(1) A creditors' committee may not perform its Exercise by functions if at any time the Official Receiver is bankruptcy Cabinet Secretary of trustee in respect of the bankrupt's estate.

functions of creditor's tt20 L8 Insolvency 2015 No.

(2) If, in the case of a bankruptcy, no creditors' committee.

committee exists and the bankruptcy trustee in respect of the bankrupt's estate is a person other than the Official Receiver, the functions of the creditors committee are to be performed by the Cabinet Secretary, except in so far as the insolvency regulations otherwise provide.

Division 9-Bankrupt's property after bankruptcy 104.

(1) Until the bankrupt is discharged- Status of property acquired during (a) all property (whether in or outside Kenya) that bankruptcy.

the bankrupt acquires or that passes to the bankrupt vests in the bankruptcy trustee without that trustee having to intervene or take any other step in relation to the property, and any rights of the bankrupt in the property are extinguished; and (b) the powers that the bankrupt could have exercised in, over, or in respect of that property for the bankrupt's own benefit vest in the bankruptcy trustee.

(2) This section is subject to sections lO6 and 124.

(3) This section does not apply to property that is vested in the bankrupt under an order made under section 120(3).

105.If the bankruptcy trustee is replaced, the property Property vests in and powers vested in the former bankruptcy trustee under replacement bankruptcy this Act vest in the replacement bankruptcy trustee.

trustee.

106.

Property held by the bankrupt in trust for another Property held in person vests in the bankruptcy trustee, who shall assume trust by bankrupt.

control of the property and deal with it for the benefit of the beneficiaries of the trust.

107.

(1) If a bankruptcy trustee considers it necessary Court may order to do so, the bankruptcy trustee may apply to the Court for money due to bankrupt to be an order under subsection (2).

assigned to bankruptcy (2) On the hearing of an application made under trustee.

subsection (1), the Court may order that any money due to the bankrupt, or any money to become due or payable to the bankrupt, is assigned or charged to, or in favour of, the bankruptcy trustee.

(3) The assignment or charge is a discharge to the person who pays the bankruptcy trustee.

ttzt 2015 Insolvency No.18 108.

The bankruptcy trustee shall apply the following Certain payments payments in accordance with the Second Schedule (Priority to be applied in accordance with of payments to preferential creditors)- the Second (a) Schedule.

any amount paid by the bankrupt under section 150; and (b) any amount paid to the bankruptcy trustee under an order made under section 107.

109.

(1) This section applies if a bankruptcy order When execution has been made in respect of a debtor but, before the order creditor may retain execution was made, a creditor has- proceeds.

(a) issued execution against the debtor's property; or (b) attached a debt payable by the debtor.

(2) If this section applies, the creditor may retain the benefit of the execution or attachment (including the proceeds) only if the creditor completed the execution or attachment- (a) before the bankruptcy order was made; and (b) before the creditor had notice that an application for such an order had been lodged.

(3) The creditor may retain as against the bankruptcy trustee a payment made by the bankrupt in the course of the execution or attachment to avoid the execution or attachment as if- (a) the payment was the proceeds of the execution or attachment; and (b) the execution or attachment was completed when the payment was made.

(4) The right of a creditor under this section to retain the benefit of an execution or attachment is subject to Division 19.

110.

(l) This section applies if a judicial enforcement Effect of notice to officer who has taken the property of a debtor in execution judicial enforcement is served with notice of the debtor's bankruptcy- officer of (a) bankruptcy.

before the property is sold; or (b) before the execution is completed by the receipt or recovery of the full amount derived from the execution.

tt22 Insolvency 2015 No.18 (2) If required to do so by the bankruptcy trustee, the judicial enforcement officer shall deliver to the bankruptcy trustee all money and goods seized or received in satisfaction or part satisfaction of the execution.

(3) The costs of the execution are a first charge on the money or goods delivered to the bankruptcy trustee, who may sell all or any of the goods to satisfy the charge.

111.

(l) This section applies if, under execution of a Judicial judgment for an amount exceeding ten thousand shillings, enforcement officer to retain the judicial enforcement officer- proceeds of execution for (a) sells property ofthe debtor; or fourteen days after (b) sale.

is paid money in order to avoid a sale.

(2) The judicial enforcement officer is entitled to- (a) deduct the costs of the execution from the proceeds of sale or the money paid; and (b) retain the balance for the requisite period, to be applied in accordance with subsection (3) or (a).

(3) If the judicial enforcement offlcer is served with notice within the requisite period that a debtor's application has been made, the judicial enforcement officer shall pay the balance to the bankruptcy trustee, who is entitled to retain it as against the execution creditor.

(4) If the judicial enforcement officer is served with notice within the requisite period that a creditor's application has been made in respect of a debtor- (a) the judicial enforcement officer shall retain the balance until the application, and any other application of which notice is served on the judicial enforcement officer pending disposal of the first application, has been disposed of; and (b) the judicial enforcement officer shall- (i) if a bankruptcy order is made in respect of the debtor-pay the balance to the bankruptcy trustee; or (ii) if such an order is not made-pay the balance to the execution creditor, who is entitled to retain it as against the bankruptcy tL23 2015 Insolvency No.18 trustee (subject to section I 13).

(5) If the judicial enforcement officer is not served with notice within the requisite period that a bankruptcy application has been made in respect of the debtor, that officer shall pay the balance to the execution creditor, who is entitled to retain it as against the bankruptcy trustee.

(6) The requisite period for the purpose of this section is fourteen days from the date of the sale or payment to avoid sale.

ll2.On the sale by the judicial enforcement officer of Purchaser under a debtor's property on which execution has been levied, the sale by judicial enforcement purchaser, if acting in good faith, acquires a good title to officer acquires the property as against the bankruptcy trustee.

good title.

113.

(1) An execution creditor may make an Court may set application to the Court for an order setting aside the rights aside rights conferred on of the bankruptcy trustee under section 110 or 111.

bankruptcy (2) trustee.

On the hearing of an application made under subsection (1), the Court may make an order setting aside those rights in favour of the execution creditor to the extent and on such terms (if any) as the Court considers appropriate.

(3) The Court may not make an order under subsection (2) unless satisfied that the bankruptcy trustee has been served with a copy of the application.

(4) The bankruptcy trustee is entitled to appear as respondent at the hearing of the application.

114.

(1) This section applies to a transaction between Transaction in a person and the bankrupt in relation to property that the good faith and for value after bankrupt has acquired, or that has passed to the bankrupt, bankruptcy.

after the bankruptcy has commenced.

(2) The transaction is valid as against the bankruptcy trustee if- (a) the person concerned deals with the bankrupt in good faith and for value; and (b) the transaction is completed without an intervention by the bankruptcy trustee.

(3) If the person concerned is a bank of which the bankrupt is a client, a transaction by that person dealing with the bankrupt for value includes- 1124 No.18 Insolvency 2015 (a) the receipt by that person of any money, charge, or negotiable instrument from the bankrupt or by the bankrupt's order or direction; (b) a payment by that person to the bankrupt or by the bankrupt's order or direction; and (c) the delivery by that person of a charge or negotiable instrument to the bankrupt or by the bankrupt's order or direction.

(4) A payment of money or delivery of property by a legal personal representative to, or by the direction of, the bankrupt is a transaction for value.

115.If a bankrupt acquires property, or property Executions and passes to a bankrupt, after the bankruptcy has commenced, attachments in good faith.

an execution or attachment against the property is valid as against the bankruptcy trustee if it- (a) is made in good faith; (b) is made in respect of a debt or liability incurred by the bankrupt after the bankruptcy commenced; and (c) is completed before an intervention by the bankruptcy trustee.

116.

For the purposes of sections 109 and 115- When execution or attachment (a) an execution against goods is completed by completed for seizure and sale; purposes of sections 109 and (b) an attachment of a debt is completed by receipt of l 15.

the debt; and (c) an execution against land is completed by sale or, in the case of an equitable interest, by the appointment of a receiver.

1l7.It the bankruptcy trustee's interest in property is Bankruptcy acquired by or passes to a bankrupt after bankruptcy has trustee's interest in property passes commenced- to transferee.

(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 ll4 or 115 applies.

LL25 2015 Insolvency No.18 Division 10 - Disclaimers of bankrupt's property 118.

(1) The bankruptcy trustee may disclaim onerous Bankruptcy property, subject to section 121.

trustee may disclaim onerous (2) Subsection (1) applies even if the bankruptcy property.

trustee has taken possession of the property, tried to sell it, or otherwise exercised rights of ownership in relation to it.

(3) Within fourteen days after the disclaimer, the bankruptcy trustee shall send a notice of the disclaimer to every person whose rights are, to the bankruptcy trustee's knowledge, affected by it.

(4) Property is onerous for the purposes of this section if it is or comprises- (a) an unprofitable contract; (b) property of the bankrupt that is unsaleable, or not readily saleable, or that may give rise to a liability to pay money or perform an onerous act; or (c) a litigation right that, in the opinion of the bankruptcy trustee, has no reasonable prospect of success or cannot reasonably be funded from the assets of the bankrupt's estate.

119.

A disclaimer by the bankruptcy trustee- Effect of (a) terminates, on and from the date of the disclaimer.

disclaimer, the rights, interests, and liabilities of the bankruptcy trustee and the bankrupt in relation to the property disclaimed; and (b) does not affect the rights, interests, or liabilities of any other person, except in so far as is necessary to release the bankruptcy trustee or the bankrupt from a liability.

120.

(1) A person who sustains loss or damage as a Position of person result of disclaimer by the bankruptcy trustee may- who suffers loss as result of (a) claim as a creditor in the bankruptcy for the disclaimer.

amount of the loss or damage, taking account of the effect of an order made by the Court under paragraph (b); or (b) apply to the Court for an order that the disclaimed property be delivered to, or vested in, the person.

2015 No.18 (2) The bankrupt may also apply to the Court for an order that the disclaimed property be delivered to, or vested in, the bankrupt.

(3) On the hearing of an application made under subsection (lxb) or (2), the Court may make the order sought if satisfied that it is fair and reasonable that the property should be delivered to, or vested in, the applicant.

l2l.The bankruptcy trustee loses the right to disclaim Bankruptcy onerous property if- trustee may be required to elect (a) person whose rights would whether to a be affected by the disclaim.

disclaimer has sent the bankruptcy trustee a notice requiring the bankruptcy trustee to elect whether to disclaim that property; (b) the notice specifies a deadline for the disclaimer that is not less than twenty-one days after the bankruptcy trustee has received the notice; and (c) the bankruptcy trustee does not disclaim that property before that deadline.

122.

(l) If land disclaimed by the bankruptcy trustee Liability for is subject to a rentcharge, the vesting of that land in any rentcharge on bankrupt's land other person (including the State), or the person's after disclaimer.

successors in title, does not make any of them personally liable for the rentcharge.

(2) Subsection (1) does not affect the liability of a person for a rentcharge accruing after the person has taken possession or control of the land.

123.(l) This section applies to an interest in land Transmission of that- interest in land.

(a) is owned by the bankrupt; (b) is subject to a mortgage or a charge; and (c) is not disclaimed by the bankruptcy trustee.

(2) The bankruptcy trustee shall- (a) arrange for the transmission of the interest in the land to the bankruptcy trustee to be registered under the Land Registration Act, 2012; or (b) give notice to the mortgagee or other person No.3 of 2012) entitled under - the charge that the bankruptcy LL27 2015 Insolvency No.18 trustee cannot, or does not intend to, register transmission of the interest in the land.

(3) A notice given under subsection (2Xb) is notice that- (a) the interest has vested in the bankruptcy trustee; and (b) the mortgagee or holder of the charge is, on taking possession of, or selling, the interest,liable to account to the bankruptcy trustee as if that trustee were the proprietor of the interest.

124.(l)The bankruptcy trustee cannot, after the Bankruptcy bankrupt's discharge, claim an interest in land to which trustee cannot claim interest in section 123(l) applies and for which the bankruptcy trustee land if bankrupt has not registered a transmission if the bankrupt- remains in possession until (a) was in possession of the interest when the discharge.

bankruptcy commenced; and (b) remained in possession until discharge from bankruptcy.

(2) Subsection (1) applies whether or not the bankruptcy trustee gave a notice under section 123(2)(b).

(3) However, the bankruptcy trustee may apply to the Court for an order that the bankruptcy trustee is entitled, after discharge, to claim the bankrupt's interest in the land.

(4) In deciding whether or not to make an order on the hearing of an application made under subsection (3), the Court shall have regard to- (a) the good faith of the bankrupt; (b) the time that has elapsed since the bankruptcy (c) the value of any improvements made by the bankrupt; and (d) all other relevant matters.

125.

(1) The bankruptcy trustee may transfer the Bankruptcy following property belonging to the bankrupt in the same trustee may transfer shares and way as the bankrupt could have transferred it but for the other securities.

bankruptcy: (a) securities of a company; tt28 No.18 Insolvency 2Ol5 (b) securities of the Government of Kenya; (c) securities issued by a local authority; (d) shares in ships; (e) any other property transferable in the records of a company, office or person.

(2) A person whose act or consent is necessary for the transfer of the property shall, on being requested to do so by the bankruptcy trustee, do whatever is necessary for the transfer to be completed.

(3) If the bankruptcy trustee proposes to transfer shares of a company, a shareholder- (a) to whom the shares are required to be offered for sale in accordance with the company's constitution; and (b) who agrees to purchase them, shall pay a fair price for the shares, whether or not that constitution provides a procedure for fixing the price.

126.

A bankruptcy trustee may disclaim any liability Bankruptcy under shares owned by the bankrupt in any company by trustee may disclaim liability disclaiming the shares as onerous property under section under shares.

118, but sections 120 and section l2l do not apply to a disclaimer of liability under shares.

127.(l) The bankruptcy trustee may disclaim a Bankruptcy liability under shares owned by the bankrupt in a company trustee may disclaim liability by disclaiming them as onerous property in accordance under shares.

with section 118.

(2) Neither section 120 nor section 121 applies to a disclaimer of liability under shares.

128.

The bankruptcy trustee loses the right to disclaim Bankruptcy liability under shares if- trustee may be required to elect (a) person whether to the company or a who has an interest in disclaim liability the shares has sent the bankruptcy trustee a notice under shares.

requiring that trustee to elect whether to disclaim liability under the shares; (b) the notice specifies a deadline for the disclaimer that is not less than twenty-one days after the bankruptcy trustee has received the notice; and tt29 Insolvency No.18 (c) the bankruptcy trustee does not disclaim liability under the shares before that deadline.

129.(l) After disclaimer, the bankruptcy trustee Transfer of shares may, subject to any other written law and to the company's after disclaimer.

constitution, transfer the relevant shares to any person who has an interest in them.

(2) If that person refuses to accept the transfer, or if no person has an interest in them, the bankruptcy trustee may transfer the shares to the bankrupt if the bankrupt consents, and in that case the bankrupt is entitled as against the bankruptcy trustee to retain the shares and the proceeds if the bankrupt sells them.

(3) If the bankruptcy trustee does not transfer the shares to a person who has an interest in them or to the bankrupt, the directors of the company may- (a) sell the shares; or (b) with the Court's approval and whatever any other written law may provide-cancel the shares if they believe it is in the company's best interests to do so.

(4) The bankruptcy trustee is a director of the company for the purposes of transferring, selling, or cancelling the shares under this section if- (a) immediately before the bankruptcy commenced, the bankrupt was a director of the company; and (b) the number of directors is fewer than the minimum number of directors required by the Companies Act, 2015 or the company's constitution as a result of the bankrupt's disqualification as a director.

130.

(1) This section applies if the bankruptcy trustee Company may has disclaimed liability under shares and the company is prove for unpaid calls.

not in liquidation.

(2) The company may prove in the bankruptcy for- (a) the amount of unpaid calls made before the bankruptcy commenced in respect of the bankrupt's shares; and l 130 Insolvency 20ls No.18 (b) the value of calls to be made in respect of the bankrupt's shares within one year after the bankruptcy commenced.

(3) If the bankruptcy trustee and the company cannot agree, the Court, may on the application of either of them, make an order determining the value of the calls to be made.

Division ll-Goods held by bankrupt under credit purchase transaction 131.In this Division- Inteqpretation: Division 11.

"cash price", in relation to a sale of goods, means- (a) the lowest price at which a person could have bought those goods from the creditor on the basis of payment in full at the time the sale was made; or (b) if there is no such price-the fair market value of those goods at the time the sale was made; "creditor", in relation to a credit purchase transaction, means- (a) the person disposing of the goods under the transaction; and (b) if the rights of that person are transferred by assignment or by operation of law, means the person for the time being entitled to those rights: "debtor", in relation to a credit purchase transaction, means- (a) the person to whom goods are disposed of under the transaction; and (b) if the rights of that person are transfened by assignment or by operation of law, means the person for the time being entitled to those rights: "hirer", in relation to a credit purchase transaction, means- (a) the person who is entitled to the use of the goods under the transaction; and (b) if the rights of that person are transfened by assignment or by operation of law, means the person for the time being entitled to those rights.

1131 Insolvency 20ts No.18 132.

(1) If a bankrupt acquired goods under a credit Restrictions on purchase transaction before the bankruptcy commenced and creditor dealing the creditor either- with goods.

(a) took possession of the goods within the twenty- one days immediately before the time when the bankruptcy commenced, and after that time still possesses them; or (b) takes possession of the goods after that time, the creditor may not sell or dispose of the goods or part with possession of them until the expiry of thirty days from and including the date when the creditor serves a post- possession notice on the bankruptcy trustee.

(2) Subsection (1) does not apply if the creditor, with the consent of the bankruptcy trustee, sells or parts with possession of the goods before the end of the thirty-day period.

(3) A sale or disposal in contravention of subsection (1) is void as against the bankruptcy trustee.

133.

(1) In the case of goods to which section 131 Bankruptcy applies, the bankruptcy trustee may- trustee's powers in relation to goods that are (a) within the thirty-day period referred to in that subject to a credil section, exercise any right conferred by any purchase relevant written law to introduce a buyer for the transaction.

goods; or (b) at any time before the creditor sells or agrees to sell the goods under a power conferred by any such law or by the relevant credit purchase transaction, settle the bankrupt's obligations as debtor in accordance with that law or that transaction.

(2) This section applies irrespective any other written law to the contrary.

t.34.

(l) A creditor may prove in a bankruptcy for the Creditor in amount (not exceeding that limited by any relevant written possession of goods may prove law) that the creditor was entitled to recover from the in bankruptcy if bankrupt as a debtor if- bankruptcy trustee has not exercised (a) the creditor has taken possession of consumer powers.

goods purchased under a credit purchase Ii No.

18 Insolvency 201s transaction (whether before or after the bankruptcy ofthe debtor); and (b) the bankruptcy trustee has not acted under section 133 in relation to the goods.

(2) If a creditor has proved in a bankruptcy in accordance with under subsection (1)- (a) the creditor shall submit with the creditor's claim form the documents (if any) prescribed by the insolvency regulations for the purpose of this section; and (b) the bankruptcy trustee may exercise the rights conferred on the debtor by any relevant written law that applies after the creditor takes possession of goods in accordance with that law.

135.If- Creditor may assign goods to (a) the bankrupt purchased goods under a credit bankruPtcY purchase transaction before the time the trustee.

bankruptcy commenced; and (b) at that time the creditor either- 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 l2-Second bankruptcies 136.

(1) This section applies to and in respect of a Status of bankrupt who, before discharge, is adjudged bankrupt for a bankrupt's property on second time.

second (2) bankruptcy.

Property that is acquired by, or has passed to, the bankrupt since the first bankruptcy (including property acquired or that has passed since the second bankruptcy) vests in the bankruptcy trustee in the second bankruptcy.

(3) Despite subsection (2), the Court may, if it considers it appropriate to do so, order that all or palt of the 1133 2015 Insolvency No.18 following assets or their proceeds vest in the bankruptcy trustee in the first bankruptcy: (a) assets in the second bankruptcy that, in the Court's opinion, were acquired independently of the creditors in the second bankruptcy; (b) assets in the second bankruptcy that devolved on the bankrupt.

(4) A surplus in the second bankruptcy is an asset in the estate in the first bankruptcy, and is payable to the bankruptcy trustee in the first bankruptcy.

(5) This section has effect despite section 104.

137.

(1) This section applies if the bankruptcy trustee Effect of notice to in respect of a bankrupt's estate receives notice that a bankruptcy trustee of application for creditor has lodged an appiication for another bankruptcy.

bankruptcy.

(2) The bankruptcy trustee shall hold property in that trustee's possession that has been acquired by, or passed to, the bankrupt since the first bankruptcy until the application for the other bankruptcy has been dealt with.

(3) The bankruptcy trustee shall transfer the property and its proceeds, less any deduction for the bankruptcy trustee's costs and expenses, to the bankruptcy trustee in the other bankruptcy if- (a) the creditor's application results in another bankruptcy; or (b) the bankrupt is automatically adjudged bankrupt on the bankrupt's own application.

Division 13 - Persons jointly adjudged bankrupt 138.If two or more persons are adjudged bankrupl Separate accounts jointly, the bankruptcy trustee shall teep aistTnct accounis l'^lil"rll t'*'n in respect of- (a) the joint estate; and (b) the separate estate of each bankrupt.

139.

(1) When two or more persons have been How jointand adjudged bankrupt jointly, the bankruptcy trustee shall first :::?:t"j,[f; apply- (a) the joint estate to the debts due by the bankrupts jointly; and tt34 No.

lg Insolvency 2015 (b) the separate estate of each bankrupt to the debts of that bankrupt.

(2) The bankruptcy trustee shall then- (a) apply any surplus in the joint estate to the separate estate of each bankrupt in proportion to the interest of each bankrupt in the joint estate; and (b) credit any surplus in the separate estate of a bankrupt to the joint estate.

Division l4-Duties of bankrupt 140.

(1) A bankrupt shall, to the best of the General duty of bankrupt's ability, assist in the realisation of the bankrupt's bankrupt.

property and the distribution of the proceeds among the creditors.

(2) The duty imposed by subsection (1) is in addition to any other duty imposed on the bankrupt by this Act or by any other written law.

L4l.

(l) As soon as practicable after acquisition, the Bankrupt to bankrupt shall notify the bankruptcy trustee of any property disclose property that- acquired before discharge.

(a) was acquired by, or passed to, the bankrupt before discharge; and (b) is divisible among the creditors.

(2) A bankrupt who, without reasonable excuse, fails to comply with subsection (l) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings or to imprisonment for a term not exceeding six months, or to both.

142.(l) On demand by the bankruptcy trustee, the Bankrupt to bankrupt shall deliver to the bankruptcy trustee, or to a deliver property to bankruptcy trustee person authorised by the bankruptcy trustee to receive it, all on demand.

of the bankrupt's property that- (a) is divisible among the creditors; and (b) is under the bankrupt's control.

(2) On demand by the bankruptcy trustee, the bankrupt shall deliver to the bankruptcy trustee, or to a person authorised by the bankruptcy trustee to receive it, all property that is acquired by, or passes to, the bankrupt before the bankrupt's discharge.

1135 2015 Insolvency No.18 (3) A bank:upt shall take all the steps (including the steps specified in subsection (4)) in relation to the bankrupt's property, and the distribution of the proceeds to the creditors, that are- (a) required by the bankruptcy trustee; (b) prescribed by the insolvency regulations for the purposes of this section; (c) directed to be taken by the Court by an order made in reference to the bankruptcy; or (d) directed to be done by the Court on an application by the bankruptcy trustee or a creditor.

(4) The steps referred to in subsection (3) include the execution by the bankrupt of powers of attorney, transfers, and other relevant documents.

(5) A bankrupt who, without reasonable excuse, fails to comply with a requirement imposed by or under this section is guilty of contempt of the Court and is liable to be punished accordingly, in addition to any other punishment to which the bankrupt may be subject.

143.

(r) rf- Court may impose charge on (a) any property consisting of an interest in a bankrupt's dwelling house that is occupied by the bankrupt property.

or by the bankrupt's spouse or former spouse is comprised in the bankrupt's estate; and (b) the bankruptcy trustee is, for any reason, unable for the time being to realise that property, that trustee may apply to the Court for an order imposing a charge on the property for the benefit of the bankrupt's estate.

(2) lf , on the hearing of an application under this section the Court imposes a charge on any property- (a) the benefit of that charge is included in the bankrupt's estate; and (b) is enforceable up to the charged value from time to time, for the payment of any amount that is payable otherwise than to the bankrupt out of the estate and of interest on that amount at the rate I 136 Insolvency 2015 No.18 prescribed by the insolvency regulations for the purposes of this section.

(3) In subsection (2), the charged value means- (a) the amount specified in the charging order as the value of the bankrupt's interest in the property at the date of the order; and (b) interest on that amount from the date of the charging order at the prescribed rate.

(4) In determining the value of an interest for the purposes of this section, the Court shall disregard any matter that it is required to disregard by the insolvency regulations.

(5) In making an order under this section in respect of property vested in the bankruptcy trustee, the Court shall provide, in accordance with the insolvency regulations, for the property- (a) to cease to be included in the bankrupt's estate; and (b) to vest in the bankrupt subject to the charge and any prior charge.

144.(l) As soon as practicable after being adjudged Bankrupttogive tankrupt shali- eJe bankrupt, irre :::mffJ*'"" (a) deliver to the bankruptcy trustee relevant ;:""",fi1,1*n* documents that are in the bankrupt's possession or control; and (b) notify that trustee of relevant documents that are in the possession or control of any other person.

(2) In subsection (1), "relevant documents" means all accounting records and other documents relating to the bankrupt's estate.

145.

A bankrupt shall- Bankrupt to give bankruptcy trustee (a) as soon as practicable after adjudged information bankrupt- relating to (i) property.

give the bankruptcy trustee a complete and accurate list of the bankrupt's property and of the bankrupt's creditors and debtors, and update the lists as necessary; Lt37 2015 Insolvency No.lB (ii) give the bankruptcy trustee any other information relating to the bankrupt's property that that trustee requires; (b) attend before the bankruptcy trustee at all reasonable times whenever required by that trustee to so; and (c) verify any statement by statutory declaration when required by that trustee to do so.

146.

(1) Whenever the bankruptcy trustee requires it, Bankrupt to give the bankrupt shall provide the bankruptcy trustee with bankruptcy trustee information details of the bankrupt's income and expenditure since the relating to income bankruptcy commenced.

and expenditure.

(2) A bankrupt who, without reasonable excuse, fails to comply with a requirement of the bankruptcy trustee under subsection (1) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings or to imprisonment for a term not exceeding twelve months, or to both.

147, (l) A bankrupt shall, within seven days after any Bankrupt to notify change occurs in the bankrupt's name, address, bankruptcy trustee of change in employment or income, notify the bankruptcy trustee of the personal change.

information.

(2) A bankrupt who, without reasonable excuse, fails to comply with subsection (1) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings or to imprisonment for a term not exceeding six months, or to both.

(3) If, after being convicted of an offence under subsection (2), a bankrupt, without reasonable excuse, continues to fail to notify the relevant change to the bankruptcy trustee, the bankrupt commits a further offence on each day during which the failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for each such offence.

148.

(l) The bankrupt shall give the bankruptcy Bankrupt to give trustee (or any person employed by the bankruptcy trustee) bankruptcy trustee financial the information and details that are necessary to prepare a information.

financial statement that shows the financial position of the bankrupt's estate.

(2) If required to do so by the bankruptcy trustee, the bankrupt shall, before the deadline, prepare and deliver to I 138 No.

L8 Insolvency 20ts the bankruptcy trustee a full, true, and detailed financial statement that shows- (a) details of the bankrupt's trading and stocktaking; and (b) details of the bankrupt's profit and losses during any period within the three years immediately preceding the date on which the bankruptcy commenced.

(3) To enable the bankrupt to prepare the financial statement referred to in subsection (2)- (a) the bankruptcy trustee shall give the bankrupt full access to the bankrupt's accounting records that are in the bankruptcy trustee's possession; and (b) if the bankruptcy trustee believes it necessary to do so-that trustee shall provide the bankrupt with the assistance of a certified public accountant at the expense of the bankrupt's estate.

(4) A bankrupt who, without reasonable excuse, fails to comply with a requirement of this section commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings or to imprisonment for a term not exceeding six months, or to both.

(5) If, after being convicted of an offence under subsection (4), a bankrupt, without reasonable excuse, continues to fail to comply with the relevant requirement, the bankrupt commits a further offence on each day during which the failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for each such offence.

(6) For the purposes of this section, the deadline is the expiry of twenty-one days after the bankruptcy cofirmenced or of such extended period as the bankruptcy trustee may allow Division l5-Restrictions on bankrupt during bankruptcy l49,In this Division- Interpretation: "building", in relation to a bankrupt, includes a Division 15.

reference to a part of a building in which the bankrupt holds a proprietorial interest; 1139 2015 Insolvency No.18 "place" includes building, premises, aircraft, ship, or other means of transporting people or goods; "relevant property", in relation to a bankrupt, means- (a) property ofthe bankrupt; or (b) a document relating to the bankrupt's property, conduct, or dealings.

150.

(1) If required by the bankruptcy trustee to do Bankrupt can be so, the bankrupt shall pay an amount or periodic amounts required to contribute to during the bankruptcy as a contribution towards payment of payment of debts.

the bankrupt's debts.

(2) The bankruptcy trustee may impose conditions with respect to the payments, including conditions as the dates on which and the manner in which they are to be made, and may from time to time amend any such conditions or substitute new conditions for existing ones.

(3) In deciding whether to require the bankrupt to make the payment or payments, the bankruptcy trustee shall- (a) have regard to all the circumstances of the bankruptcy and the bankrupt's conduct, earning power, responsibilities, and prospects; and (b) make reasonable allowance for the maintenance of the bankrupt and the bankrupt's relatives and dependants.

(4) If the bankrupt fails to comply with a requirement made under subsection (1), or with a condition imposed in respect of such a requirement under subsection (2), the bankruptcy trustee may make an application to the Court for an order under subsection (5).

(5) On the hearing of an application made under subsection (4), the Court may order the bankrupt to pay the amount or amounts required by the bankruptcy trustee under subsection (1), or to comply with any condition imposed in respect of the requirement under subsection (2).

(6) On the hearing of an application made to the Court by the bankruptcy trustee, the bankrupt, or a creditor, the Court may- (a) amend, suspend, or cancel the bankrupt's obligations to make payments under this section: I 140 Insolvency 2015 No.18 (b) amend, suspend or discharge an order made under subsection (5); or (c) remit any arrears owing by the bankrupt.

151.

If a bankrupt fails to make a payment Onus of proof if required under section 150, the onus is on the bankrupt in bankrupt defaults in making any proceedings arising out of the failure to show that the payment.

failure was not deliberate.

1,52.

(I) An undischarged bankrupt shall not, without Prohibition of the consent of the bankruptcy trustee or the Court (either bankrupt entering directly or indirectly) business.

(a) - part enter into, carry ofl, or take in the management or control of any business; (b) be employed by a relative of the bankrupt or (c) be employed by a company, trust, trustee, or incorporated body that is owned, managed, or controlled by a relative of the bankrupt.

(2) A bankrupt who contravenes subsection (1) commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings or to imprisonment for a te(m not exceeding two years, or to both.

153.

(l) The Court may issue a search warrant to the Warrant to search bankruptcy trustee or any other person if it reasonably for and seize bankrupt's believes that any relevant property is concealed in a property.

specified place.

(2) The warrant may authorise the bankruptcy trustee or other person named in the warrant, together with any assistants that may be necessary- (a) to enter and search the place; (b) to seize and take possession of relevant property; (c) if necessary, to use force to enter the place (including by breaking open doors); and (d) to open any container found in the place, by force if necessary.

154.

(1) If authorised by a warrant issued by the Seizure of Court, the bankruptcy trustee or (if not the bankruptcy bankrupt's trustee) the Official Receiver, with such assistants as are property.

considered necessary- tt4t 2015 Insolvency No.18 (a) may seize any part of the bankrupt's property that is under the control of the bankrupt or of any other person; and (b) with a view to seizing the bankrupt's property, may- (D break open any building or room of the bankrupt where the bankrupt is believed to be; (ii) break open any building, room, or receptacle of the bankrupt where the bankrupt's property is believed to be; and (iii) seize and take possession of the bankrupt's property found in the building, room, or receptacle.

(2) For the purposes of this section and section 153, if the execution of a warrant takes place without the bankrupt being present, the person executing the warrant shall leave in a prominent place at the place searched a notice that- (a) states the date and time when the warrant was executed; and (b) states the name of the person who executed it.

(3) For the purposes of this section and section 153, the person executing the warrant shall leave with the bankrupt, or leave in a prominent place at the place searched if the bankrupt is not present, a list of any property seized during the course of the search.

(4) Subsection (3) does not apply if it is impractical to leave a list of property seized or if the bankrupt consents to receiving a list sent in accordance with subsection (5).

(5) If subsection (4) applies, the person executing the search shall leave with the notice referred to in subsection (2), or with the bankrupt if the bankrupt is present, a notice stating that- (a) relevant property has been seized in the course of the search; and (b) within seven days after the execution of the warrant-a list of the property seized will be tt42 Insolvency 2015 No.18 delivered or sent to the bankrupt or left in a prominent position at the place searched.

(6) If subsection (5) applies, the person executing the warrant shall ensure that within seven days after the execution of the warrant there is delivered or sent to the bankrupt, or left in a prominent position at the place searched, a notice listing the property seized and identifying the place where the property was seized.

155.

(1) The bankruptcy trustee may require the Bankrupt to bankrupt and relatives of the bankrupt to vacate any land or vacate land or buildings if building that is part of the property vested in the required to do so bankruptcy trustee under the bankruptcy.

(2) If the bankruptcy trustee's demand is not complied with, the bankruptcy trustee may apply to a court of competent jurisdiction for an order for possession of the land or building.

(3) On the hearing of an application made under subsection (2), the court may make an order for the possession of the land or building if it believes that the bankrupt or relatives of the bankrupt have no justification for remaining there.

(4) The bankrupt or the bankrupt's relatives concerned are entitled to appear and be heard as respondents at the hearing 156.

A bankrupt is entitled at any reasonable time to Bankrupt's right inspect and to take copies of- to inspect (a) documents.

the bankrupt's accounting records; (b) the bankrupt's answers to questions put to the bankrupt in the course of an examination under this Act; (c) the statement of the bankrupt's financial position; (d) all proofs ofdebt; (e) the minutes of any creditors' meeting; and (f) the record of any examination of the bankrupt.

157.

(1) After the bankruptcy commences, the Restrictions on bankrupt, and any person (other than the bankruptcy bankrupt dealing trustee) who claims through or under the bankrupt, ceases with property.

to be entitled- tt43 2015 Insolvency No.l8 (a) to recover property that is part of the bankrupt's estate; or (b) to give a release or discharge in relation to that property.

(2) Subsection (1) applies subject to sections ll4 and 115 and whether or not the bankruptcy trustee has intervened.

158.

(1) After the bankruptcy has corlmenced, the Bankrupt bankrupt may not execute a power of appointment, or any prohibited from taking steps to other power vested in the bankrupt, if the result would be to defeat beneficial defeat or destroy any contingent or other estate or hterest interests of others in bankrupt's in any property to which the bankrupt may otherwise be prope(y.

beneficially entitled at any time before the bankrupt's discharge.

(2) The restriction on the bankrupt in subsection (1) applies- (a) both before and after the bankrupt obtains a discharge; and (b) subject to sections 114 and 115 (transactions entered into in good faith).

159.

(1) As soon as practicable after becoming aware Responsibility of or forming s reasonable suspicion that a customer is an bank to notify bankruptcy trustee undischarged bankrupt, a bank shall- of bankrupt's (a) notify the bankruptcy trustee of any account that account.

the customer holds with the bank; and (b) not pay any money from the account, unless subsection (2) applies.

(2) The bank may pay money out of the account if- (a) the bank is authorised by an order of the Court or instructed by the bankruptcy trustee to do so; or (b) the bank has notified the bankruptcy trustee of the account and has not, within one month after the notification, received any instructions from the bankruptcy trustee.

(3) At the same time as the bank notifies the bankruptcy trustee under subsection (lXa), it shall inform the customer that it has notified the bankruptcy trustee in accordance with subsection (1).

tt44 Insolvency 20ts No.18 (4) Abankthat- (a) without reasonable excused, fails to comply with subsection (lXa) or (3); or (b) contravenes subsection (1Xb), commits an offence and on conviction is liable to a fine not exceeding two million shillings.

160.

(1) The Official Receiver rr&], by notice, Official Receiver require a bank to search its account records by comparing entitled to require bank to search the names of its customers with the names (including any records relating to aliases) of undischarged bankrupts specified in the notice or bankrupt's in a list that is attached to it.

account.

(2) Within seven days after receiving the notice, the bank shall search its account records and provide the Official Receiver with written results of the search in so far as the search reveals the names of undischarged bankrupts specified in the notice or list.

(3) If a bank fails to comply with subsection (2), the Official Receiver may make an application to the Court for an order under subsection (4).

(4) On the hearing of an application made under subsection (3), the Court shall, unless it considers that the Official Receiver's requirement was unjustified, make an order directing the bank to comply with the requirement.

(5) The bank is entitled to be served with a copy of the application and to appear and be heard as respondent at the hearing of the application.

Division 16-Provision allowed for bankrupt during bankruptcy 161.

(1) A bankrupt may choose and retain as the Bankrupt entitled bankrupt's own property assets of a description specified in to retain certain subsection (2) up to a maximum value determined in assets.

accordance with subsection (3).

(2) The assets are- (a) the bankrupt's necessary tools of trade; (b) necessary household furniture and personal effects (including clothing) for the bankrupt and the bankrupt's relatives and dependants; and (c) a motor vehicle.

\t45 2015 Insolvency No.18 (3) The maximum value of those assets are- (a) in the case of the bankrupt's necessary tools of trade-the value fixed by the bankruptcy trustee; (b) in the case of necessary household furniture and personal effects-the value fixed by the (c) bankruptcy trustee; and a motor vehicle-one million shillings or, if a greater amount is prescribed by the insolvency regulations, that amount.

162.

A bankrupt may retain necessary tools of trade Bankrupt may and necessary household furniture and effects that are retain certain assets with worth more than the maximum value fixed in accordance consent of with section 161, if the bankrupts' creditors consent to it by creditors.

an ordinary resolution passed at a creditors' meeting.

163.

(1) Subject to subsection (2), the retention of an Retention of asset by the bankrupt under section 161 or 162 does not assets not to affect rights under affect rights arising under a valid charge, bailment contract charge or credit or credit purchase transaction in respect of the asset.

purchase transaction.

(2) In relation to goods that that are in the possession of the bankrupt under a bailment contract or credit purchase transaction, the Court may make an order authorising the bankruptcy trustee to dispose of the goods as if all the rights of the owner under the contract or agreement were vested in the bankrupt.

(3) An order under subsection (2) may be made- (a) only on the application of the bankruptcy trustee; and (b) only if the Court is satisfied that disposal of the goods would be in the overall best interests of the bankrupt's creditors.

(4) An order under subsection (2) is subject to the condition that- (a) the net proceeds ofdisposal ofthe goods; and (b) any additional money required to be added to the net proceeds so as to produce the amount determined by the Court as the net amount that would be realised on a sale of the goods at market value, be applied towards discharging the amounts payable under the bailment contract or credit purchase transaction.

tt46 Insolvency 2015 No.18 164.

The fact that the net value of the assets that the Retention bankrupt retains is less than the maximum values specified provisions not to confer rights to in section 161 does not give the bankrupt any rights in other assets.

relation to other assets in the bankrupt's estate.

165.If the bankrupt has died, a relative or dependant Relative or of the bankrupt, who has been approved for this purpose by dependant entitled to exercise the bankruptcy trustee or the Court, may exercise the right bankrupt's right to to retain assets under section 161 or 162 for the benefit of retain assets.

the bankrupt's relatives and dependants.

166.

The bankruptcy trustee may make an allowance Bankruptcy out of the property of the bankrupt to the bankrupt, or to trustee may make allowance to any relative or dependant of the bankrupt, for the support of bankrupt.

the bankrupt and the bankrupt's relatives and dependants.

167.

(l) The bankruptcy trustee may allow the Bankruptcy bankrupt to retain, for the immediate maintenance of the trustee may allow bankrupt to retain bankrupt and the bankrupt's relatives and dependants, money.

money up to the prescribed limit that the bankrupt has in the bankrupt's possession or in a bank account when the bankruptcy commenced.

(2) For the purpose of subsection (1), the prescribed limit is one hundred thousand shillings or, if a greater amount is prescribed by the insolvency regulations for the purposes of this section, that amount.

Division l7-Powers of bankruptcy trustee and the Court to examine bankrupt and others Subdivision 7 -Examination by bankruptcy trustee 168.

(1) The bankruptcy trustee may, at any time Bankruptcy before or after a bankrupt's discharge- trustee may summon bankrupt (a) serve on any of the persons listed in subsection (2) and others to be a summons to appear before the bankruptcy trustee examined.

or the Court to be examined on oath in relation to the bankrupt's conduct, affairs or property; and (b) require that person- (i) to produce and surrender to the bankruptcy trustee or the Court any document under that person's control that relates to the bankrupt's conduct, affairs or property; or (ii) to answer any question put to that person relating to the bankrupt's conduct, affairs or property.

Lt47 201.5 Insolvency No.l8 (2) The following are the persons referred to in subsection (1): (a) the bankrupt; (b) the bankrupt's spouse; (c) a person known or suspected to be in possession any of the bankrupt's property or any document relating to the bankrupt's conduct, affairs or property; (d) a person believed to owe the bankrupt money; (e) a person believed by the bankruptcy trustee to be able to provide information regarding- (i) the bankrupt; or (ii) the bankrupt's conduct, affairs or property; (f) a trustee of a trust of which the bankrupt is a settlor or of which the bankrupt is or has been a trustee.

169.

(l) The bankruptcy trustee may examine on Conduct of oath the persons summoned for examination in accordance examination of person summoned with section 168.

by bankruptcy (2) The bankruptcy trustee shall ensure that the trustee.

examination is recorded in writing, and that the person summoned signs the written record unless excused from doing so.

(3) If person, without reasonable excuse, refuses to sign the refusal to sign the written record of the person's examination before the bankruptcy trustee, the bankruptcy trustee may report the person's conduct to the Court, in which case the Court may, if satisfied that the refusal was unjustified, find the person to be in contempt of the Court.

(4) If a person summoned for examination by the bankruptcy fails to appear at the appointed time and has no reasonable excuse, the Court- (a) may, on the bankruptcy trustee's application, by warrant, have the person arrested and brought before the Court for examination; and (b) if it does so, may order the person to pay all the expenses arising out of the arrest and examination before the Court if it believes that that person's Insolvency No.18 evidence was required for the purpose of ascertaining the bankrupt's estate.

170.

A person who is summoned for examination by Expenses of the bankruptcy trustee- person summoned by bankruptcy (a) is entitled to be paid the expenses incurred in trustee or the attending the examination, not Court.

exceeding the amount prescribed by the insolvency regulations for the purposes of this section; and (b) is not obliged to attend the examination if those expenses have not been paid or tendered to the person before the examination.

171.

(1) A person who is examined or questioned at Entitlement of an examination by the bankruptcy trustee is entitled to be examinee to be represented by an advocate.

represented.

(2) Such a person may be questioned by the bankrupt's advocate, and any answers given by the person form part of the examination.

172.

A creditor, or the creditor's advocate, is entitled Creditor may at any reasonable time to inspect the record of the inspect record of examination of a person conducted in accordance with examination.

section 169.

173.

(1) A person shall not, without the approval of Report of the Court, publish a report of- examination not to be published (a) any examination of a person summoned for without court's examination by the bankruptcy trustee; or consent.

(b) any matter arising in the course of the examination.

(2) A person who wishes to publish a report of such an examination or matter may make an application to the Court for approval to publish it.

(3) On the hearing of an application made under subsection (2), the Court may give approval for the publication of a report subject to such conditions (if any) as the Court may specify.

(4) A person who contravenes subsection (1) commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings or to imprisonment for a term not exceeding three months, or to both.

1749 2015 Insolvency No.18 174.

Sections 168 to 173 also apply when the Examination bankruptcy trustee has been appointed as interim trustee in provisions also apply when respect of all or part of a debtor's property under section 36 bankruptcy trustee and, for that purpose, references in sections 168 to 173 to appointed interim the bankrupt are to be read with as if they were references trustee in respect of debtor's to the debtor.

property.

175.

(1) A person is not entitled as against the No lien over bankruptcy trustee to withhold possession of, or claim a bankrupt's documents and lien over- other records.

(a) a document that belongs to the bankrupt; or (b) the bankrupt's business records.

(2) However, a person may claim as a preferential creditor under paragraph 3(1)(f) of the Second Schedule if the person- (a) has performed services in connection with the bankrupt's business records or a document belonging to the bankrupt; (b) has not been paid, or has not been paid in full, for those services; and (c) would, but for subsection (1), ordinarily have had a lien over the business records or document.

(3) The limit to which the person can claim as a preferential creditor under paragraph 3(1)(f) of the Second Schedule is ten percent of the total value of the services specified in subsection (2), up to a maximum amount of two hundred thousand shillings.

176, (l) A person who, without reasonable excuse- Offences relating to conduct of (a) fails to comply with a summons attend the public examinations by bankruptcy examination of a bankrupt as required by section trustee.

168(1); (b) fails without reasonable excuse to produce a document that the person is required to produce as required by section 168(1Xb)(i); (c) fails to answer a question as required by section 168(1)(bXii); or (d) in purporting to answer such a question, gives an answer that the person knows, or ought reasonably to know, is false or misleading in a material respect, I 150 Insolvency 2015 No.18 commits an offence and on conviction is liable to a fine not exceeding one million shillings or to imprisonment for a term not exceeding twelve months, or to both.

(2) A person who is questioned under section 168(1)(b)(ii) shall answer all questions put to the person in relation to the bankrupt's conduct, affairs and property to the extent that the person is able to do so.

(3) A person is not excused from answering a question because the question may incriminate or tend to incriminate the person.

(4) Except as provided by subsection (5), a statement made by a person examined or questioned under section 168(1xb)(ii) in response to a question put to the person in the exercise of a power conferred by this Part is not admissible in criminal proceedings against the person.

(5) Such a statement is admissible in any such proceedings if- (a) the person was examined or questioned under oath and is charged with an offence under section 108 or 114 of the Penal Code (which respectively relate to perjury and subornation of perjury and to false swearing); or (b) the statement was made by the bankrupt and the bankrupt is charged with an offence under subsection (1)(c) or (d).

Subdivision 2-Public examination before the Coart 177.

(l) At any time before an absolute order for a Court to hold bankrupt's discharge is made- public if examination (a) the bankruptcy trustee; or bankruptcy trustee or creditors (b) if a ordinary resolution has been passed at a require.

creditor's meeting seeking the public examination of the bankrupt before the Court-any of the creditors concerned, may make an application to the Court for an order that the bankrupt be publicly examined before the Court.

(2) On the hearing of an application made under subsection (1), the Court shall, subject to subsection (3), make an order directing the bankrupt to be publicly 1151 2015 Insolvency No.18 examined before the Court and shall fix a time and date for the holding of the examination.

The date fixed may not be earlier than fourteen days from the date of the order unless the Court is of the opinion that there are compelling reasons for holding the examination sooner.

(3) The Court shall reject a copy of a creditors' ordinary lodged under subsection (1) unless it is authenticated by either the bankruptcy trustee or the chairperson of the meeting at which the resolution was passed.

178.

(1) As soon as practicable after the Court has Bankruptcy made an order under section 177, the bankruptcy trustee trustee to serve notice of shall serve a copy of the order on the bankrupt.

examination on (2) At least seven days before the date fixed for bankrupt.

holding the examination, the bankruptcy trustee shall- (a) publish a notice advertising the examination- (i) once in the Gazette; and (ii) once in at least two newspapers circulating in the area in which the bankrupt resides; and (b) send a notice to each creditor a notice giving details of the time, date and place of the examination.

179.

Before the public examination of a bankrupt Bankruptcy before the Court begins, the bankruptcy trustee shall lodge trustee to lodge report with the with the Court a report on- Court before start (a) of examination.

the bankrupt's estate; (b) the bankrupt's conduct; and (c) all other matters of which the Court should be informed.

180.

(1) At the time and date fixed by the Court for Conduct of public holding the public examination of a bankrupt, the bankrupt examination shall attend the examination, may before the Court.

and be examined as to the bankrupt's conduct, affairs and property.

(2) At the examination, the following persons may examine the bankrupt: (a) the bankruptcy trustee, or an advocate for the bankruptcy trustee; tt52 Insolvency 2015 No.18 (b) a creditor who has proved a claim, or an advocate for the creditor.

(3) A person examining the bankrupt shall examine the bankrupt on oath.

(4) At the examination, the bankrupt shall- (a) produce all documents relevant to the examination that the person conducting the examination requires the bankrupt to produce; and (b) answer all questions that that person asks the bankrupt or that the Court allows the bankrupt to be asked.

(5) The bankrupt is not entitled to advance notice of who will ask the questions or what the questions will be.

181.

(1) On the holding of a public examination of a Bankruptcy bankrupt before the Court, the Court shall ensure that a trustee to ensur record of written record is made of the examination.

examination is (2) The Court shall also ensure that the record of the kept.

examination- (a) is read over to the bankrupt; and (b) is made available for inspection at all reasonable times by the bankrupt's creditors or their advocates.

(3) If required by the Court to do so, the bankrupt shall sign the record of the examination.

(4) A bankrupt who, without reasonable excuse, fails to comply with a request made under subsection (3) is in contempt of the Court.

182.

(1) The public examination of a bankrupt ends when when the Court makes an order declaring that the examination ends' examination is ended.

(2) The Court may make an order declaring that the examination has ended only if it is satisfied that the bankrupt's conduct, affairs and property have been sufficiently investigated and that the investigation is complete.

183.If the bankrupt does not appear for the consequenceof examination at the appointed time and hai -no reasonable bankrupt's failin' excuse- examination.

1153 2015 Insolvency No.18 (a) the Court may, either on the bankruptcy trustee's application or its own initiative, by warrant, have the bankrupt arrested and brought before the Court for examination; and (b) the Court may order the bankrupt to pay all the expenses arising out of the arrest and examination before the Court, if it believes that the bankrupt's evidence was necessary for the purposes of ascertaining the bankrupt's estate.

184.

(1) A bankrupt is entitled to be paid such Bankrupt entitled expenses for attending a public examination before the to be paid expenses for Court as are prescribed by the insolvency regulations for attending the purposes of this section.

examination.

(2) It the relevant expenses have not been paid or tendered to the bankrupt, the bankrupt person is not obliged to attend the examination.

185.

(1) If authorised by the Court, the bankruptcy Power to extend trustee or a person appointed by that trustee may exercise examination companies the powers specified in subsection (2) in relation to a controlled by company with which the bankrupt is associated or a bankrupt and bankrupt's partnership of which the bankrupt is a member.

associates.

(2) The powers referred to in subsection (1) are the powers- (a) to examine the documents of the company or partnership; and (b) to examine- (i) any past or present officer, employee or member of the company about the affairs of that body; or (ii) any past or present member or employee about the affairs of the partnership.

(3) The bankruptcy trustee shall ensure that a record of the examination of a person under subsection (2Xb) is recorded in writing, and the person examined signs the written record unless for good reason the bankruptcy trustee excuses the person from doing so.

(4) For the purposes of this section, a company is associated with the bankrupt if the bankrupt is an officer or employee of the company or is in a position to appoint or control the appointment of its directors.

tt54 Insolvency 2015 No.18 186.

(1) A person (including the bankrupt) who is No privilege examined or questioned at a public examination of a against self- incrimination, but bankrupt shall answer all questions put to the person in statements not relation to the bankrupt's conduct, affairs and property to generally admissible in the extent that the person is able to do so.

criminal proceedings (2) A person is not excused from answering a question against their because the question may incriminate or tend to incriminate maker.

the person.

(3) Except as provided by subsection (4), a statement made by a person examined or questioned under this Part in response to a question put to the person in the course of the public examination of a bankrupt is not admissible in criminal proceedings against the person.

(4) Such a statement is admissible in any such proceedings if- (a) the person was examined or questioned under oath and is charged with an offence under- section 108 of the Penal Code (which deals with perjury and subornation ofperjury); or cap63' (ii) section 114 of that Code (which deals with false swearing); or (b) the statement was made by the bankrupt and the bankrupt is charged with an offence under section 187(lXc) or (d).

187.

(1) A person who, without reasonable excuse- Offences relating to examinations of (a) fails to attend an examination as required by bankrupts.

section 180(1); (b) fails to deliver a document as required under section 180(a)(a); (c) fails to answer a question as required under section 180(a)(b); or (d) in purporting to answer such a question, gives an answer that the person knows, or ought reasonably to know, is false or misleading in a material respect, commits an offence and on conviction is liable to a fine not exceeding one million shillings or to imprisonment for a term not exceeding twelve months, or to both.

1155 2015 Insolvency No.18 (2) T\e fact that a bankrupt may be charged with, tried for and convicted of an offence under subsection (l) does not prevent the Court from punishing the bankrupt for contempt of the Court.

188.

(1) A person (including the bankrupt) who is Entitlement of examined or questioned at a public examination of a examinee to be represented.

bankrupt is entitled to be represented by an advocate.

(2) Such a person may be questioned by the bankrupt's advocate, and any answers given by the person form part of the examination.

Division L8-Status of bankrupt's contracts 189.If a bankrupt is a party to a contract, the Bankruptcy bankruptcy trustee may- trustee may continue or (a) disclaim continue the contract, subject to the terms of the bankrupt's contract and all relevant rules of law; or coniracts entered into before (b) disclaim the contract if it is onerous property for bankruptcy the purposes of section 118.

commenced.

190.

(1) This section applies if the other party to a Contract contract to which the bankrupt is a party, in accordance terminated by with a term of the contract, terminates the contract in other contracting party.

consequence of the bankruptcy.

(2) Irrespective of what the contract provides, the bankruptcy trustee may recover such amount from the other contracting party as the Court considers to be fair and reasonable, but that amount may not be greater than the amount calculated in accordance with the formula in subsection (3).

(3) The formula is as follows: A=B-C,where- A is the amount to be calculated for the purpose of subsection (2); B is the amount payable to the bankrupt under the contract; and C is the total of- (a) the amount paid to the bankrupt; (b) the cost to complete the contract; and (c) a reasonable amount as a penalty for delay in completing the contract.

I 156 Insolvency 2015 No.18 l9l.

(1) This section applies to a payment of money Transaction with or a delivery of property to a person who is adjudged bankrupt made in ignorance of bankrupt, whether the payment or delivery is made- bankruptcy.

(a) on the order ofthe person; or (b) from the person to an assignee or to the order of an assignee.

(2) The payment or delivery is a good discharge to the person who made the payment or delivery if- (a) the payment or delivery was made before the bankruptcy of the person referred to in subsection (1) was advertised; and (b) the person making the payment or delivery satisfies the Court that- (i) that person had no knowledge of the bankruptcy or that an application for a bankruptcy order had been made; and (ii) the payment or delivery was made in the ordinary course of business or was otherwise made in good faith.

192.It the bankrupt is jointly liable under a contract Bankrupt's co- with another person, that other person may sue and be sued contractor may sue and be sued if on the contract without the bankrupt being joined as a party there is a joint to the proceeding.

contractual liability.

193.

(1) The bankruptcy trustee may recover money Bankruptcy paid by a bankrupt to the bankrupt's advocate for costs in trustee may recover obtaining a bankruptcy order, except for those (if any) advocate's costs.

prescribed for the purpose of this section by the insolvency regulations.

(2) Subsection (1) applies whether the relevant payment was made before or after the bankruptcy commenced.

Division l9-Irregular transactions involving bankrupt 194.

(1) This Division applies to the following Applicationor irregular tiansactions by the' bankrupt before th; Division re' bankruptcy commenced: (a) an insolvent transaction; (b) an insolvent charge; tL57 2015 Insolvency No.18 (c) an insolvent gift; (d) a transaction at undervalue; (e) a contribution by the bankrupt to the property of another person.

(2) The general effect of this Division is- (a) to enable irregular transactions of the kinds listed in subsection (1)(a) to (c) to be cancelled on the initiative of the bankruptcy trustee; and (b) to enable that trustee, in appropriate cases, to recover property or money from a party to an irregular transaction with the bankrupt.

L95.

For the purposes of this Division, a two year Power to extend period or a six months period referred to in this Division certain periods specified in this can be extended- Division- (a) in the case of a bankruptcy order made on a creditor's application-by the period between the time when the application was served on the bankrupt and the time when the bankruptcy order was made; and (b) in the case of a bankruptcy order made on the bankrupt's own application while a creditor's application was pending-by the period between the time when the creditor's application was served on the bankrupt and the time when the bankruptcy order was made.

196.

A transaction by a bankrupt can be cancelled on Insolvent the bankruptcy trustee's initiative if it- transactions may be cancelled by (a) is an insolvent transaction; and bankruptcy trustee.

(b) was made within two years immediately before the bankruptcy commenced.

197.(l) For the purposes of section 196, a Meaning of transaction is an insolvent transaction by a bankrupt if it- insolvent transaction for (a) is entered into or made at a time when the purposes of sections 196.

bankrupt is unable to pay the bankrupt's debts; and (b) enables a creditor to receive more towards satisfaction of a debt by the bankrupt than the creditor would receive, or would be likely to receive, in the bankruptcy.

I 158 Insolvency 2015 No.18 (2) Any of the following actions by a bankrupt is a transaction for the purpose of subsection (1): (a) conveying or transferring the bankrupt's property; (b) giving a charge over the bankrupt's property; (c) incurring an obligation; (d) undergoing an execution process; (e) paying money (including money paid in accordance with a judgment or an order of a court); (0 any other act done or omitted to be done for the purpose of entering into such a transaction or giving effect to it.

198.

For the purposes of section 196, a transaction that Insolvent was entered into within the six months before a bankrupt is transaction adjudged bankrupt is presumed, until the contrary is presumed.

proved, to have been made at a time when the bankrupt is unable to pay the bankrupt's debts.

199.

(1) This section applies if a series of When series of transactions made for commercial purposes forms an transactions are to be regarded as integral part of a continuing business relationship (such as a single transaction.

running account) between a bankrupt and a creditor in circumstances in which, during the course of the relationship, the level of the bankrupt's net indebtedness to the creditor is increased and reduced from time to time.

(2) For the purposes of subsection (1), it does not matter whether persons other than the bankrupt or the creditor are parties to any of the transactions.

(3) When this section applies- (a) section 196 applies in relation to all of the transactions forming part of the relationship as if they together formed a single transaction; and (b) any particular transaction of the series referred to in subsection (1) may be treated as an insolvent transaction that can be cancelled by the bankruptcy trustee only if the effect of applying that section as provided by paragraph (a) is that the single transaction referred to in that paragraph is treated as an insolvent transaction that can be cancelled by the bankruptcy trustee.

1159 2015 Insolvency No.18 200.

A charge over any property of a bankrupt can be Insolvent charges cancelled on the bankruptcy trustee's initiative if- can be cancelled on bankruprcy (a) the charge was created within the two years trustee's initiative.

immediately before the bankruptcy commenced; and (b) immediately after the charge was given, the bankrupt was unable to pay the bankrupt's due debts.

201.

(1) A charge may not be cancelled under section Charge for new 200 it it secures- consideration or replacement (a) money actually advanced or paid; charge not affected.

(b) the actual price or value of property sold or transferred; or (c) any other valuable consideration given, in good faith by the secured creditor to the bankrupt at the time when, or at any time after, the charge was created.

(2) A charge may not be cancelled under section 200 if the charge is a replacement for an earlier charge that was given by the bankrupt more than two years before the bankruptcy commenced, except to the extent that- (a) the amount secured by the substituted charge is greater than the amount that was secured by the earlier charge; or (b) the value of the property that was subject to the substituted charge at the date of substitution was greater than the value of the property subject to the earlier charge at that date.

202.

A bankrupt who gave a charge within the six Presumption that months immediately preceding the commencement of the bankrupt unable to bankruptcy is presumed, until the contrary is proved, to pay due debts.

have been unable to pay the bankrupt's debts immediately after the charge was created.

203.

(1) If, in relation to property purchased by a Charge for unpaid bankrupt, the bankrupt has given to the seller a charge over purchase price given after sale of the property within the two years immediately preceding property.

the bankruptcy, section 200 does not affect the charge to the extent that it secures unpaid purchase money, but only if the charge was given not more than fourteen days after the date of the sale of the property to the bankrupt.

I 160 Insolvency 2015 No.18 (2) Money is unpaid purchase money for the purpose of subsection (1) whether it is unpaid in relation to the property over which the charge is given or some other property.

204.

(l) This section applies if the bankrupt has made Appropriation of a payment or payments to a secured creditor after the payments by bankrupt to bankrupt has given a charge to which section 202 or 2O3 secured creditor.

applies.

(2) The bankruptcy trustee shall credit the bankrupt's payment or payments (as far as is necessary) towards- (a) repayment of the money actually advanced or paid by the secured creditor to the bankrupt when or after the bankrupt gave the charge; (b) payment of the actual price or value of property sold or supplied by the secured creditor to the bankrupt when or after the bankrupt gave the charge; or (c) payment of any other liability of the bankrupt to the secured creditor in respect of any other valuable consideration given in good faith when or after the bankrupt gave the charge.

(3) This section does not apply to payments received by a bank in good faith in the ordinary course of business and without negligence.

205.A charge given by the bankrupt under an Charge agreed agreement to give the charge that was made before the two before specified period not to be years immediately before the bankruptcy is not liable to be cancelled.

cancelled under section 200.

206.

A gift made by a bankrupt to another person can Cancellation of be cancelled on the bankruptcy trustee's initiative if the gifts made within two years before bankrupt made the gift within the two years immediately bankruptcy.

preceding the commencement of the bankruptcy.

207.

(I) A gift by a bankrupt to another person can Cancellation of be also cancelled on the bankruptcy trustee's initiative if- gifts made by bankrupt made (a) the bankrupt made the gift during the period within five and two years before beginning five years and ending two years before bankruptcy.

the commencement of the bankruptcy; and (b) at the time when the gift was made, the bankrupt was unable to pay the bankrupt's debts.

1151 2015 Insolvency No.18 (2) A bankrupt is presumed to have been unable to pay the bankrupt's debts for the purpose of subsection (1)(b) unless the person claiming the gift proves that- (a) immediately after the gift was made; or (b) at any later time before the commencement of the bankruptcy, the bankrupt was able to pay the bankrupt's debts without the aid of the property of which the gift was composed.

208.

(1) The procedure set out in this section applies Procedure for to the following irregular transactions: cancelling irregular (a) an insolvent transaction; transactions.

(b) an insolvent charge; (c) an insolvent gift; (d) any other transaction of a class prescribed by the insolvency regulations for the purposes of this section.

(2) A bankruptcy trustee who wishes to cancel an irregular transaction to which this section applies shall- (a) lodge a notice with the Court that complies with subsection (3); and (b) serve the notice on- (i) the other party to the transaction; and (ii) any other party from whom the bankruptcy trustee intends to recover.

(3) A notice complies with this subsection if it- (a) is in writing; (b) states the bankruptcy trustee's postal and street addresses and e-mail address (if any); (c) specifies the irregular transaction to be cancelled; (d) describes the property, or states the amount, that the bankruptcy trustee wishes to recover; (e) includes a statement that the person named in the notice may object to the cancellation of the transaction by sending to the bankruptcy trustee a notice of objection to be received by the bankruptcy trustee at that trustee's postal, street or tt62 Insolvency 2015 No.18 email address within twenty-one days after service on that person of that trustee's notice; (f) states that a person making an objection is required to specify the reasons for the objection; (g) states that the transaction will be cancelled as against the person named in the notice if that person does not object; and (h) states that if the person named in the notice does object, the bankruptcy trustee may apply to the Court for the transaction to be cancelled.

(4) An irregular transaction is automatically cancelled in relation to a person on whom the bankruptcy trustee has served a bankruptcy trustee's notice, if the person has not objected by sending to the bankruptcy trustee a notice of objection that is received by the bankruptcy trustee at that trustee's postal, street or email address within twenty-one days after the bankruptcy trustee's notice has been served on that person.

(5) The bankruptcy trustee may disregard a notice of objection that fails to specify the reasons for the objection.

(6) The Court may, on the application of the bankruptcy trustee, cancel an irregular transaction that is not automatically cancelled by subsection (4).

209.(l) On the cancellation of an irregular Court may order transaction under which property of the bankrupt, or an retransfer of property or interest in property of the bankrupt, was transferred, the payment of an Court may make an order- equivalent value.

(a) for the retransfer to the bankruptcy trustee of the property or interest in the property; or (b) for payment to the bankruptcy trustee of such amount as the Court considers appropriate, but the amount may not be greater than the value of the property, or interest in the property, at the time when the transaction was cancelled.

(2) The Court may make any other order for the purpose of giving effect to an order under subsection (1).

(3) An order under subsection (1) is in addition to any other rights and remedies available to the bankruptcy trustee, and this section does not affect those rights and remedies.

LL63 2015 Insolvency No.18 210.

The Court may not make an order under section Limits on what 209 against a person if the person proves that when the can be recovered.

person received the property or interest in the property- (a) the person acted in good faith; (b) a reasonable person in the same position would not have suspected that- (i) in the case of an insolvent gift-the bankrupt was, or would become, unable to pay the bankrupt's debts without the aid of the property that the gift is composed of; or (ii) in the case of any other irregular transaction of a kind to which section 208 applies-the bankrupt was, or would become, unable to pay the bankrupt's due debts; and (c) the person gave value for the property or interest in the property or altered the person's position in the reasonably held belief that the transfer of the property or interest in the property to the person was valid and would not be cancelled.

2l1.(l) Under section 212, the bankruptcy trustee Bankruptcy may recover from aparty to a transaction with the bankrupt trustee may recover difference an amount calculated in accordance with the following in value if formula: transaction is found to be under A=B-C value.

where- A is the amount to be calculated; B is the value that the party received from the bankrupt under the transaction; and C is the value (if any) that the bankrupt received from the party under the transaction.

(2) In this section and in section 212, "transaction" includes the giving of a guarantee by the bankrupt.

(3) The bankruptcy trustee may recover from the party the amount calculated under subsection (1) if- (a) the bankrupt entered into the transaction with the party within the two years immediately before the bankruptcy commenced; and (b) either- tt64 No.18 Insolvency 2015 (i) the bankrupt was unable to pay the bankrupt's debts when the transaction was entered into; or (ii) the bankrupt became unable to pay the bankrupt's debts as a result of having entered into the transaction.

212.(l) The bankruptcy trustee may make an Court may order application to the Court for an order directing the recipient recipient of bankrupt's of a contribution by the bankrupt to the recipient's property contribution to to pay the value of the contribution to the bankruptcy property of another trustee.

to pay value to bankruptcy trustee.

(2) On the hearing on an application made under subsection (1), the Court may make the order sought but only if satisfied that- (a) the bankrupt was not paid an adequate amount in money or money's worth for the contribution; (b) the value of the bankrupt's assets was reduced by the contribution; and (c) the bankrupt made the contribution- (i) within the two years immediately preceding the commencement of the bankruptcy; or (ii) within the five years immediately before that commencement, and the recipient is not able to prove that the bankrupt, either at the time of the contribution or at any later time before that commencement, was able to pay the bankrupt's debts without the aid of the contribution.

(3) For the purposes of this section and section 213, a bankrupt has made a contribution to the recipient's property if the bankrupt has- (a) erected buildings on, or otherwise improved, land or any other property of the recipient; (b) bought land or any other property in the recipient's name; (c) provided money to buy land or any other property in the recipient's name or on the recipient's behalf; or (d) paid instalments for the purchase of, or towards the purchase of, land or any other property in the recipient's name or on the recipient's behalf.

1165 2015 Insolvency No.18 213.

(l) The Court may- Court's powers in relation to (a) ascertain the value of the bankrupt's contribution bankrupt's for the purposes of section 212; and contribution to recipient's (b) order the recipient to pay an amount equal to that property.

value to the bankruptcy trustee.

(2) ln subsection (1)(a), the bankrupt's contribution includes any payments for legal expenses, interest, rates, and other expenses or charges.

(3) The Court may order the recipient to pay less than the value of the contribution, or refuse to order the recipient to pay anything, if- (a) the recipient acted in good faith and has altered the recipient's position in the reasonably held belief that the bankrupt's contribution was valid and that the recipient would not be liable to repay it in full or in part; or (b) in the Court's opinion, it is unfair that the recipient should repay all or part of the contribution.

(4) If the Court orders the recipient to repay the bankrupt's contribution or a part of it, it may in the same order or in a subsequent order- (a) direct the bankruptcy trustee to sell the whole or part of the relevant property, and to convey or transfer it to the purchaser; and (b) make vesting and other orders that are necessary for the sale and transfer of the property.

214.(L) The bankruptcy trustee shall apply- How bankruptcy trustee is to use (a) the money repaid under section 212 by the repayment of recipient of a contribution by the bankrupt to bankrupt's contribution to property; or property.

(b) the proceeds of sale of that property, by taking the steps specified in subsection (2) in the order specified in that subsection.

(2) The steps to be taken by the bankruptcy trustee are as follows: Step 1: The bankruptcy trustee shall keep as much of the proceeds as the bankruptcy trustee needs, when added to the other assets in the bankrupt's estate, to pay the creditors in full (including interest); tt66 I No.18 Insolvency 20ts Step 2: If there is a surplus after the creditors have been paid in full, the bankruptcy trustee shall pay as much of the surplus to the recipient of the property to which the bankrupt has contributed as was repaid under section2l2; Step 3 The bankruptcy trustee may not pay anything to the bankrupt without having taken steps 1 and2.

Division 20-Processing of creditors' claims against bankrupt's estate 2f5.

(1) For the purposes of this Division, a creditor's Interpretation: claim is a document that a creditor submits to the Division 20.

bankruptcy trustee for the purpose of proving the debt.

(2) A debt is proved when it is allowed by the bankruptcy trustee.

216.

(1) For the purpose of this Division, a provable What debts are debt is a debt or liability that the bankrupt owes- provable debts.

(a) at the commencement of the bankruptcy; or (b) after that commencement but before discharge, because of an obligation incurred by the bankrupt before that commencement.

(2) A fine, penalty or other order made by a court ordering the payment of money that has been made following a conviction- (a) is not a provable debt; and (b) is not discharged when the bankrupt is discharged from bankruptcy.

217.

(l) A creditor (including a creditor who has a Procedure for preferential claim) who wishes to claim in the bankruptcy proving debt: creditor to submit shall submit a creditor's claim to the bankruptcy trustee claim form.

before the deadline for submitting claims.

(2) The bankruptcy trustee may accept such a claim only if it is in the form prescribed by the insolvency regulations for the purposes of this section.

LL67 2015 Insolvency No.18 (3) For the purpose of subsection (1), the deadline is either- (a) the time specified by the bankruptcy trustee in a notice given to the creditor; or (b) the time specified in an advertisement published by the bankruptcy trustee in a newspaper widely circulating in the area in which the creditor normally resides or carries on business.

(4) In submitting a claim, a creditor shall comply with the procedure and formalities (if any) prescribed by the insolvency regulations.

(5) The creditor is required to bear the costs of proving the debt, unless the Court makes an order as to the creditor's costs under sectton 225.

(6) The creditor may amend or withdraw the claim, but an amended claim has to comply with the formalities prescribed for the original claim.

218.

(1) The bankruptcy trustee shall examine each Bankruptcy grounds of the debt, unless of the trustee required creditor's claim and the to examine opinion that no dividend will be paid to creditors.

creditor's claim.

(2) As soon as practicable after examining a claim, the bankruptcy trustee shall do one or more of the following: (a) wholly or partly allow the claim; (b) wholly or partly reject the claim; (c) require further evidence in support of the claim or an item contained in it.

219.

As soon as practicable after rejecting a creditor's Bankruprcy claim, or a part of it, the bankruptcy trustee shall give the trustee to give creditor notice of creditor a notice rejecting the claim or part and specifying grounds of the grounds for the rejection.

rejection.

220.(l) The bankruptcy trustee may summon for Bankruptcy examination, and examine (on oath or otherwise), any of the trustee's power to obtain following persons: evidence of debt.

(a) a person who has submitted a creditor's claim; (b) a person who has made a declaration or statement as part of a creditor's claim; I 168 Insolvency 20ts No.18 (c) a person who is capable of giving evidence concerning a creditor's claim or the debt to which the claim relates.

(2) It a person who has been summoned under this section fails to attend, or attends but refuses to be sworn or give evidence, and has no reasonable excuse for doing so, the Court, on the bankruptcy trustee's application may- (a) may issue a warrant directing the person to be arrested and brought before the Court for examination; and (b) if the Court believes that the person's evidence was relevant to deciding whether a creditor's claim should be allowed or rejected-make an order directing the person to pay all or a specified part of the expenses attributable to the arrest and examination.

221.

(\) The bankrupt or any creditor may give the Notice by bankruptcy trustee notice to allow or reject a creditor's bankrupt or creditor to claim.

bankruptcy trustee to allow (2) It the bankruptcy trustee has not made a decision or reject allowing or rejecting the creditor's claim within fourteen creditor's claim.

days after receiving the claim, the creditor or the bankrupt may apply to the Court for an order under subsection (3).

(3) On the hearing of an application made under subsection (2),the Court shall- (a) if it finds the claim to be substantiated or partly substantiated-make an order allowing the claim or partly allowing the claim; or (b) if it finds that the claim is wholly or partly unsubstantiated-make an order rejecting or partly it, and in either case may make such other order of an ancillary nature as it considers appropriate.

222.

(l) The Official Receiver, the bankrupt or a Court may cancel creditor may make an application to the Court for an order creditor's claim.

under subsection (2) on the ground that the bankruptcy trustee improperly allowed a creditor's claim.

(2) On the hearing of an application made under subsection (1), the Court may make an order cancelling the 1169 2015 Insolvency No.18 creditor's claim or reducing the amount claimed, if it considers that the claim was improperly allowed or was improperly allowed in part.

223.

(l) A creditor whose claim has been rejected by Power of court to the bankruptcy trustee may apply to the Court to make an quash or vary bankruptcy order under subsection (3).

trustee's decision rejecting (2) An application can be made only within twenty-one creditor's claim.

days after the creditor receives the bankruptcy trustee's notice of rejection of the claim, or within such extended period as the Court may allow.

(3) On the hearing of an application made under subsection (1), the Court shall- (a) if it considers that the bankruptcy trustee's decision was wholly justified-confirm the decision; or (b) if it considers that the decision was only partly justified-confirm the decision as to that part and quash the rest of the decision, but if it considers that the decision was wholly unjustified, it shall quash the decision.

(4) A creditor has no right to prove for a debt that has been rejected by the bankruptcy trustee, unless the creditor has made an application under this section.

224.(l) This section applies to an application made Parties to under section 221,222 or 223.

proceedings relating to (2) It the applicant is not the bankruptcy trustee, the creditor's claim applicant shall serve a copy of the application on the bankruptcy trustee as a party to the proceeding.

(3) If the applicant is not the bankrupt or a creditor who is affected by the decision of the bankruptcy trustee, the applicant shall serve a copy of the application on the bankrupt or that creditor.

(4) On being served with a copy of the application, the bankrupt or creditor may give notice to the Court that the bankrupt or creditor wishes to appear and be heard at the hearing and, on doing so, becomes a party to the proceeding.

225.On the hearing of an application made under Court may make section 221, 222 or 223, the Court may, if it considers it order as to costs.

appropriate to do so, make an order- tt70 No.

18 Insolvency 2015 (a) directing specified costs of a creditor to be added to the creditor's claim; (b) directing specified costs of a party to the proceeding to be paid out of the bankrupt's estate; or (c) directing specified costs to be paid by a specified party to the proceedings (other than the bankruptcy trustee).

226.

(l) If the property of a bankrupt is subject to a Secured, charge, the creditor who holds the charge -uy .tioor" un ffi:',H;',i:"-' option specified in subsection (2).

property that is subject to a (2) The options are as follows: charge.

(a) Option l: to realise the property by having it sold (but only if the creditor is entitled to do so under the terms of the charge); or (b) Option 2: to have the property valued and prove in the bankruptcy as an unsecured creditor for the balance due (if any) after deducting the amount of the valuation; (c) Option 3: to surrender the charge to the bankruptcy trustee for the general benefit of the creditors and prove in the bankruptcy as an unsecured creditor for the whole debt.

(3) The bankruptcy trustee may, at any time by notice, require a creditor who holds a charge over a bankrupt's property- (a) within thirty days after receipt of the notice, to choose one of the options specified in subsection (2); and (b) if the creditor chooses option 2 or option 3-to exercise the chosen option within that period.

(4) A creditor who, having been served with a notice under subsection (l), fails to comply with the notice is taken to have surrendered the charge to the bankruptcy trustee under option 3 for the general benefit of the creditors, in which case the creditor may prove as an unsecured creditor for the whole debt.

(5) This section is subject to section227.

LLTL 2015 Insolvency No.18 227.

(1) If property of a bankrupt is subject to a Power of Court security, the bankruptcy trustee may make an application to to order disposal of property that the Court for an order under subsection(2).

is subject to a (2) On the hearing of an application made under charge.

subsection (1), the Court may make an order enabling the bankruptcy trustee to dispose of the property as if it were not subject to the security, but only if it is satisfied that the disposal of the property would be likely to provide a better overall outcome for the creditors of the bankrupt.

(3) An order under subsection (2) is subject to the condition that the bankruptcy trustee apply towards discharging the amounts secured by the security- (a) the net proceeds ofdisposal ofthe property, and (b) any additional money required to be added to the net proceeds so as to produce the amount determined by the Court as the net amount that would be realised on a sale of the propefiy at market value.

(4) If an order under subsection (2) relates to more than one security, the bankruptcy trustee shall apply the money from the disposal in the order of the priorities of the securities.

(5) Within fourteen days after an order is made under subsection (Z),the bankruptcy trustee shall lodge a copy of the order with the Official Receiver for recording in the public register kept under Division 2 of Part XII.

(6) A bankruptcy trustee who, without reasonable excuse, fails to comply with subsection (5) commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

228.(l) A creditor who realises property that is Realisation of subject to a charge may prove as an unsecured creditor for property that is subject to a any balance due after deducting the net amount realised.

security.

(2) However, subsection (1) does not apply if the bankruptcy trustee has accepted a valuation and creditor's claim under section 231.

(3) A secured creditor who realises property subject to a charge shall account to the bankruptcy trustee for any surplus remaining after the following amounts have been paid: tt72 No.

18 Insolvency 2015 (a) the amount of the debt; (b) interest payable on the debt up to the time when it is paid; (c) any proper payments to the holder of any other charge over the property.

229.

(l) This section applies if a creditor who holds a Valuation of chrge charge over a bankrupt's property has the property valued held by creditor and claim for balance and seeks to prove as an unsecured creditor for the balance due.

due after deducting the amount of the valuation.

(2) The creditor shall ensure that the valuation and the claim for the balance- (a) is made in the prescribed creditor's claim form; (b) contains full particulars of the valuation and the debt; (c) contains full particulars of the charge (including the date when it was given); and (d) identifies the documents (if any) that substantiate the debt and the charge.

(3) If required to do so by the bankruptcy trustee, the creditor shall produce for inspection the documents so identified.

(4) Failure to comply with subsection (2), or with a requirement of the bankruptcy trustee under subsection (3), renders the creditor's claim invalid.

230.

(1) A person who- Offence for secured creditor (a) makes, or authorises the making of, a claim under to make false section 229 (1) knowing it to be false or claim.

misleading; or (b) omits, or authorises the omission of, any matter from a claim under section 229 (l) knowing that the omission will make the claim false or misleading, commits an offence (2) A person who is found guilty of an offence under subsection (1) 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.

Lt73 2015 Insolvency No.18 231.

(l) If a creditor who holds a charge over Bankruptcy property of a bankrupt values the property and seeks to trustee's powers when secured prove for the balance due, the bankruptcy trustee shall- creditor values property subject (a) accept the valuation and the creditor's claim; or to charge and proves for (b) reject the valuation and creditor's claim in whole or balance.

in part.

(2) Within fourteen days after receiving a notice of rejection of the creditor's valuation and claim, the creditor may submit to the bankruptcy trustee a revised valuation and creditor's claim.

(3) If the bankruptcy trustee subsequently finds that a decision rejecting a valuation and creditor's claim was wrong, the bankruptcy trustee may revoke or amend the decision.

(4) It the bankruptcy trustee accepts the valuation and creditor's claim, the bankruptcy trustee may, at any time before the creditor realises the property, redeem the charge by paying the amount of the valuation to the creditor.

(5) For the purpose of subsection (4), the bankruptcy trustee accepts the valuation and creditor's claim if the bankruptcy trustee- (a) accepts the original or an amended valuation and creditor's claim; or (b) accepts a valuation and creditor's claim after amending or revoking a decision to reject a valuation and creditor's claim.

I 232.(I) This section applies to a creditor who has Secured creditor surrendered a charge under option 3 in section226(2) or is who surrenders charge may with taken to have surrendered the charge under section 226(4).

approval of the Court withdraw (2) The creditor may, with the approval of the Court or claim or submit a the bankruptcy trustee and subject to the terms that the new claim Court or that trustee imposes- (a) withdraw the surrender and rely on the charge; or (b) submit a new creditor's claim under this Division.

(3) Subsection (2) does not apply if the bankruptcy trustee has already realised the property that is subject to the charge.

I tt74 Insolvency 2015 No.18 233.If a creditor's claim is subject to a contingency or Bankruptcy is for damages, or if, for some other reason, the amount of trustee may estimate amount the claim is uncertain, the bankruptcy trustee may estimate of uncertain the amount of the claim.

creditor's claim.

234.(I) If the bankruptcy trustee- Application to the Court to (a) chooses not to estimate the amount of a creditor's determine claim in accordance with section 233; or amount of uncertain (b) has estimated the amount of the claim but the creditor's claim.

creditor is dissatisfied with the estimate, the creditor may apply to the Court to make an order under subsection (2).

(2) On the hearirrg of an application made under subsection (1), the Court shall make an order determining the amount of the creditor's claim.

(3) The bankruptcy trustee is entitled to be served with a copy of the application and, at the hearing of the application, to appear and be heard as respondent.

235.

(1) A creditor's claim that would, but for the Creditor's claim bankruptcy, be payable six months or more after the payable six months or more coflmencement of the bankruptcy is taken to be a claim for after the present value of the debt.

commencement of bankruptcy.

(2) The present value of the debt is to be calculated by deducting interest at the rate prescribed by the insolvency regulations for the period from the date on which the bankruptcy commenced to the date when the debt would be payable.

236.(l) If there have been mutual credits, mutual Bankruptcy debts or other mutual dealings between a bankrupt and firstee's duty when mutual another person, the bankruptcy trustee shall- dealings have occurred between (a) take an account of what is due from the one party the bankrupt and to the other in respect of those credits, debts or other persons.

dealings; (b) set-off an amount due from one party to the other against an amount due from the other party; and (c) allow only the balance of the account to be proved in the bankruptcy.

(2) However, a person may not claim the benefit of a set-off against an amount due from the bankrupt if, at the time when the credit was given to the bankrupt, the person Lt75 2015 Insolvency No.18 knew or had reason to know that the bankrupt was insolvent.

(3) A creditor of the bankrupt who claims a set-off shall declare in the creditor's claim form that, at the time when the creditor gave the bankrupt credit, the creditor did not know and had no reason to know that the bankrupt was insolvent.

( ) The bankruptcy trustee shall reject a claim form that does not comply with subsection (3).

237.

A creditor may claim interest up to the date on Creditor may which the bankruptcy commences- claim pre- bankruptcy (a) in the case of contract debt interest-at the rate interest.

specified in the contract that provides for interest on the debt; or (b) in the case of judgment debt interest-at the rate payable on the debt.

238.

(1) The bankruptcy trustee shall pay interest on Post-bankruptcy all allowed creditors' claims at the prescribed rate if surplus interest payable at prescribed rate assets remain after the bankruptcy trustee has paid the if sulplus claims.

remains.

(2) The bankruptcy trustee shall pay the interest from and including the date on which the bankruptcy commences to the date on which the debt is paid.

(3) If the surplus is not enough to pay the interest in full on all debts, payment of the interest is to abate rateably among those debts.

Example: A and B are the only creditors of the bankrupt, C.

A's contract with C provided for interest of 20 percent but B's contract did not provide for interest.

C's bankruptcy commenced on 1 July 2015.

At that date-(l) C owed K.Sh100, 000 plus $10,000 contractual debt interest; and (2) C owed BK.Sh$200900 but no interest.

A can prove in the bankruptcy for $110,000 and B for KS200, 000.

The bankruptcy trustee pays their claims in full on I July 2014, twelve months after the commencement of the bankruptcy.

If there are surplus assets after the bankruptcy trustee has paid the claims of A and B in full, the bankruptcy trustee has to use the surplus to pay interest on both debts for the period from I July 2015 to 1 July 2014.

If there is enough, and assuming that the prescribed rate is 10 percent, the tt16 Insolvency 2015 No.18 bankruptcy trustee has to pay AK.Sh11,000 and B KS20,000 in post-the bankruptcy interest.

Assume that the bankruptcy trustee has a surplus of only K.Sh15, 500.

In that case A and B share pro rata, so that A is paid K.Sh5, 500 in post-the bankruptcy interest, and B is paid $10,000.

239.(l) If there is a surplus after the bankruptcy Additional post- trustee has paid post-bankruptcy interest as provided by bankruptcy interest on section 238, the bankruptcy trustee shall pay additional contract or interest on allowed proofs for a contract debt or judgment judgment debt if debt, by making up- surplus remains.

(a) in the case of a contract debt-the difference between the prescribed rate and the rate specified in the contract; and (b) in the case of a judgment debt-the difference between the prescribed rate and the rate payable on the debt.

(2) The bankruptcy trustee shall pay the additional interest from and including the date on which the bankruptcy commenced to the date on which the creditor's claim is paid.

(3) If the surplus is not enough to pay the additional interest in full on the creditors' claims that are eligible for that interest, payment of the interest is to abate rateably among those claims.

240.For the purposes of sections 238 and 239, the Meaning of prescribed rate of interest is the rate for the time being prescribed rate for purposes of prescribed by the insolvency regulations for the purposes of sections 238 and those sections.

239.

241.

A creditor shall deduct from the creditor's claim Creditor required any trade discount that the creditor would have given a to deduct trade debtor if the debtor had not become bankrupt.

discounts.

242.1t a creditor's security over assets of the bankrupt Secured creditor is wholly or partly void under a provision of this or any can prove as unsecured other Act, the creditor may prove as an unsecured creditor if creditor- security is void or partly void.

(a) if the security is wholly void-for the whole of the debt; or (b) if the security is partly void-to the extent that the debt is unsecured.

7777 2015 Insolvency No.18 243.

A person who obtained an order for costs against Judgment the bankrupt before the commencement of the bankruptcy creditor may prove for costs.

may prove for the amount of those costs even if that amount is not fixed until after that commencement.

244.

(1) If a bankrupt is, at the commencement of the Company may bankruptcy, a shareholder of a company (not being a prove for unpaid calls company that is in liquidation), the company may prove for- (a) the amount of unpaid calls on the bankrupt made before that commencement in respect of the bankrupt's shares; and (b) the value of the liability to calls to be made during the twelve-month period after that commencement.

(2) The value referred to in subsection (l)(b) is to be estimated- (a) as agreed by the bankruptcy trustee and the company; or (b) if the bankruptcy trustee and the company cannot agree-as directed by the Court.

245.

(l) If, in relation to a bankruptcy- When guarantor for bankrupt may (a) a person is, at the commencement of the prove claim.

bankruptcy, a guarantor of, or is otherwise liable for a debt of, the bankrupt; and (b) the person discharges the debt or liability (before or after that commencement), the person is entitled to the benefit to subsection (3) or (4), whichever is applicable to the person.

(3) If the creditor of the bankrupt has submitted a creditor's claim for the debt or liability, the person may stand in the creditor's place in respect of the claim.

(4) If the creditor has not submitted a creditor's claim form for the debt or liability- (a) the person may prove for the payment that the person has made as if the payment were a debt, without disturbing dividends already paid to the creditor in the bankruptcy; and (b) if the person does so, the person is entitled to receive dividends paid subsequently.

l_, tt78 Insolvency 2015 No.l.8 Division 21 - Distribution of bankrupt's estate 246.In this Division, "preferential claim" means a Interpretation: claim in respect of a debt listed in paragraphz,3 or 4 of the Division 21.

Second Schedule.

247.(l) For the purpose of this Act, a bankrupt's Preferential debts: preferential debts are those specified in paragraphs 2to 4 of priority of debs.

the Second Schedule and are payable as provided by that Schedule in priority to the bankrupt's other debts.

(2) Debts of the bankrupt that are neither preferential debts nor debts to which section 248 applies also rank equally between themselves and, after the preferential debts, are payable in full unless the bankrupt's estate is insufficient to satisfy them, in which case they abate in equal proportions among themselves.

(3) Any surplus remaining after the payment of the debts referred to in subsection (2) is to be applied in paying interest on those debts in respect of the periods during which they have been outstanding since the commencement of the bankruptcy.

(4) Interest on preferential debts ranks equally with interest on debts that are not preferential debts.

(5) The rate of interest payable under subsection (4) in respect of a debt is the rate for the time being prescribed by the insolvency regulations for the purposes of this section.

(6) Neither this section nor section 248 limits the effect of a provision of any written law under which the payment of any debt or the making of any other payment is, in the event of bankruptcy, given a particular priority or required to be postponed.

(7) If , before the commencement of the bankruptcy, a creditor agrees to accept a lower priority in respect of a debt than it would otherwise have under this section, nothing in this section or the Second Schedule prevents the agreement from having effect according to its terms.

248.

(I) This section applies to bankruptcy debts Priority ranking of owed in respect of credit provided by a person who was the debts owed to bankrupt's spouse at the commencement of the bankruptcy bankrupt's spouse.

and so applies even if the person was not the bankrupt's spouse at the time the credit was provided.

7L79 Insolvency 2015 No.

L8 (2) Those debts- (a) rank in priority after the debts and interest required to be paid in accordance with section 247(3) and (4), and (b) are payable with interest at the rate specified in section 241(5) in respect of the period during which they have been outstanding since the commencement of the bankruptcy.

(3) The interest payable under subsection (2Xb) has the same priority as the debts on which it is payable.

249.1t a payment has been made to a person on Person who makes account of a preferential creditor out of money advanced by payment on account of another person for that purpose, the other person has, in the preferential bankruptcy, the same right of priority in respect of the creditor to be subrogated to the money so advanced as the preferential creditor would have rights of that if the payment had not been made.

creditor.

250.

(1) If a landlord or other person has distrained Priority given to on goods or effects of the bankrupt during the thirty day landlord or other person who period before the bankruptcy commenced, the preferential distrains on goods claims are a first charge on the goods or effects so and effects of distrained, or the proceeds from their sale.

bankrupt.

(2) However, if any money is paid to a claimant under that charge, the landlord or other person has the same rights of priority as that claimant.

25l.If a bankrupt is a partner of a firm, any creditor to Creditors to have whom the bankrupt is indebted jointly with the other priority over creditors ofjoint partners of the firm is not entitled to receive money bankrupt.

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.(l) On realising the bankrupt's estate or so Final distribution much of it as can be realised without needlessly protracting of bankrupt's the bankruptcy trusteeship, the bankruptcy trustee shall estate.

give notice either- (a) of an intention to declare a final dividend; or (b) that no dividend, or further dividend, will be declared.

(2) The bankruptcy trustee shall include in the notice the prescribed information and a statement that requires all I 180 Insolvency 2015 No.18 claims against the bankrupt's estate to be established by a final date specified in the notice.

(3) The Court may, on the application of any person, the Court may make an order postponing the final date.

(4) After the final date, the bankruptcy trustee shall- (a) pay any outstanding expenses of the bankruptcy out of the bankrupt's estate; and (b) if the bankruptcy intends to declare a final dividend-declare and distribute that dividend without regard to the claim of any person in respect of a debt not already proved in the bankruptcy.

(5) After paying the interest referred to in section 238 and paying in full the claims referred to in section 237 , the bankruptcy trustee shall pay any surplus to the bankrupt.

(6) Subsection (5) is subject to section 214.

253.

(1) Subject to this section, if- Final meeting of (a) it appears to the bankruptcy trustee that the creditors.

administration of the bankrupt's estate in accordance with this Division is for practical purposes complete; and (b) the bankruptcy trustee is not the Official Receiver, the bankruptcy trustee shall summon a final general meeting of the bankrupt's creditors.

(2) The final general meeting of the bankrupt's creditors shall- (a) receive and consider the bankruptcy trustee's report of the administration of the bankrupt's estate; and (b) determine whether the bankruptcy trustee should be released under section 77.

(3) The bankruptcy trustee may give the notice summoning the final general meeting at the same time as giving notice under section 252(l).

(4) If the final general meeting is summoned for an earlier date, the bankruptcy trustee shall adjourn the meeting (and, if necessary, further adjourn the meeting) until a date on which the bankruptcy trustee is able to 1181 20ts Insolvency No.18 report to the meeting that the administration of the bankrupt's estate is for practical purposes complete.

(5) In the administration of the estate it is the bankruptcy trustee's duty to retain sufficient sums from the estate to cover the expenses of summoning and holding the final general meeting.

(6) rf- (a) the bankrupt's estate property consists of or includes an interest in a dwelling house that is occupied by the bankrupt or the bankrupt's spouse or former spouse; and (b) the bankruptcy trustee has for any reason been unable to realise that property, the bankruptcy trustee may not summon a final general meeting unless one of the following has been satisfied: (c) the Court has made an order under section 143 imposing a charge on that property for the benefit of the bankrupt's estate; (d) the Court has declined, on an application under that section, to make such an order; (e) the Attorney General has issued a certificate to the bankruptcy trustee stating that it would be inappropriate for such an application to be made.

Division 22-Discharge of bankrupt from bankruptcy 254.(l) A bankrupt is automatically discharged from Automatic bankruptcy three years after the bankrupt lodged a discharge three years after statement of the bankrupt's financial position in accordance bankrupt lodges with section 50, but may apply to be discharged earlier.

statement of financial position.

(2) However, a bankrupt is not automatically discharged if- (a) the bankruptcy trustee or a creditor has objected under section 256 and the objection has not been withdrawn by the end of the three-year period referred to in subsection (1); (b) the bankrupt has to be publicly examined in accordance with section 180 and has not completed that examination; or tt82 No.

18 Insolvency 20ts I (c) the bankrupt is undischarged from an earlier bankruptcy.

255.

The automatic discharge of the bankrupt has the Effect of same effect as if the Court made an order for the bankrupt's automatic discharge.

discharge.

256.(1) The bankruptcy trustee, the Official Right ofcreditor Receiver (if not the bankruptcy trustee) or, with the to object to automatic approval of the Court, a creditor may object to a bankrupt's discharge.

automatic discharge.

(2) An objection has no effect unless it is made in the manner and form prescribed by the insolvency regulations.

257.

(l) An objection to the automatic discharge of Objection can be the bankrupt may be withdrawn in the manner prescribed withdrawn.

by the insolvency regulations.

(2) A bankrupt is automatically discharged on the withdrawal of the objection if- (a) the three-year period referred to in section 254(l) has elapsed; (b) there is no other objection to the discharge that has not been withdrawn; and (c) neither section 254(2)(b) nor (c) applies.

258.

(1) A bankrupt may at any time apply to the Bankrupt may Court for an order of discharge from bankruptcy.

apply for early discharge.

(2) However, if the Court has previously refused an application by the bankrupt for a discharge, and has specified the earliest date when the bankrupt may again apply, the bankrupt may not make another application before that date.

(3) The Court shall hear an application made under subsection (1) in the manner prescribed by section 180.

259.(l) The bankruptcy trustee shall summon the When bankrupt is bankrupt to be publicly examined before the Court to be publicly examined before concerning the bankrupt's discharge if- the Court concerning (a) the bankruptcy trustee or a creditor has objected to discharge.

the bankrupt's automatic discharge and the objection has not been withdrawn; (b) the bankrupt is due for automatic discharge but is still undischarged from an earlier bankruptcy; 1183 2015 Insolvency No.18 (c) the bankrupt has been required to be publicly examined in accordance with section 180 and has not completed that examination.

(2) The bankruptcy trustee shall summon the bankrupt as soon as practicable after the end of the three-year period referred to in section25a[).

(3) The provisions of Division 17, so far as relevant, apply with any necessary modifications to a public examination under this section.

260.

(l) The bankruptcy trustee shall prepare a report Bankruptcy and lodge it with the Court when- trustee to lodge report with the (a) section 258 for a Court in specified the bankrupt has applied under circumstances.

discharge; or (b) the bankruptcy trustee has summoned the bankrupt to be examined in accordance with section259.

(2) The bankruptcy trustee shall include in the report a comprehensive review of- (a) the bankrupt's affairs; (b) the causes of the bankruptcy; (c) the bankrupt's performance of the bankrupt's responsibilities under this Act; (d) the manner in which, and the extent to which, the bankrupt has complied with orders of the Court; (e) the bankrupt's conduct before and after the coilrmencement of the bankruptcy; and (0 any other matter that is likely to assist the Court in making a decision as to whether or not to discharge the bankrupt.

261.

(l) A creditor shall give to the bankruptcy When creditor trustee and the bankrupt a notice that complies with required to give notice of subsection (2) if the creditor intends to oppose the opposition to bankrupt's discharge on a ground that is not mentioned in discharge.

the bankruptcy trustee's report.

(2) A notice complies with this subsection if it- (a) specifies the ground or grounds for opposing the discharge; and I 184 Insolvency 2015 No.18 (b) is given within the period prescribed by the insolvency regulations for the purposes of this section.

262.

(I) On hearing an application made under Power of the section 258, or the holding of a public examination of the Court to grant or may- refuse discharge.

bankrupt under section 259,the Court (a) immediately discharge the bankrupt; (b) discharge the bankrupt on conditions; (c) discharge the bankrupt but suspend the order for a specified period; or (d) discharge the bankrupt, with or without conditions, at a specified future date, or may refuse to make an order of discharge, in which case the Court may specify the earliest date when the bankrupt may reapply for discharge.

(2) The conditions referred to in subsection (1)(b) may include a condition that the bankrupt consents to a judgment or order for the payment of any sum of money.

(3) If the Court discharges the bankrupt on the condition that the bankrupt consents to any judgment, and the bankrupt does consent, the Court may vary the judgment to such extent as it considers appropriate.

263.(l) On making an order of discharge or at any Court may restrict earlier time, the Court may prohibit the bankrupt from bankrupt from engaging in doing after discharge all or any of the following without the business after Court's approval: discharge.

(a) entering into, carrying on, or taking part in the management or control of any business or class of business; (b) being a director of a company or a partner of a firm or limited liability partnership; (c) directly or indirectly being concerned, or taking part, in the management of any company or limited liability partnership; (d) being employed by a relative of the bankrupt; (e) being employed by a company, trust or other body that is managed or controlled by a relative of the bankrupt.

I 190 No.

18 Insolvency 20ts Official Receiver revests in the bankrupt without the need for a transfer.

(2) A contract, sale, disposition or payment duly made, or any action duly taken by the Official Receiver before the annulment- (a) is not affected as to its validity by the annulment; and (b) has effect as if no bankruptcy order had been made in respect of the bankrupt.

Division 24 -Composition during bankruptcy 275.In this Division- Interpretation: "confirming resolution" means a special resolution Division 24.

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.

(1) The creditors of a bankrupt may accept a Creditors may composition in satisfaction of the debts due to them from accept composition by the bankrupt by passing a special resolution that contains passing the terms of the composition.

preliminary (2) If there is more than one class of creditors, the resolution.

delay of one class in accepting, or the failure of one class to accept, does not prevent any other of the classes from accepting the composition.

277.

(l) A composition is ineffective only when the Composition not creditors have passed a special resolution confirming the effective unless approved by preliminary resolution.

confirming (2) In the confirming resolution, the creditors may resolution.

vary the terms of the composition set out in the preliminary resolution, if the terms as varied are at least as favourable to the creditors as those set out in the preliminary resolution.

(3) The notice of the meeting convened to pass the confirming resolution is ineffective unless it- (a) states generally the terms of the proposal for composition; and (b) is accompanied by a report by the Official Receiver on that proposal.

1189 2015 Insolvency No.18 (b) the Official Receiver shall pay that amount into the Consolidated Fund or into some other public account prescribed by the insolvency regulations for the purposes of this section; and (c) the Official Receiver is not entitled to remuneration under section 710 for those services.

273.

(l) The Official Receiver may annul a When Official bankruptcy order on any of the grounds specified in Receiver may annul bankruptcy subsection (2), but only if the order was made on a debtor's order.

application.

(2) The grounds for annulment by the Official Receiver are as follows: (a) that the Official Receiver considers that the bankrupt should not have been adjudged bankrupt; (b) that the Official Receiver is satisfied that the bankrupt's debts have been fully paid or satisfied and that the bankruptcy trustee's fees and costs incurred in the bankruptcy have been paid; (c) that the Official Receiver considers that the liability of the bankrupt to pay the bankrupt's debts should be revived because there has been a substantial change in the bankrupt's financial circumstances since the bankruptcy commenced; (d) that the Court has approved a deed of composition under Division 24 of Part III or a voluntary irlrangement under Division 1 of Part IV.

(3) The Official Receiver may annul the bankruptcy order on the application of any person interested or on the Official Receiver's own initiative.

(4) The annulment of bankruptcy order under subsection (3) takes effect- (a) in the case of an application on the ground specified in subsection (2)(a)-from the time when the order was originally made; and: (b) in the case of an application on one of the grounds specified in subsection (2)(b) to (d)-from the time of the Official Receiver's order of annulment.

274.(l) On annulment of a bankruptcy order, all Effect of property of the bankrupt vested in the Official Receiver on annulment of bankruptcy and not sold or otherwise disposed of by the bankruptcy order.

I 188 Insolvency 2015 No.18 (c) it considers that the liability of the bankrupt to pay the bankrupt's debts should be revived because there has been a substantial change in the bankrupt's financial circumstances since the bankruptcy commenced; or (d) it has approved a deed of composition under Division 24 of Part III or a voluntary arrangement under Division 1 of Part IV.

(3) If an application is made by an applicant other than the Official Receiver on one of the grounds specified in subsection (2Xa) to (c)- (a) the applicant shall serve a copy of the application on the Official Receiver in the manner and within the period directed by the Court; and (b) on being served with a copy of the application- the Official Receiver is entitled to appear at the hearing of the application as a party to the proceeding.

(4) A bankruptcy order is annulled- (a) in the case of an application made on the ground specified in subsection (2Xa)-from the time when it was made; or (b) in the case of an application made on one of the grounds specified in subsection (2)(b) to (d)- from the time when the Court made the order of annulment.

(5) If an application for annulment is made on the ground that the bankrupt should not have been adjudged bankrupt because of a defect in form or procedure, the Court may, in addition to annulling the bankruptcy order, exercise its powers under section 696 to correct the defect and order that the bankruptcy application be reheard as if no bankruptcy order had been made.

(6) If a bankruptcy order is annulled on one of the grounds specified in subsection (2)(a) to (c)- (a) the Court may, on the Official Receiver's application, fix an amount as reasonable remuneration for the Official Receiver's services and order that it be paid, in addition to any costs that may be awarded; 1187 2015 Insolvency No.18 269.The discharge of a bankrupt does not release a Discharge not to person who, at the commencement of the bankruptcy, release partners of bankrupt and was- others.

(a) a business partner of the bankrupt; (b) a co-trustee with the bankrupt; (c) jointly bound or had made any contract with the bankrupt; or (d) a guarantor or in the nature of a guarantor of the bankrupt.

270.

(l) A person who is discharged from Discharged bankruptcy shall assist the bankruptcy trustee, as required bankrupt to assist bankruptcy by the Court or the bankruptcy trustee, in the realisation trustee.

and distribution of the property of the person that is vested in that trustee.

(2) lt a person who has been discharged from bankruptcy fails to comply with subsection (1), the Court may, on the application of the bankruptcy trustee, order the person to provide the bankruptcy trustee with such assistance as is specified in the order.

27l.lt the Court refuses to discharge a bankrupt or Official Receiver makes an order discharging the bankrupt but suspends the to record in public register decision discharge, the Official Receiver shall record that of the Court information in the relevant public register kept the Official refusing to discharge Receiver under Division 2 of Part XII.

bankrupt, etc.

Division 23-Annulment of bankruptcy orders 272.

(I) The Official Receiver or any other person Court may annul claiming to have a legitimate interest in the matter may bankruptcy order in certain make an application to the Court for an order under circumstance.

subsection (2).

(2) On the hearing of an application made under subsection (1), the Court may annul a bankruptcy order made in respect of a bankrupt if- (a) on reconsideration it finds that the bankrupt should not have been adjudged bankrupt; (b) it is satisfied that the bankrupt's debts have been fully paid or satisfied and that the bankruptcy trustee's fees and costs incurred in the bankruptcy have been paid; I 186 Insolvency 2015 No.18 265.

(1) The quashing of a discharge does not affect Effect of quashing the rights or remedies that a person other than the bankrupt order discharging bankrupt from would have had if the discharge had not been quashed.

bankruptcy.

(2) It property acquired by the bankrupt after discharge is owned by the bankrupt at the date when the order quashing the discharge is made, the property vests in the bankruptcy trustee subject to any securities or other encumbrances.

(3) The bankruptcy trustee shall apply any such property in paying the debts that the bankrupt has incurred since the date of discharge.

266.(l) A bankrupt may apply to the Court for an Bankrupt may absolute discharge even though the bankrupt is not able to apply for absolute discharge on comply with any or all of the conditions of the bankrupt's ground that discharge.

conditions of discharge are too (2) The Court may discharge the bankrupt absolutely onerous.

if satisfied that the bankrupt's inability to comply with the conditions is due to circumstances for which the bankrupt should not reasonably be held responsible.

267.

(l) On being discharged, a bankrupt is released Debts from which from all debts provable in the bankruptcy except those bankrupt is released on listed in subsectiot (2).

discharge.

(2) The debts from which the bankrupt is not released are the following: (a) any debt or liability incurred by fraud or fraudulent breach of trust to which the bankrupt was a party; Cap.152.

(b) any debt or liability for which the bankrupt has obtained forbearance through fraud to which the bankrupt was a party; (c) any judgment debt or amount payable under any Cap.8.

order for which the bankrupt is liable under section 150 or 262; (d) amounts payable under a Court order made under the Matrimonial Causes Act; (e) amounts payable under the Children Act.

268.

A discharge of a bankrupt from bankruptcy is Discharge to be conclusive evidence of the bankruptcy and of the validity conclusive evidence of of the proceedings in course of the bankruptcy.

bankruptcy and the validity of bankruptcy proceedings.

1185 2015 Insolvency No.18 (2) The Court may impose such a prohibition for a specified period, or without specifying a time limit.

(3) The Court may at any time vary or cancel a prohibition imposed under this section.

264.

(l) The bankruptcy trustee or a creditor of the court may quash bankrupt may make an application to the Court for an order order discharging (2).

bankrupt.

under subsection (2) On the hearing of an application made under subsection (1), the Court may make an order quashing the discharge of a bankrupt at any time before- (a) in the case of an absolute discharge-two years after the discharge; or (b) in the case of a discharge that is conditional or suspended-two years after the discharge has taken effect.

(3) The Court may make an order quashing a discharge only if it is satisfied that facts have been established that- (a) were not known to it when it made the order of discharge; and (b) had it known of them, would have justified it in refusing a discharge or in imposing conditions in respect of the discharge.

(a) The Court may not make an order quashing a discharge if the facts relied on by the applicant, at the time when it made an order discharging the bankrupt- (a) were known to the applicant; or (b) could have been known if the applicant had inquired with reasonable diligence.

(5) If the Court makes an order quashing a discharge, it may then, or at any time afterwards, make a new order of discharge.

(6) Such an order may be absolute, be suspended for a specified period or be made subject to conditions.

(7) The Court may not hear an application made under subsection (1) unless it is satisfied that the bankrupt has been given notice of the application (including the grounds relied on by the applicant).

1191 2015 Insolvency No.18 (4) If the proposal for composition provides for the payment in full of all creditors whose respective debts do not exceed a specified amount, that class of creditors is not to be counted either in number or value for the purpose of counting the requisite majority of creditors for passing the confirming resolution.

278.

(l) If members of a partnership have been Compositions adjudged bankrupt, the joint creditors and each class of with members of partnership.

separate creditors can make separate compositions.

(2) lt subsection (1) applies, the majorities of creditors required for passing the confirming resolution are the separate majorities of each class, but with that exception the joint and separate creditors are to be counted as one body for voting purposes.

279.(l) A composition is not binding until it is Composition not approved by the Court.

binding unless approved by the (2) When approved by the Court, a composition binds Court.

all the creditors in respect of provable debts due to them by the bankrupt.

(3) The Court may refuse to approve a composition if it finds that- (a) section 276 or 277; (b) the terms of the composition are not reasonable or are not calculated to benefit the general body of creditors; (c) the bankrupt is guilty of misconduct that justifies the Court in refusing, qualifying, or suspending the bankrupt's discharge; or (d) for any other reason it should not approve the composition.

(4) The Court may not approve a composition if the composition does not provide for the payment, before any other debts are paid, of those debts that have priority under the Second Schedule.

(5) The Court's approval is conclusive as to the validity of the composition.

280.

(1) The bankrupt or the Official Receiver may Procedure for apply to the Court to approve the composition.

court approval of composition.

I lrIr tt - 2015 No.18 (2) The Court may hear the application only if satisfied that each creditor who has submitted a claim in the bankruptcy has been given notice of it.

(3) Before approving the composition, the Court shall- (a) receive and consider a report by the Official Receiver regarding the terms of the composition and the bankrupt's conduct; and (b) hear any objection by or on behalf of a creditor.

(4) When it approves the composition, the Court may correct any formal or accidental error or omission, but may not alter the substance of the composition.

281.

(1) As soon as practicable after the Court has Deed of approved a composition- composition to be executed.

(a) the bankrupt and the Official Receiver shall execute a deed of composition for putting the proposal into effect; and (b) the Official Receiver shall apply to the Court for confirmation of the deed.

(2) If it is satisfied that the deed conforms with the composition that it has earlier approved, the Court shall- (a) direct that the deed be lodged in the Court; and (b) on lodgement of the deed-quash the relevant bankruptcy order.

(3) The deed may not be entered and lodged in the Court unless the prescribed commission has been paid to the Official Receiver.

(4) The quashing under subsection (2) does not revest the bankrupt's property in the bankrupt in accordance with section 274(l\.

282.

When the Court has confirmed the deed and Effectofdeedof quashed the bankruptcy order- composition.

(a) the deed binds all the creditors in all respects as if they had each executed the deed; and (b) subject to the provisions of the Land Registration Act,2ol2-the bankrupt's property to which the No'3or2012 deed relates vests, und ir to be dealt with, as provided by the deed.

r.193 2015 Insolvency No.18 283.

(1) A bankrupt who makes a composition with Bankrupt remains the bankrupt's creditors remains liable for the unpaid liable for unpaid balances of certain balance of a debt if- debts.

(a) the bankrupt, by means of fraud- (i) incurred or increased the debt; or (ii) on or before the date of the composition, obtained forbearance on the debt; and (b) the creditor who has been defrauded iras not agreed to the composition.

(2) For the purposes of subsection (lxb), a creditor does not agree to the composition merely by proving the debt and accepting payment of a distribution of the assets in the estate.

284.

(l) The deadlines for steps to approve the Deadlines for composition and execute the deed are as follows: steps to approve composition and (a) the confirming resolution has to have been passed execute deed.

within one month after the preliminary resolution is passed; (b) the Court has to have approved the composition within one month after the confirming resolution is passed; (c) the bankrupt has to have executed the deed of composition within seven days after the Court approves the composition or, if the Court allows the bankrupt additional time, within that time.

(2) lf a deadline is not met immediately on the expiry of the deadline- (a) the bankruptcy proceedings resume as if there had been no confirming resolution; and (b) none of the periods specified in subsection (1) counts for the purpose of calculating a period of time for a purpose of this Act.

285.

(l) The Registrar of the Court shall, after Procedure recording the deed of composition- following approval of (a) endorse on the deed that it has been recorded in the composition by Court registry; and the Court.

(b) if requested to do so by the Official Receiver- deliver the deed to the Official Receiver.

tt94 Insolvency 2015 No.18 (2) As soon as practicable after the deed has been recorded in the Court registry, the Official Receiver shall- (a) take all steps necessary to have any vesting provided for in the deed registered or recorded in the appropriate public registry or office; and (b) then return the deed to the Registrar of the Court.

(3) The Official Receiver shall, subject to the provisions of the deed, give possession to the bankrupt or the trustee under the composition of- (a) the bankrupt's property; or (b) so much of the bankrupt's property as is under the control of the Official Receiver and that under the composition revests in the bankrupt or the bankruptcy trustee.

286.

(1) On the application of any person aggrieved How composition by a failure to pay an amount payable in accordance with a may be enforced, composition approved by the Court, the Court may order that the failure to pay be remedied.

(2) On the application of a person who claims to have an interest in a composition approved by the Court, the Court may make an order enforcing the provisions of a composition.

287.

(l) After the preliminary resolution has been Jurisdiction of the passed, the Court continues to have exclusive jurisdiction Court in relation to composition in relation to the composition and the deed of composition, and deed of and their administration.

composition.

(2) On an application in relation to the composition, the deed of composition, or their administration, the Court- (a) for the purpose of summoning and examining the bankrupt and witnesses-may direct the proceeding as if it were a proceeding under Division l7; and (b) may make such order or orders as it considers appropriate, including an order as to the costs of the application.

288.

The Court shall decide a question arising under a Law and practice deed of composition according to the law and practice of in bankruptcy to apply to deed of bankruptcy, in so far as that law and practice is relevant.

composition.

1195 Insolvency No.18 Division 25-Bankruptcy offences 289.

(1) A bankrupt commits an offence if the Offences in bankrupt did not, when contracting a debt, have the relation to debts.

capacity to pay the debt when it fell due for payment, as well as to pay all the bankrupt's other debts.

(2) A bankrupt commits an offence if the bankrupt has materially contributed to, or increased the extent of, the bankrupt's insolvency - (a) by gambling; (b) by engaging in rash and hazardous speculation; (c) by unjustifiable spending; or (d) by living extravagantly.

(3) In proceedings for an offence under subsection (1) or (2), it is a defence to prove that, at the relevant time, the bankrupt had no intention to defraud.

290.

(1) A bankrupt commits an offence if the Offences in bankrupt- relation to property.

(a) conceals, or removes from Kenya, any part of the bankrupt's property- (i) during the two months immediately preceding the date on which an unsatisfied judgment or order for payment of money was made against the bankrupt; or (ii) at any time after such a judgment or order was made; or (b) with intent to defraud any of the bankrupt's creditors- (i) makes or causes to be made a gift, delivery or transfer of any part of the bankrupt's property; or (ii) gives or causes to be given a charge over any part of that property.

(2) A bankrupt commits an offence if, during the two years 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- 1196 No.

18 Insolvency 2015 (a) conceals any part of the bankrupt's property to the value of fifty thousand shillings or more; (b) conceals any debt due to the bankrupt or due from the bankrupt; or (c) fraudulently moves any part of the bankrupt's property to the value of fifty thousand shillings or more.

(3) In proceedings for an offence under subsection (lXa), it is a defence to prove that, at the relevant time, the bankrupt had no intention to defraud any of the bankrupt's creditors.

(a) In proceedings for an offence under subsection (2)(a) or (b), it is a defence to prove that, at the relevant time, the bankrupt had no intention to defraud.

291.(l) A bankrupt commits an offence if, during Offence in the three years immediately preceding the time when the relation to written statement to bankruptcy order was made in respect of the bankrupt, the creditor.

etc.

bankrupt makes or produces to a material person a written statement of the bankrupt's financial position that contains information that is false or misleading.

(2) The following persons are material persons for the purposes of subsection (1): (a) a person who is at the relevant time the bankrupt's creditor; (b) a person who becomes the bankrupt's creditor as a result of the statement being made or produced to the person.

(3) In proceedings for an offence under subsection (l), it is a defence to prove that at the relevant time the bankrupt had no intention to deceive.

292.(l) A bankrupt commits an offence if, during Offence in the two years immediately preceding the making of the relation to application to the Court for a bankruptcy order in respect of documents, etc.

the bankrupt, or at any time after the application was made, the bankrupt- (a) conceals, destroys, mutilates or falsifies, or is a party to the concealment, destruction, mutilation or falsification of, any document affecting, or relating to, the bankrupt's conduct, affairs or property; tt97 2015 Insolvency No.18 (b) makes, or is a party to the making of, any false entry in any document affecting, or relating to, the bankrupt's conduct, affairs or property; (c) fraudulently parts with, alters, or makes any omission in, or is a party to fraudulently parting with, altering, or making an omission in, any document affecting, or relating to, the bankrupt's conduct, affairs or property; or (d) prevents the production of any document relating to the bankrupt's conduct, affairs or property to auy prson to whom the bankrupt has an obligation under this Part to produce the document.

(2) In proceedings for an offence under subsection (1)(a), (b) or (d), it is a defence to prove that, at the relevant time, the bankrupt had no intention to conceal the state of the bankrupt's affairs or to defeat the law.

293.

A banknrpt commits an offence if, during the Offcnce in twelve months immediately precedingthe making of the rplation to fictitious lossoe or application to the Court for a bankruptcy order in respect of cxpcnSog.

the bankrupt, or at any time after the application was made, the bankrupt attempts to account for any part of the banknrpt's property by means of fictitious losses or expenses.

294,(l) A bankrupt commits an offence if, during Offonccc in the three years preceding the making of the application to rplation to crpdit, the Court for a banknrptcy order in respect of the banknrpt, otc.

or at any time after the application was made- (a) the bankrupt obtains property on cedit and has not paid for the property; and (b) the banknrpt obtains the property- (i) by making a false representation or doing some other fraudulent act; (ii) by falsely stating the position of the bankrupt's financial affairs; or (iii) under the false pretence of carrying on business and dealing in the ordinary course of trade.

(2) A bankrupt commits an offence if, during the three years immediately preceding the making of the application to the Court for a bankruptcy order in respect of the l r98 No.18 Insolvency 4ils bankrupt, or at any time after the application was made, the bankrupt (otherwise than in the ofdinary course of business) pawns, mortgages, pledges or disposes of any property that the bankrupt has obtained but for which the bankrupt has not made payment.

(3) In proceedings for an offence under subsection (1) or (2), it is a defence to prove that, at the relevant time, the bankrupt had no intention to defraud.

295.

A bankrupt commits an offence if the bankrupt- Offences in relation to (a) makes a false representation; or obtaining consent of creditors.

(b) does any otherfraudulent act, for the purpose of obtaining the consent of any one or more of the bankrupt's creditors to any agreement with reference to the bankrupt's affairs or the bankrupt's bankruptcy.

296.(l) A bankrupt commits an offence if, during Offence for the twelve months immediately preceding the making of bankrupt to leave Kenya without the application to the Court for a bankruptcy order in consent.

respect of the bankrupt, or at any time after the application was made, the bankrupt- (a) leaves Kenya (either temporarily or permanently), together with any part of any property to the value of one hundred thousand shillings or more that, by law, ought to be distributed among the bankrupt's creditors; (b) attempts to leave Kenya with any part of that property; or (c) prepares to leave Kenya (either temporarily or permanently) while being in possession of any part of that property.

(2) In proceedings for an offence under subsection (l), it is a defence to prove that, at the relevant time, the bankrupt had no intention to defraud.

297.

A bankrupt who is found guilty of an offence General penalties under a provision of sections 289 to 296 is liable on for bankruptcy offences.

conviction to a fine not exceeding two million shillings or to imprisonment for a term not exceeding five years, or to both.

1199 Insolvency 2015 No.18 298.(l) A bankrupt confrnits an offence if, at any Failure to keep time during the three years immediately preceding the date and preserve proper record of on which the bankrupt was adjudged bankrupt- transactions.

(a) the bankrupt had failed to keep and preserve a record of the bankrupt's transactions for the period; and (b) because of the nature of the bankrupt's business or occupation, the bankrupt might reasonably be expected to have kept such a record.

(2) A bankrupt who is found guilty of an offence under subsection (1) is liable on conviction to a fine not exceeding one million shillings or to imprisonment for a term not exceeding twelve months, or to both.

299.(l) A bankrupt commits an offence if, with Failure to keep intent to conceal the true state of the bankrupt's affairs, the proper records with intent to bankrupt has failed to keep and preserve a proper record of conceal- the bankrupt' s transactions.

(2) A bankrupt who is found guilty of an offence under subsection (l) is liable on conviction to a fine not exceeding one million shillings or to imprisonment for a term not exceeding two years, or to both.

300.

(1) For the pu{poses of sections 298 and 299, a When bankrupt bankrupt is, in the absence of evidence to the contrary, presumed not to have kept or presumed not to have kept a proper record of the bankrupt's preserved proper transactions if, being engaged in a trade or business, the records.

bankrupt has not kept the required records.

(2) For the purpose of subsection (1), the required records are those needed to explain the bankrupt's transactions and financial position in the bankrupt's trade or business, and includes- (a) a record containing entries from day to day in sufficient detail of all cash received and cash paid; (b) if the bankrupt's trade or business has involved dealing in goods- (i) a record of all goods sold and purchased; and (ii) detailed stock sheets of annual and other stock takings showing the quantity and the valuation made of each item of stock on hand; and 1200 Insolvency 2015 No.lE (c) if the bankrupt's trade or business has involved supplying services-details of those services.

(3) For the purposes of sections 298 and 299, a bankrupt is, in the absence of evidence to the contrary, presumed not to have preserved a proper record of the baril<nrpt's transactions if the bankrupt has not preserved- (a) the records listed in subsection (2) (if applicable); (b) a record of all goods purchased in the course of the barf<nrpt's business (with the original invoices); and (c) a daily record of all goods sold on credit.

301.

(1) A bankrupt who- Offence by bankrupt in (a) acts or purports to act as a director of a company rclation to or as a partner of a firm or limited liability managemcnt of partnership; or companics, (b) fails without reasonable excuse to comply with section 152, commits an offence.

(2) A person who is found guilty of an offence under subsection (1) is liable on conviction to a fine not exceeding one million shillings or to imprisonment for a term not exceeding twelve months, or to both.

302.

(1) A bankrupt commits an offence if the othcrbankruptcy bankrupt- offcnccs' (a) in the course of the administration of the bankrupt's affairs, makes to the bankruptcy trustee or the Official Receiver (if not the bankruptcy fiustee) a statement that the bankrupt knows or has reason to know was false or misleading in a material respect; (b) after becoming aware that any person has lodged a false proof in the bankruptcy, fails to disclose that fact immediately to the bankruptcy trustee or to the Official Receiver (if not the bankruptcy trustee); (c) has, during the two years immediately preceding the date on which the bankrupt was adjudged bankrupt and while the bankrupt was insolvent, given any undue preference to any of the bankrupt's creditors with intent to defraud any other of the bankrupt's creditors; or t20L 2015 Insolvency No.lE (d) before the bankrupt obtains a final order or discharge from bankruptcy (either alone or jointly with one or more other persons)- (i) obtains credit of one hundred thousand shillings or more; or (ii) incurs a liability to any person of one hundred thousand shillings or more for the purpose of obtaining credit for another person.

(2) In proceedings for an offence under subsection (lXd)(D, it is a defence to prove that, before obtaining the relevant credit, the bankrupt informed the credit provider that the bankrupt was an undischarged bankrupt.

(3) In proceedings for an offence under subsection (lxd)(ii), it is a defence to prove that, before incurring the relevant liability, the credit provider was informed that the person incurring the liability was an undischarged bankrupt.

(4) A person who is found guilty of an offence under subsection (1) is liable on conviction a fine not exceeding one million shillings or to imprisonment for a term not exceeding twelve months, or to both.

PART IV - ALTERNATIVES TO BANKRUPTCY: NATURAL PERSONS Division 1 -Voluntary arrangements S ubdivision I - O rdinary proc edure 303.

(1) In this Division- Interpretation: "debtor" Division 1.

means a debtor who is a natural person; "interim order" means an order made under section "proposal" means a proposalmade by a debtor to the debtor's creditors for a composition in satisfaction of the debtor's debts or a scheme of arrangement of the debtor's financial affairs; "provisional supervisor", in relation to a proposal, means the person designated as referred to in section 306(1Xd); "supervisor", in relation to a voluntary arrangement, means the person who is for the time being performing the functions imposed as a result of the approval of the r202 No.

L8 Insolvency 2015 arrangement by the creditors of the debtor under the arTangement; "voluntary arrangement", in relation to a debtor, means a proposal that has taken effect in accordance with section 312(l).

(2) For the purposes of this Division, a voluntary arrangement approved by a creditors' meeting convened under section 309 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 3r2(2)(b).

304.

(1) An application to the Court for an interim When application order may be made if the debtor intends to make a proposal for interim order to the debtor's creditors under this Division for a can be made.

composition in satisfaction of the debtor's debts or a scheme of arrangement of the debtor's financial affairs.

(2) The debtor shall ensure that the proposal provides for a person to act as supervisor of the voluntary arrangement to which the proposal relates.

(3) Only an authorised insolvency practitioner is eligible to act as supervisor of a voluntary arrangement.

(4) Subject to subsection (2), such an the application may be made- (a) if the debtor is an undischarged bankrupt-by the debtor, the bankruptcy trustee of the debtor's estate or the Official Receiver; and (b) in any other case-by the debtor.

(5) An application may be made by a debtor who is an undischarged bankrupt only if the debtor has given notice of the proposal to the Official Receiver and, if there is one, the bankruptcy trustee of the debtor's estate.

(6) An application may not be made while a bankruptcy application made by the debtor is pending, if the Court has, under section 33, appointed an authorised insolvency practitioner to inquire into the debtor's financial affairs and to report on those affairs to the Court.

305.

(1) While an application under section 304 for Effect of an interim order is pending, the following provisions apply: application for interim order.

(a) a landlord or other person to whom rent is payable by the debtor may exercise a right of forfeiture in L203 Insolvency No.

18 relation to premises let to the debtor for a failure of the debtor to comply with a term of the tenancy- (i) only with the approval of the Court; and (ii) if in giving approval the Court has imposed conditions-only if those conditions are complied with; (b) the Court- (i) may prohibit disffess from being levied on the debtor's property or its subsequent sale, or both; and (ii) may stay any action, execution or other legal process against the property or person of the debtor.

(2) A court in which proceedings are pending against the debtor may, on proof that an application has been made under section 304 in respect of the debtor, either stay the proceedings or allow them to continue on such terms as it considers appropriate.

306.

(1) On the hearing of an application made under Power of the section 304, the Court may make an interim order if Court to make satisfied- inlerim order.

(a) that the debtor intends to make a proposal under this Division; (b) that on the day of the making of the application the debtor was an undischarged bankrupt or was able to make an application for the debtor's own (c) that no previous application has been made by the debtor for an interim order during the twelve months immediately preceding that day; and (d) that the supervisor designated under the debtor's proposal is willing to act in relation to the proposal.

(2) The Court shall make an interim order if satisfied that it would facilitate the consideration and implementation of the debtor's proposal.

(3) If the debtor is an undischarged bankrupt, the interim order may contain provisions as to the conduct of 1204 No.18 Insolvency 20t5 the bankruptcy, and the administration of the bankrupt's estate, during the period for which the order is to have effect.

(4) However, an interim order may, in relation to a debtor who is an undischarged bankrupt, include a provision relaxing or removing a requirement of Part III or of this Division, or of the insolvency regulations, only if the Court is satisfied that the inclusion of the provision would be unlikely to result in a significant diminution in, or in the value of, the debtor's estate in relation to the conduct of the bankruptcy.

(5) Except as otherwise provided by this Division, an interim order made on an application made under section 304 ceases to have effect at the end of fourteen days from the date on which the order was made.

(6) On the making of an interim order, the designated supervisor referred to in subsection (1Xd) becomes provisional supervisor.

(7) While an interim order has effect in respect of a debtor- (a) a bankruptcy application relating to the debtor may not be made or proceeded with; (b) a landlord or other person to whom rent is payable may exercise a right of forfeiture by peaceable re- entry in relation to premises let to the debtor in respect of a failure by the debtor to comply with a term or condition of the debtor's tenancy of the premises only with the approval of the Court; and (c) any other proceedings (including execution or other legal process) may be begun or continued, and distress may be levied, against the debtor or the debtor's property only with the approval of the Court.

307.

(1) As soon as practicable after the making of Provisional an interim order, the provisional supervisor shall, before the supervisor to report on debtor's order ceases to have effect, submit a report to the Court proposal.

stating- (a) whether, in that supervisor's opinion, the proposal has a reasonable prospect of being approved and implemented; 1205 2015 Insolvency No.18 (b) whether, in that supervisor's opinion, a meeting of the debtor's creditors should be convened to consider the proposal; and (c) if in that supervisor's opinion is that such a meeting should be convened-the date on which, and the time and place at which, it is proposed to hold the meeting.

(2) For the purpose of enabling the provisional supervisor to prepare that supervisor's report, the debtor shall submit to that supervisor- (a) a document setting out the terms of the proposal; and (b) a statement of the debtor's financial affairs containing- (i) such particulars of the debtor's creditors and of the debtor's debts and other liabilities and of the debtor's assets as may be prescribed by the insolvency regulations for the purposes of this section; and (ii) such other information as may be so prescribed.

(3) If the provisional supervisor has failed to submit the report required by this section or has died, the Court may, on an application made by the debtor, make an order directing that supervisor to be replaced as such by another authorised insolvency practitioner in relation to the proposal.

(4) If it is impracticable or inappropriate for the provisional supervisor to continue to act as such, the Court may, on an application made by the debtor or that supervisor, make an order directing that supervisor to be replaced as such by another authorised insolvency practitioner in relation to the proposal.

(5) If the provisional supervisor has failed to submit the report as required by this section, the Court may, on an application made by application of the debtor, make an order directing the interim order to continue, or (if it has ceased to have effect) to be renewed, for such further period as the Court may specify in the order.

(6) On the hearing of an application made by the provisional supervisor, the Court may make an order 1206 Insolvency 2015 No.18 extending the period for which the interim order has effect so as to enable that supervisor to have more time to prepare his or her report.

(7) lf, on receiving the provisional supervisor's report, the Court is satisfied that a meeting of the debtor's creditors should be convened to consider the debtor's proposal, the Court shall make an order directing the period for which the interim order has effect to be extended (for such further period as it may specify in the order) so as to enable the debtor's proposal to be considered by the debtor's creditors in accordance with this Division.

(8) The Court may discharge the interim order if it is satisfied, on the application of the provisional supervisor- (a) that the debtor has failed to comply with the debtor's obligations under subsection (2); or (b) that for any other reason it would be inappropriate for a meeting of the debtor's creditors to be convened to consider the debtor's proposal.

308.

(1) This section applies if- Debtor's proposal and provisional (a) a debtor intends to make a proposal under this supervisor's Division; report.

(b) no interim order has been made in relation to the proposal and no application for such an order is pending; and (c) where the debtor is an undischarged bankrupt-the debtor has given notice of the proposal to the Official Receiver and, if there is one, the bankruptcy trustee of the debtor's estate, unless a bankruptcy application made by the debtor is pending and the Court has, under section 33, appointed an authorised insolvency practitioner to inquire into the debtor's financial affairs and report the findings to the Court.

(2) For the purpose of enabling the provisional supervisor to prepare a repofi to the Court, the debtor shall submit to that supervisor- (a) a document setting out the terms of the voluntary arrangement that the debtor is proposing; and L207 Insolvency No.18 (b) a statement of the debtor's financial affairs containing- (i)such particulars of the debtor's creditors and of the debtor's debts and other liabilities and of the debtor's assets as may be prescribed by the insolvency regulations for the purposes of this section; and (ii) such other information as may be so prescribed.

(3) If of the opinion that the debtor is an undischarged bankrupt, or is in a position to apply for the debtor's own bankruptcy, the provisional supervisor shall, within the prescribed period, submit a report to the Court stating whether in his or her opinion- (a) the debtor's proposal has a reasonable prospect of being approved and implemented; and (b) a meeting of the debtor's creditors should be convened to consider the debtor's proposal.

(a) The prescribed period for the purpose of subsection (3) is- (a) fourteen days after the provisional supervisor has received the document and statement referred to in subsection (2); (b) such extended period as the Court may allow (5) If of the opinion that a meeting of the debtor's creditors should be convened to consider the debtor's proposal, the provisional supervisor shall fix the date on which, and time and place at which, it is proposed to hold the meeting and notify those creditors accordingly.

(6) If the provisional supervisor has failed to submit the report required by this section or has died, the Court may, on an application made by the debtor, make an order directing that supervisor to be replaced as such by another authorised insolvency practitioner.

(7) If it is impracticable or inappropriate for the provisional supervisor to continue to act as such, the Court may, on an application made by the debtor or that supervisor, make an order directing that supervisor to be replaced as such by another authorised insolvency practitioner.

1208 Insolvency 20ts No.18 (8) The Court may, on an application made by the provisional supervisor, extend the period within which that supervisor's report is required to be submitted.

309.

(1) If it has been reported to the Court under When provisional section 307 or 308 that a meeting of the debtor's creditors supervisor is to convene creditors' should be convened, the provisional supervisor shall, unless meeting to the Court otherwise directs, convene that meeting for the consider debtor's time, date and place proposed in that supervisor's report.

proposal.

(2) The persons to be summoned to the meeting are every creditor of the debtor of whose claim and address the person convening the meeting is aware.

(3) For the purpose of subsection (2), the creditors of a debtor who is an undischarged bankrupt include- (a) each person who is a creditor of the bankrupt in respect of a bankruptcy debt; and (b) each person who would be such a creditor if the bankruptcy had commenced on the date on which notice of the meeting was given.

310.

(1) The main purpose of a creditors' meeting Conduct of convened under section 309 is to decide whether to approve creditors' meeting: the debtor's proposal (with or without modifications).

consideration of (2) At the beginning of the meeting, those creditors debtor's proposal.

present shall elect one of their number to be chairperson of the meeting.

(3) The chairperson shall then divide the meeting into three groups for voting purposes, with the first group comprising secured creditors (if any), the second group comprising preferential creditors (if any) and the third group comprising unsecured creditors.

(4) A modification to the debtor's proposal may be approved only if the debtor consents to it.

(5) A modification to the debtor's proposal may be one that provides for the provisional supervisor to be replaced by another authorised insolvency practitioner to perform the functions of supervisor of that proposal if it is approved and takes effect as a voluntary arrangement.

(6) However, a modification to the debtor's proposal may not be one as a result of which it is no longer a proposal as defined by section 303.

1209 2015 Insolvency No.18 (7) If the proposal or a modification to it affects the right of a secured creditor of the debtor to enforce the creditor's security, the proposal or modification may not be approved unless- (a) the creditor consents to it; or (b) if the ceditor does not consent to it-the creditor- (i) would be in a position no worse than if the debtor were adjudged bankrupt; (ii) would receive no less from the assets to which the creditor's security relates, or from their proceeds of sale, than any other secured creditor having a security interest in those assets that has the same priority as the creditor's; and (iii) would be paid in full from those assets, or their proceeds of sale, before any payment from them or their proceeds is made to any other creditor whose security interest in them is ranked below that of the creditor, or who has no security interest in them.

(8) Subjeet to this section, the meeting is to be conducted in accordance with the rules (if any) prescribed by the insolvency regulations.

(9) The meeting may at any time resolve that it be adjourned, or further adjourned.

(10) As soon as practicable after the conclusion of the meeting, the chairperson- (a) shall report the result of of the meeting to the Court; and (b) immediately after doing so, shall give notice of the result of the meeting to all persons to whom the notice convening the meeting was sent.

(11) If the report is to the effect that the meeting has decided not to approve the debtor's proposal (either with or without modifications), the Court shall discharge any interim order that has effect in relation to the debtor.

311.

(1) This section applies to the decisions taken at Approval of the meeting of creditors held in accordance with section debtor's proposal.

t2t0 No.

lg Insolvency 2015 310 to consider a debtor's proposal (with or without modifications).

(2) The debtor's proposal (including any modifications) is approved if it is supported by a majority (in number and value) of the creditors of each group of creditors present (either in person or by proxy) at the meeting of creditors.

(3) For the purposes only of deciding whether the requisite majority by value has voted in favour of a resolution to approve the debtor's proposal, the following provisions apply: (a) the chairperson of the meeting may- (i) admit or reject proofs of debt; and (ii) adjourn the meeting in order to admit or reject proofs of debt; (b) a person whose debt is admitted is a creditor.

(4) At any time before the deadline for making an application under this subsection, the debtor or any of the debtor's creditors who attended or was entitled to attend the meeting may make an application to the Court for an order under subsection (7).

(5) The deadline for making an application under subsection (4) is- (a) the expiry of thirty days after the date on which the meeting of creditors was held; or (b) if the Court extends that period, the expiry of the extended period.

(6) The debtor and any creditor who attended or was entitled to attend the meeting of creditors is entitled to appear and be heard at the hearing of the application even if not the applicant.

The right conferred by this subsection may be exercised by such a creditor irrespective of whether the creditor supports or has an interest in the implementation of the proposal.

(7) On the hearing of an application made under subsection (4), the Court may- (a) make an order approving the proposal (with or without the modifications (if any) put to the L2TL 2015 Insolvency No.18 meeting of creditors in accordance with section 310); or ., (b) make such other order as it considers appropriate, but only if it considers that it would be in the best interests of both the debtor and the debtor's creditors to so.

(8) The Court *uy *uk" an order under subsection (7)(a) even if the debtor's proposal (or a modification to it) was not approved at the creditors' meeting by a majority of the preferential creditors' group or the unsecured creditors' group, but may do so only if the proposal (or modification)- (a) has been approved by a majority of the secured creditors' group; (b) does not discriminate among the members of the dissenting group or groups of creditors and ensures that they will be no worse off than they would have been if the debtor had been adjudged bankrupt; and (c) respects the priorities of preferential creditors over unsecured creditors.

(9) Section 93(3) and (4) apply in relation to a resolution purporting to be passed in accordance with this section.

312.(1) A debtor's proposal (with or without Effect of approval modifications) takes effect as a voluntary arrangement by of debtor's proposal by the debtor on the day after the date on which it is approved meeting of by the Court by order made under section 311(7Xa) or on creditors or by the such later date as may be specified in the order.

Court.

(2) On taking effect as a voluntary arrangement, the approved proposal binds every person (including a secured creditor and a preferential creditor) who- (a) was entitled to vote at the meeting (whether present or represented at the meeting or not); or (b) would have been so entitled if the person had received notice of the meeting, as if the person were a party to the arrangement.

(3) On the approved proposal taking effect as a voluntary arrangement, the provisional supervisor becomes t2t2 Insolvency 20t5 No.18 the supervisor of the arrangement unless that supervisor has been replaced in accordance with section 310(5).

(4) rf- (a) when the voluntary arrangement ends, any amount payable under the arrangement to a person bound because of subsection (2)(bXii) has not been paid; and (b) that arrangement did not come to an end prematurely, the debtor at that time becomes liable to pay to that person the amount payable under that arrangement.

(5) An interim order having effect in relation to the debtor inrmediately before the expiry of thirty days from and including the date on which the report with respect to the creditors' meeting was made to the Court in accordance with section 310(10) ceases to have effect at the end of that period.

(6) Subsection (5) applies except to such extent as the Court may direct for the purposes of any application made under section 314 (right to challenge decision taken at creditors' meeting).

(7) If proceedings on a bankruptcy application have been stayed by an interim order that has ceased to have effect, the application is, unless the Court otherwise orders, taken to have been dismissed.

313.

(1) If the Court has approved a debtor's Additional cffoct proposal in accordance with section 311(7)(a) and the on undischargod debtor is an undischarged bankrupt- banknrpt.

(a) the bankrupt; or (b) if the bankrupt has not made an application within the period prescribed by the insolvency regulations for the purposes of this section-the Official Receiver, may make an application to the Court for an order under subsection (3).

(2) However, such an application may not be made- (a) during the period within which the decision of the creditors' meeting can be challenged by an application made under section 314(1); .tI -g 1213 2015 Insolvency No.18 (b) while an application under section 314(l) is pending; (c) while an appeal in respect of an order made under section 313 is pending; or (d) during the period within which such an appeal may be made.

(3) On the hearing of an application made under subsection (1), the Court shall, subject to subsection (2), annul the banknrptcy order, unless it is of the opinion that there are compelling reasons not to do so.

(4) In making an order under subsection (3), the Court may give such directions about the conduct of the bankruptcy and the administration of the bankrupt's estate as it considers appropriate for facilitating the implementation of the approved proposal.

314.

(1) Subject to subsection (3), any ofthe persons Right to challenge specified in subsection (2) may make an application to the dccision takcn at crrditors' Court on either or both of the following grounds: meeting, (a) that a debtor's proposal approved by a creditors' meeting held in accordance with section 309 unfairly affects the interests of a creditor of the debtor; (b) that a material inegularity occuned at or in relation to the meeting.

(2) The persons who may make an application for the purposes of subsection (1) are- (a) the debtor; (b) a person who- (i) was entitled to vote at the creditors' meeting, or (ii) would have been so entitled if the person had had notice of it; (c) the provisional supervisor or, if the proposal has taken effect as a voluntary arangement, the supervisor of the arrangement; and (d) if the debtor is an undischarged bankrupt-the bankruptcy trustee in respect of the debtor's estate or the Official Receiver.

t2t4 Insolvency 2015 No.18 (3) An application under this section may not be made- (a) after the end of thirty days from and including the date on which the result of the creditors' meeting was reported to the Court in accordance with section 309(10); or (b) in the case of a person who was not given notice of the creditors' meeting-after the end of thirty days from and including the date on which the person first became aware that the meeting had taken place, but, subject to that, an application made by a person referred to in subsection (2Xb)(ii) on the ground that the voluntaryurangement unfairly affects the person's interests may be made even after that arrangement has ended, unless it has ended prematurely.

(4) If, on the hearing of an application made under subsection (1), the Court is satisfied as to either of the grounds referred to in that subsection, it may do one or both of the following: (a) make an order revoking or suspending an approval given by the meeting; (b) give a direction to any person for the convening of a further meeting of the debtor's creditors to consider any revised proposal the person may make or, in a case to which subsection (1Xb) applies-to reconsider the debtor's original proposal.

(5) If, at any time after giving a direction under subsection (4Xb) for convening a meeting to consider a revised proposal, the Court is satisfied that the debtor does not intend to submit such a proposal, the Court shall revoke the direction and revoke or suspend any approval given at the previous meeting.

(6) If the Court gives a direction under subsection (4Xb), it may also give a direction continuing or, as the case requires, renewing, for such period as may be specified in the direction, the effect in relation to the debtor of any applicable interim order.

(7) If, on the hearing of an application made under subsection (l) with respect to a creditors' meeting, the L275 2015 Insolvency No.

L8 Court gives a direction under subsection (4Xb) or revokes or suspends an approval under subsection ( Xa) or (5), it may give such ancillary directions as it considers appropriate and, in particular, directions with respect to- (a) action taken since the meeting under any voluntary arrangement approved by the meeting; and (b) such action taken since the meeting as could not have been taken if an interim order had had effect in relation to the debtor when it was taken.

(8) Except as otherwise provided by this section, an approval given at a creditors' meeting held in accordance with section 309 is not invalidated by any irregularity occurring at or in relation to the meeting.

315.

(1) The supervisor is responsible for Implementation implementing and supervising a voluntary arrangement that and supervision of voluntary has taken effect under section 312 or 319 and has such arrangement.

powers as are necessary to enable that responsibility to be carried out.

(2) If a voluntary iurangement has effect under section 312 or 319, a debtor or a creditor of the debtor or any other person who is dissatisfied by any act, omission or decision of the supervisor may apply to the Court for an order under subsection (3).

(3) On the hearing of an application made under subsection (2), the Court - (a) if it finds the action or decision of the supervisor to have been unfair or unjustified-make an order quashing or modifying the act or decision; or (ii) if it does not so find-make an order confirming the act or decision; and (b) if it makes an order under paragraph (aXi), may- (i) give such directions to the supervisor as it considers appropriate; and (ii) make such ancillary order as it considers appropriate.

tzt6 Insolvency 20ls No.18 (4) On the application of the supervisor to the Court for directions in relation to any particular matter arising under the voluntary arrangement, the Court may give such directions in relation to the matter as it considers appropriate.

(5) Whenever- (a) it is desirable to appoint a person to perform the functions of the supervisor; and (b) it is difficult or impracticable for an appointment to be made without the assistance of the Court, the Court may make an order appointing an authorised insolvency practitioner to act as supervisor in relation to the voluntary arrangement, either in substitution for the existing supervisor or to fill a vacancy.

(6) The power conferred by subsection (5) is exercisable so as to increase the number of persons performing the functions of supervisor or, if there is more than one person performing those functions, so as to replace one or more of those persons.

Subdivision 2 - Dxpedited procedure 316.

(1) This section applies if a debtor intends to Expcdited make a proposal to the debtor's creditors for a voluntary voluntary anangemont urangement and- prceedurc: (a) availability.

the debtor is an undischarged bankrupt; (b) the Official Reeeiver is specified in the proposal as the provisional supervisor in relation to the proposal; and (c) no application for an interim order has been made under section 304.

(2) If this section applies, the debtor may submit to the Official Receiver- (a) a document setting out the terms of the debtor's proposal; and (b) a statement of the debtor's financial affairs containing- (i) such particulars as may be prescribed by the insolvency regulations for the purposes of t2t7 2015 Insolvency No.18 this section of the debtor's creditors, debts, (ii) other liabilities and assets; and such other information as may be so prescribed.

(3) If satisfied that the proposal has a reasonable prospect of being approved and implemented, the Official Receiver may make arrangements for the purpose of inviting creditors to decide whether to approve it.

(4) For the purposes of subsection (3), a person is a creditor only if- (a) the person is a creditor of the debtor in respect of a bankruptcy debt; and (b) the Official Receiver is aware of the person'sI claim and the person's address.

t (5) In making arrangements under subsection (3), the Official Receiver shall ensure that- I (a) each creditor is provided with a copy of the debtor's proposal; I (b) each creditor is provided with information about the criteria by reference to which the Official Receiver will determine whether the creditors approve or reject that proposal; and (c) no opportunity is allowed for modifications to that proposal to be suggested or made.

[- (6) If a debtor submits documents to the Official Receiver in accordance with subsection (2), an application under section 304 for an interim order may not be made in respect of the debtor unless the Official Receiver- (a) has made the arrangements referred to in subsection (3); or (b) has informed the debtor that the Official Receiver does not intend to make such arrangements (either because the Official Receiver is not satisfied that the proposal has a reasonable prospect of being approved and implemented or for any other reason).

(7) If a meeting of creditors is convened for the purpose of subsection (3), the provisions of section 310 apply to the holding and conduct of the meeting.

12r8 Insolvency 2015 No.18 317.

As soon reasonably practicable after the Duty of Official iurangements under section 316 have been implemented, Receiver to report the Official Receiver shall report to the whether result to the Court.

Court the proposed voluntary iurangement has been approved or rejected.

318.

(1) If the Official Receiver reports to the Court Approval of that the debtor's proposal has been approved, the proposal expedited voluntary takes effect as a voluntary arrangement.

arrangement.

(2) On taking effect as a voluntary arrangement, the proposal binds- (a) the debtor; and (b) binds every person (including a secured creditor and a preferential creditor) who was entitled to participate in the arrangements made in accordance with section 316(3), as if each of them were a party to the arrangement.

(2) In addition to submitting the report, the Official Receiver may make an application to the Court to make an order under subsection (4).

(3) However, such an application may not be made- (a) during the period within which the voluntary :Irrangement can be challenged by an application under section 314; (b) while an application made under that section is pending; (c) while an appeal in respect of an application made under that section is pending; or (d) during the period within which such an appeal may be made.

(4) On considering an application made under subsection (2),the Court shall annul the bankruptcy order in respect of the debtor unless it is of the opinion that there are compelling reasons not to do so.

(5) The Court may give such directions about the conduct of the bankruptcy and the administration of the bankrupt's estate as it considers will facilitate the implementation of the approved voluntary arrangement.

t2t9 2015 Insolvency No.18 319.

(1) In addition to making the arrangements under Power of Official section 316(3), the Official Receiver may, if the debtor is Receiver to make application for an undischarged bankrupt, make an application to the Court annulment of to make an order under subsection (3).

bankruprcy order where debtor is an (2) Such an application may not be made- undischarged (a) bankrupt.

while an application for an order under section 3ll(7) is pending; (b) during the period within which a voluntary arrangement can be challenged by an application made under section 314; (c) while an application made under that section is pending; or (d) while an appeal in respect of an order made under that section is pending; or (e) during the period within which such an appeal may be made.

(3) On considering an application made under subsection (1), the Court shall annul the bankruptcy order in respect of the debtor unless it is of the opinion that there are compelling reasons not to do so.

(4) The Court may give such directions about the conduct of the bankruptcy and the administration of the bankrupt's estate as it considers will facilitate the implementation of the voluntary arrangement.

320.

(1) The Court may make an order Revocation of revoking a voluntary arrangement that has effect because of expedited voluntary section 318(1) on the ground- arTangement.

(a) that it unfairly affects the interests of a creditor of the debtor; or (b) that a material irregularity occurred in relation to the arrangements made under section 316(3).

(2) An order under subsection (1) may be made only on the application of- (a) the debtor; (b) a person who was entitled to participate in the arrangements made under section 316(3); (c) the bankruptcy trustee (if any); or 1220 No.l8 Insolvency (d) the Official Receiver.

(3) An application under subsection (2) may not be made after the expiry of thirty days from and including the date on which the Official Receiver has reported to the Court as required by section 317.

(4) However, a creditor who was not made aware of the arrangements under section 316(3) at the time when they were made may make an application under subsection (2) during the thirty days from and including the date on which the creditor first became aware of the voluntary arrangement.

Subdivision 3-Criminal conduct under the Division 321.

(1) A debtor commits an offence, if for the Offence for debtor purpose of obtaining approval to a proposal for a voluntary to make false representation for arrangement, the debtor- purpose of obtaining (a) makes a representation knowing it to be false or creditors' misleading;or approval.

(b) fraudulently does, or omits to do, any act.

(2) In subsection (1), the reference to obtaining approval to a proposal for a voluntary ilrangement is to obtaining* (a) the approval of a proposal for a voluntary arrangement presented to a meeting of the debtor's creditors held in accordance with section 310; or (b) the approval of a proposal for a voluntary arrangement submitted to the Official Receiver in accordance with section 316.

(3) Subsection (l) applies even if the proposal is not approved.

(4) A person found guilty of an offence under subsection (1) 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.

322.(1) This section applies to a voluntary Prosecution of arrangement that has taken effect in accordance with delinquent 312(l) 319(1).

debtors.

section or (2) As soon as practicable after forming a reasonable suspicion that a debtor has committed an offence in t22L Insolvency 2015 No.18 connection with a voluntary arrangement to which this section applies, the supervisor of the arrangement shall report the matter to the Attorney General and to the Director of Public Prosecutions.

(3) On receiving the supervisor's report, the Attorney General or Director of Public Prosecutions may request the supervisor to provide- (a) such information as is specified in the request; and (b) access to, and facilities for inspecting and taking copies of, such documents as are so specified.

(3) The supervisor shall comply with such a request to the extent that the information or documents are under the debtor's control and relate to the matter concerned.

(4) If the Director of Public Prosecutions takes criminal proceedings following a report made under subsection (2), the supervisor shall provide that Director with all assistance in connection with the prosecution that the supervisor is reasonably able to provide.

(5) If the supervisor fails to comply with subsection (3) or (4), the Attorney General or Director of Public Prosecutions may apply to the Court for an order under subsection (6).

(6) On the hearing of an application made under subsection (5), the Court may make an order directing the supervisor to comply with subsection (3) or (4), as appropriate.

Division 2 - Summary instalment orders 323.

A summary instalment order is an order made by What is a the Official Receiver directing the debtor to pay the summary debtor's debts- instalment order? (a) in instalments or in some other way; and (b) in full or to the extent that the Official Receiver considers practicable in the particular circumstances of the case.

324.The Official Receiver may make a summary whocanapplvror instalment order on the application of- - i,lfjiffn,o,o",.

1222 Insolvency 2015 No.18 (a) a debtor; or (b) a creditor with the debtor's consent.

325.

(1) The Official Receiver may refuse an Requirements for application for a sufirmary instalment order if the applications made does not comply with subsection (2).

by debtors.

application (2) An application does not comply with this subsection unless it- (a) is in the form prescribed by the insolvency regulations for the purposes of this section; (b) states- (i) that the debtor proposes to pay the creditors in full; or (ii) the proportion of the outstanding debt that the debtor proposes to pay; (c) states the total amount of the weekly or other instalments that the debtor proposes to pay; (d) states- (i) the name and address of the debtor's proposed supervisor and annex the written consent of that person to be supervisor; or (ii) if the debtor claims that a supervisor is not necessary-the debtor's reasons for making that claim; and (e) includes the following information: (i) the debtor's full name and address; (ii) details of the debtor's property; (iii) the names and addresses of each creditor; (iv) the amount and nature of each of the creditors' debts; (v) whether any of the debts are secured and the value of the charge; (vi) whether any of the debts are guaranteed by any person; (vii) the amount of the debtor's earnings; (viii) the name and address of the debtor's employer (if any); 1223 2015 Insolvency No.18 (ix) any other matter that may be prescribed by the insolvency regulations for the purposes of this subsection.

326.(l) The Official Receiver may make a summary Official Receiver instalment order if satisfied that- may make summary (a) the debtor's total unsecured debts that would be instalment order.

provable in the debtor's bankruptcy do not exceed the amount prescribed by the insolvency regulations for the purpose of this section; and (b) the debtor is unable immediately to pay those debts.

(2) The Official Receiver may not make such an order without having given the debtor and the creditors an opportunity to make representations with respect to the matter.

(3) A summary instalment order is not invalid merely because the total amount of the debts proved exceeds the amount specified in subsection (1)(a), but if it does, the supervisor appointed under section 328 shall refer the matter to the Official Receiver, in which case the Official Receiver shall cancel the order.

327.In addition to an order for the payment of the Power of Official debts in instalments, the Official Receiver may make all or Receiver to make any of the following orders: additional orders.

(a) an order regarding the debtor's future earnings or income; (b) an order regarding the disposal of goods that the debtor owns or possesses; (c) an order giving the supervisor appointed under section 328 power- (i) to direct the debtor's employer to pay all or part of the debtor's earnings to the (ii) supervisor; and to supervise payment, out of the debtor's earnings or income, of the reasonable living expenses of the debtor and the debtor's relatives and dependants.

328.

(l) Except as provided by subsection (2), a Appointment of summary instalment order is ineffective if it does not supervisors.

t224 Insolvency No.18 provide for the appointment of a suitable and willing person to supervise compliance by the debtor with the terms of the order.

(2) The Official Receiver may dispense with the appointment of a supervisor if the Official Receiver considers it appropriate to do so.

(3) In such a case- (a) the provisions of this Division apply as if the debtor was the supervisor, except for section 329; and (b) that section applies as if the Official was the supervisor.

(4) The Official Receiver may require a supervisor to provide a bond to secure the supervisor's performance of the supervisor's obligations under the Act.

(5) In imposing such a requirement, the Official Receiver shall specify the amount of the bond and the person to whom it is to be given.

329.

(l) The supervisor is responsible for supervising Role of the debtor's compliance with the terms of the summary supervisors instalment order and any other orders made under section 327.

(2) The supervisor may charge the debtor remuneration for carrying out the supervisor's responsibilities as supervisor at the amount or rates not exceeding the amount or rates fixed in accordance with the insolvency regulations.

330.

(1) The Official Receiver may, by notice, Power of Official require a supervisor or a past supervisor to provide the Receiver to require supervisor Official Receiver, within not less than seven days from the or past supervisor date of the notice, with any specified documents, or any to provide documents of a specified class, that relate to the debtor's documents.

property, conduct or dealings that are under the control of the supervisor or past supervisor.

(2) A supervisor or past supervisor who fails to comply with a notice given to the supervisor or past supervisor under subsection (1) commits an offence and on conviction is liable to a fine not exceeding two hundred and fifty thousand shillings.

L225 201s Insolvency No.lE 331.If of the opinion that the supervisor has failed to Termination of supervise the debtor's compliance adequately, the Official supervisor's appointment for Receiver shall terminate the supervisor's appointment and failure to appoint a replacement supervisor.

supervise adequately.

332.

The payment of instalments under a summary Period for instalment order can be spread over a period not payment of exceeding- instalments.

(a) three years; or (b) if justified by special circumstances acceptable to the supervisor-five years.

333.

(1) The debtor, ffiy creditor or the supervisor Variation or may at any time apply in writing to the Official Receiver to discharge of summary vary or discharge a summary instalment order.

instalment orders, (2) After considering an application made under subsection (1), the Official Receiver shall vary or discharge the order as the Official Receiver considers appropriate.

334.

(1) The debtor shall.

pay all instalments payable f,tfi::;:Tffifl under a summary instalment in the manner prescribed by the insolvency regulations.

(2) The Official Reeeiver shall oancel a summary instalments order on being satisfied on reasonable grounds that the debtor has failed to comply with subsection (1).

335.

(1) In this section, "proceedings", in relation to a Restrietions on debtor in respect of whom a summary instalment order has bringing proeeedingc been made, means proceedings brought against the person against debtoro or propelty of the debtor in respect of a debt that has while summary instalment ordor been- has effect, (a) shown in the debtor's application for the summary instalment order; (b) included in the summary instalment order; or (c) notified to the supervisor.

(2) While a summary instalment order has effect, a person may not begin or continue proceedings against the debtor unless- (a) the Official Receiver gives approval for a creditor to begin or continue the proceedings; or (b) the debtor is in default under the order.

1226 Insolvency 2015 No.18 (3) In giving any such approval, the Official Receiver may impose such conditions as appear to the Official Receiver to be fair and reasonable.

(4) In the case of proceedings that are pending before a court at the time when the summary instalment order is made, the Court, unless the conditions specified in subsection (2)(a) or (b) apply- (a) shall stay the proceedings on receiving notice of the order; and (b) may award all or part of the creditor's costs incurred up to the time of the Court's notification, and may certify accordingly for the purpose of the creditor proving the debt under this Division.

336.

(1) The supervisor shall send a notice of the Supervisor to give surnmary instalment order to every creditor- notice of summary instalment order (a) who is known to the supervisor; to creditors.

(b) whose name is shown on the debtor's application for the order; or (c) who has proved a debt under section 340.

(2) A supervisor who, without reasonable excuse, fails to comply with subsection (1) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings.

337.

(1) The Official Receiver Shall establiSh and Public register of maintain a public register of persons who are subject to ;iffi.';ffif current summary instalment orders.

instalment order.

(2) The Official Receiver shall maintain the register in accordance with Division 2 of Part XIL 338.

A summary instalment order is not current if it When summary has been discharged or all the instalments required to be instalment order ceases to be paid under the order have been paid in accordance with the current.

order.

339.

(1) A creditor who has proved the creditor's Claims of debt to the satisfaction of the supervisor is entitled to be creditors when summary included as a creditor in the administration of the debtor's instalment has estate under the summary instalment order for the amount effect- of the debt.

L227 2015 Insolvency No.18 (2) A creditor may object to the supervisor's acceptance or rejection of any creditor's claim by applying to the Official Receiver.

(3) If a creditor objects under subsection (2), the Official Receiver may give any directions that the Official Receiver considers appropriate as to the acceptance or rejection of the claim.

(4) A person who becomes a creditor of the debtor after the order has been made, and who proves a debt before the supervisor, may elect to be included in the administration of the debtor's estate.

(5) If such a person so elects, the person may be paid a dividend under the order only after the creditors who became creditors of the debtor before the order was made and who have been included as a creditor in the administration have been paid under the order.

340.

(1) This section applies if the supervisor, under a Payment of power conferred by a summary instalment order made by debtor's eamings the Official Receiver, directs the debtor's employer to pay to supervisor.

the debtor's earnings, or part of them, to the supervisor.

(2) The amounts that the employer shall pay to the supervisor are recoverable as a debt from the employer, and the supervisor's receipt is a complete discharge to the employer for the debt.

(3) Payment by the employer in contravention of the supervisor's direction to pay the supervisor discharges the liability of the employer to the supervisor for the amount of the payment only if it is made- (a) with the consent of the supervisor or the Official Receiver; or (b) to a person who is not the debtor and who has a better legal claim to it than the debtor.

341.

(1) A debtor who fails to pay an amount due Consequences of under a summary instalment order is presumed, unless the default by debtor to pay amount due contrary is proved- under summary (a) instalment order.

to have been able to pay the amount from the date of the order; and (b) to have refused or neglected to pay it.

1228 No.18 Insolvency 2015 (2) If the debtor fails to make a payment in accordance with the order- (a) proceedings that have been stayed under section 335 may begin or continue; (b) any period during which a proceeding was stayed under that section are to be added to any period of limitation that applies to the proceeding.

(3) Subsection (2) is subject to any order of the Court to the contrary.

(4) As soon as practicable after a debtor fails to make a payment in accordance with a summaxy instalment order, the supervisor shall give notice of the failure to the Official Receiver.

342.(l) A debtor in respect of whom a summary Offenec for dcbtor instalment order is in effect commits an offence if, before to obtain eitdit while summary all creditors have been paid the amounts to which they are instalment order entitled under the order, the debtor- has effcct, (a) alone or jointly with another person, obtains credit of one hundred thousand shillings or more; (b) incurs a liability to another person for one hundred thousand shillings or more for the purpose of obtaining uedit for another person; or (c) enters into a credit purchase transaction under which the debtor is liable to pay one hundred thousand shillings or more.

(2) In proceedings for an offence under subsection (1), it is a defence to prove- (a) in a case to which subsection (1)(a) applies-that, before obtaining the relevant credit, informed the credit provider that the debtor was subject to a summary instalment order; (b) in a case to which subsection (lxb) applies- that, before the defendant incurred the relevant liability, the credit provider was informed that the defendant was subject to a summary instalment order; or (c) in a case to which subsection (lXc) applies-that, before the defendant entered into the relevant 7229 Insolvency No.

18 agreement, the other parties to the agreement were informed that the defendant was subject to a summary instalment order.

(3) A person who is found guilty of an offence under this section is liable on conviction to a fine not exceeding one million shillings or to imprisonment for a term not exceeding twelve months, or to both.

Division 3 -No-asset procedure 343.

This Division prescribes a procedure for Division 3: dealing with a debtor who has no realisable assets.

introduction 344.(l) A debtor who meets the criteria set OUt in Application for section 345 may apply to the Official Receiver for entry to entry to no-asset procedure.

the no-asset procedure.

(2) A debtor can apply for entry to the no-asset procedure by completing the following documents and lodging them with the Official Receiver: (a) an application in the form prescribed by the insolvency regulations for the purpose of this section; and (b) a statement in the form so prescribed setting out the debtor's financial position.

(3) The Official Receiver may reject the debtor's application if the application or statement of the debtor's financial position is, in the Official Receiver's opinion, incorrect or incomplete.

34s.

(1) The Official Receiver shall admit a debtor to criteria ror entrv the no-asset procedure if satisfied on reasonable grounds ;lffi;:: that- (a) the debtor has no realisable assets; (b) the debtor has not previously been admitted to the no-asset procedure; (c) the debtor has not previously been adjudged (d) the debtor has total debts that are not less than one hundred thousand shillings and not more than four million shillings; and (e) the debtor does not have the means to repay any amount towards those debts.

1230 Insolvency 20ts No.18 (2) In this section, "realisable assets"does not include the assets that a bankrupt is allowed to retain under section 161, but does include assets (such as gifted assets) that might be recoverable by the Official Receiver- (a) if the debtor were to be adjudged bankrupt on the date of application for entry to the no-asset procedure; and (b) if Division 19 of Part II applied.

346.

The Official Receiver shall not admit a debtor to Debtor the no-asset procedure if satisfied, on reasonable grounds, disqualified from entry to no-asset that- procedure in (a) certain cases.

the debtor has concealed assets with the intention of defrauding the debtor's creditors (such as by transferring property to a trust); (b) the debtor has engaged in conduct that would, if the debtor were adjudged bankrupt, constitute an offence under this Act; (c) the debtor has incurred a debt or debts knowing that the debtor does not have the means to repay them;or (d) a creditor intends to apply for the debtor to be adjudged bankrupt and it is likely that, if the debtor were to be adjudged bankrupt, the outcome for the creditor would be materially better than if the debtor were admitted to the no- asset procedure.

347.

As soon as practicable after receiving an Official Receiver application from a debtor for entry to the no-asset to notify creditors procedure, the Official Receiver shall send a summary of the debtor's assets and liabilities to each known creditor of the debtor.

348.

(1) A debtor who has applied for entry to the Restrictions on no-asset procedure shall not obtain credit (including credit debtor obtaining credit after under a credit purchase transaction), either alone or jointly application made.

with another person, of more than ten thousand shillings without first informing the credit provider that the debtor has applied for entry to the no-asset procedure.

(2) A debtor who contravenes subsection (1) commits an offence and on conviction is liable to a fine not 723t 2015 Insolvency No.lg exceeding five hundred thousand shillings or to imprisonment for a term not exceeding six months, or to both.

349.

(1) A debtor is admitted to the no-asset When debtor procedure when the Official Receiver sends the debtor a admitted to no- asset procedure notice in the form prescribed by the insolvency regulations for the purposes of this section.

(2) As soon as practicable after a debtor is admitted to the no-asset procedure, the Official Receiver shall- (a) notify that fact to each creditor of the debtor of whom the Official Receiver is aware; and (b) publish notice of it in a publication and in a manner prescribed by the insolvency regulations.

350.

(1) The Official Receiver shall establish and Public register of maintain a public register of persons admitted to the no- persons admitted to no-asset asset procedure and persons discharged from that procedure procedure.

under section 359.

(2) The Official Receiver shall maintain the register in accordance with Division 2 of Partxl.

351.

(1) A creditor of a debtor may not, after the Creditors may not debtor has been admitted to the no-asset procedure, begin enforce debts of debtor admitted to or continue any step to recover or enforce a debt- no-asset (a) procedure.

that the debtor owes to the creditor at the time when the debtor applies for entry to the no-asset procedure; and (b) that would be provable in the debtor's bankruptcy if the debtor were to be adjudged bankrupt.

(2) Despite subsection (1), the following debts remain enforceable: (a) amounts payable under a court order made under the Matrimonial Causes Act; Cap 152 (b) amounts payable under the Children Act; Cap.8 (c) amounts owed in respect of a loan to secure the education of a dependent child or step-child of the debtor.

352.

(1) On being required by the Official Receiver Debtor's duties to do so, the debtor shall provide the Official Receiver with after entry to no- asset procedure- 1232 Insolvency 2015 No.18 such assistance, documents and information as are reasonably necessary in order to apply the no-asset procedure to the debtor.

(2) As soon as practicable after any change occurs in the debtor's circumstances that would allow the debtor to repay an amount towards the debts referred to in section 351(l), the debtor shall give written notification of the change to the Ofticial Receiver.

(3) The debtor may not obtain credit, either alone or jointly with another person, of more than one hundred thousand shillings without first informing the credit provider that the debtor is subject to the no-asset procedure.

(4) In subsection (4), "credit" includes credit under a conditional purchase transaction.

353.

(1) A person who, while admitted to the no- Offence for asset procedure- person admitted to no-asset (a) jointly with another person, obtains procedure to alone or obtain credit.

credit of one hundred thousand shillings or more; (b) incurs liability to a credit provider for one hundred thousand shillings or more for the purpose of obtaining credit for another person; or (c) enters into a credit purchase transaction under which the person is liable to pay one hundred thousand shillings or more, commits an offence.

(2) In proceedings for an offence under subsection (1), it is a defence to prove- (a) in a case to which subsection (lXa) applies-that, before obtaining the relevant credit the defendant informed the credit provider that the defendant was admitted to the no-asset procedure; (b) in a case to which subsection (lxb) applies- that, before the defendant incurred the relevant liability, the credit provider was informed that the defendant was admitted to the no-asset procedure; or (c) in a case to which subsection (1Xc) applies-that, before the defendant entered into the relevant { l/ t233 2015 Insolvency No.

18 agreement, the other parties to the agreement were informed that the defendant was admitted to the no-asset procedure.

(3) A person who is found guilty of an offence under this section is on conviction liable to a fine not exceeding one million shillings or to imprisonment for a term not exceeding twelve months, or to both.

354.

A debtor's participation in the no-asset procedure How debtor's terminates when- participation in the no-asset (a) the Official Receiver terminates the debtor's procedure is participation terminated.

under section 355; (b) the debtor is discharged under section 359; (c) the debtor applies for the debtor's own bankruptcy; or (d) a creditor who is entitled to do so (for example, because the creditor's debt is enforceable as a debt specified in section 351(2)) applies for the debtor's bankruptcy and the debtor is adjudged bankrupt.

355.

(1) The Official Receiver shall terminate a When Official debtor's participation in the no-asset procedure if Receiver may terminate no-assel satisfied- procedure.

(a) that the debtor was wrongly admitted to the no- asset procedure (for example, because the debtor concealed assets) or misled the Official Receiver; or (b) that the debtor's financial circumstances have changed sufficiently to enable the debtor to repay an amount towards the debtor's debts.

(2) The debtor's participation in the no-asset procedure is terminated by the Official Receiver sending a notice to that effect to the debtor at the debtor's last known address.

(3) The termination takes effect when the notice is sent, whether or not the debtor receives it.

(4) As soon as practicable after the termination of a debtor's participation in the no-asset procedure, the Official Receiver shall send a notice of the termination to each creditor of the debtor known to the Official Receiver.

1234 Insolvency 2015 No.18 356.

(1) If the Official Receiver terminates a debtor's Official Receiver participation in the no-asset procedure on the ground that may apply for preservation order the debtor has concealed assets or misled the Official on ground of Receiver, the Court may, on the application of the Official debtor's Receiver, make an order for the preservation of the debtor's misconduct.

assets pending an application for the debtor's bankruptcy.

(l) (2) The Court may make an order under subsection on such terms as it considers appropriate.

357.

(l) On termination of the debtor's participation Effect of in the no-asset procedure- termination of debtor's (a) the debtor's debts that became unenforceable on participation in no-asset the debtor's entry to the no-asset procedure procedure.

become again enforceable; and (b) the debtor becomes liable to pay any penalties and interest that may have accrued.

(2) Subsection (1) does not apply if the debtor's entry to the no-asset procedure is terminated by discharge under section 359.

358.

A creditor may apply to the Official Receiver for Creditor may termination of the debtor's participation in the no-asset apply to Official Receiver for procedure on the ground- lermination of debtor's (a) that the debtor did not meet the criteria for participation in admission to the no-asset procedure; or no-asset procedure.

(b) that there are reasonable grounds for the Official Receiver to conclude that the debtor was disqualified under section 346.

359.

(1) A debtor who is participating in the no-asset Discharge of procedure is automatically discharged from that procedure debtor's participation in at the end of twelve months after the date when the debtor no-asset was admitted to it.

procedure.

(2) Subsection (1) does not apply if the Official Receiver- (a) is satisfied that the twelve-month period should be extended for the purpose of properly considering whether the debtor's participation in the no-asset procedure should be terminated; and (b) sends a written deferral notice to the debtor's last known address before the end of that period.

1235 20ts Insolvency No.18 (3) The Official Receiver shall specify in the deferral notice an alternative date for automatic discharge, which may be not later than thirty-five days after the end of the twelve-month period.

(4) A deferral notice has effect whether or not the debtor receives it.

(5) As soon as practicable after sending a deferral notice to a debtor, the Official Receiver shall send a copy of the notice to each creditor of the debtor known to the Official Receiver.

(6) The debtor is automatically discharged from the no-asset procedure on the date specified in the deferral notice.

(7) The Official Receiver may revoke a deferral notice in the same way in which it was sent, in which case, the debtor is automatically discharged from the no-asset procedure- (a) if the notice is revoked on or before the end of the twelve-month period specified in subsection (1)-at the end of that period; or (b) if it is revoked after the end of that period-on the date of revocation.

360.

(1) On discharge under section 359- Effect of discharge of (a) the debtor's debts that became unenforceable on debtor's the debtor's entry to the no-asset procedure are participation in no-asset cancelled; and procedure.

(b) the debtor is no longer liable to pay any part of the debts, including any penalties and interest that may have accrued.

(2) Subsection (1) does not apply- (a) to any debt or liability incurred by fraud or fraudulent breach of trust to which the debtor was a party; or (b) any debt or liability for which the debtor has obtained forbearance through fraud to which the debtor was a party.

(2) (3) The debts and liabilities referred to in subsection again become enforceable on discharge under section 1236 No.

18 Insolvency 2015 359, and the debtor is liable to pay any penalty or interest that may have accrued.

361.

A discharge under section 359 does not release a Discharge does person who, at the date of discharge, was- not release debtor's business (a) a business partner ofthe discharged debtor; partners and others.

(b) a co-trustee with the discharged debtor; (c) jointly bound or had made any contract with the discharged debtor; or (d) a guarantor or in the nature of a guarantor of the discharged debtor.

PART V-ADMINISTRATION OF INSOLVENT DECEASEDS' ESTATES Division 1 -Introductory provision 362.

(I) In this Part- Interpretation: Part V.

"administrator" has the same meaning as in the Law of Cap.

160 Succession Act; "beneficiary", in relation to a deceased debtor's estate, means a person who is beneficially interested in the estate; "estate" has the same meaning as in the Law of Succession Act and, in relation to a deceased debtor, means that part of the debtor's estate that is available for distribution under section 376; "executor" has the same meaning as in the Law of Succession Act; "trustee" mgans a trustee appointed under section 370(2); (2) This Part does not affect- (a) any property of a deceased that does not form part ofthe deceased debtor's estate; or (b) the administration of that property.

Division 2-Functions of the Court in respect of administration of insolvent estates 363.

(1) The Court may order that the estate Of a Court may order deceased debtor be administered.

that estate be under this Part on the administered application-.

under this Part.

t237 2015 Insolvency No.

18 (a) under section 364 of the executor or administrator or a person who is applying to the Court for a grant of probate or letters of administration: or (b) under section 365 of- (i) a creditor who has produced evidence establishing a debt due to the creditor; or (ii) (2) The Court may not make such an order if it is satisfied that- (a) there is a reasonable probability that the estate will be sufficient to pay all of the deceased's debts; and (b) the creditors will not be detrimentally affected by the estate being administered in the normal way.

364.

(l) The executor or administrator, or a person Application by who is applying to the Court for a grant of probate or letters executor or of administration, may apply to the Court for an order that administrator, etc the estate be administered under this Part if the executor or administrator or person applying is of the view that the money in the estate (together with the proceeds of any assets in the estate that can conveniently be converted into money) will not be, or is not likely to be, sufficient to satisfy the several claims made or likely to be made on the estate.

(2) An application may- (a) be joined with an application for a grant of probate or letters of administration in respect of the deceased's will or of the deceased's property that does not form part of the deceased's estate; or (b) be made at any time after that grant.

(3) In addition to the application, an applicant shall lodge with the Court an account that- (a) shows the assets, debts and liabilities of the deceased to the extent that the applicant knows what they are; and (b) complies with subsection (4).

1238 Insolvency 2015 No.18 (4) An account complies with this subsection if it- (a) is verified by statutory declaration; and (b) is lodged- (i) when the application is lodged; (ii) within the prescribed time after the application is lodged; or (iii) within such additional period (if any) as the Court may allow.

(5) The applicant may amend the account with the approval of the Court.

365.

(1) An application to the Court for an order under Application by this Part may also be made- creditor or beneficiary for (a) by a creditor of the deceased's estate, if the order under this creditor's debt has reached the threshold for a Part.

creditor's application for bankruptcy; or (b) by a beneficiary.

(2) A creditor or beneficiary may apply for such an order if- (a) the executor or administrator has not applied under this Part, and after being requested in writing to apply, fails to apply within twenty-one days after receiving the request; or (b) no executor or administrator has been appointed, and no application has been lodged in the Court under section 364, within four months after the date of the debtor's death.

(3) In the case of an application under subsection (2)(a) for an order that the estate be administered under this Part, the Court may not make the order before the expiry of two months after the date when probate or letters of administration were granted, but this restriction does not apply if- (a) the executor or administrator has consented; (b) the applicant proves that- (i) the deceased was not insolvent at any time within three months before the death; or L239 2015 Insolvency No.

18 (ii) the executor or administrator has favoured or is about to favour any particular creditor or creditors; or (c) in the Court's opinion, the executor or administrator is not properly administering the estate.

(4) The Court may allow an application under subsection (2Xb) to be lodged before the expiry of four months after the date of the debtor's death if satisfied that- (a) the deceased was insolvent at any time within the three months preceding the death; or (b) the estate that should have been available for the deceased's creditors is rapidly diminishing.

366.If an application has been lodged by a creditor or Notice of beneficiary under section 365, the applicant shall give application by creditor or notice of the application- beneficiary.

(a) to the executor or administrator; or (b) if there is no executor or administrator-to the person specified by the Court.

367.

(1) This section applies if- Court may order administration by (a) an application has been made to the Court for an Official Receiver order to administer an estate under this Part; and or the Public Trustee instead of (b) the Court believes that the estate is likely to be executor or better administered by the Official Receiver or administrator.

the Public Trustee rather than by the person who is or may become the executor or administrator.

(2) The Court may, as part of its original order on the application or by any subsequent order, make an order directing- (a) the executor or administrator (if there is one) to stop administering the estate; and (b) the Official Receiver or the Public Trustee to assume responsibility for its administration.

368.

(1) If the Public Trustee is the executor or Certificate lodged administrator of, or would be entitled to obtain a grant of by the Public Trustee has effect administration for, an apparently insolvent estate, the as application and Public Trustee may lodge a certificate under this section.

order.

1240 Insolvency 2015 No.18 (2) The lodging of a certificate in the prescribed form has the effect both of an application and an order that the estate be administered under this Part.

(3) The certificate is to be lodged in the Court registry from which the grant of probate or letters of administration was issued.

369.

(1) The whole of the estate at the date when the Estate vests in application for the order under this Part was lodged vests in trustee.

the person appointed by the Court to administer it as trustee.

(2) In its order that the estate be administered under this Part or in a subsequent order, the Court shall appoint as trustee- (a) the executor or administrator; (b) the Official Receiver; (c) Public Trustee; or (d) any other person who, in its opinion.

is competent to act trustee.

370.

The trustee shall, as soon as practicable after the Trustee to realise, estate vests in the trustee, realise, administer, and distribute administer and the assets in accordance with the law and practice of distribute estate.

bankruptcy, subject to any modifications in this Part.

371.

(1) This section applies if the estate that vests in Entitlement of the trustee includes any of the deceased's necessary surviving spouse to household household furniture and effects that would have passed to furniture and the deceased's surviving spouse if the estate had not been effects.

insolvent.

(2) The surviving spouse may select and retain as the spouse's own property so much of the furniture and effects referred to in subsection (1) as the trustee determines.

(3) The surviving spouse shall make the selection within the time that the trustee allows.

(4) The surviving spouse's selection does not affect any rights under a valid charge or a credit purchase transaction in respect of the goods selected.

(5) The fact that the goods available for selection are subject to a charge or credit purchase transaction does not give the surviving spouse any rights to any other part of the deceased's property.

1241 2015 Insolvency No.18 372.

(l) The trustee may make an allowance out of Trustee may make the estate to the surviving spouse or to any of the relatives allowance to surviving spouse.

or dependants of the deceased or the surviving spouse for the support of any of them.

(2) However, the trustee shall first obtain the consent of the creditors, which is to be expressed in the form of an ordinary resolution.

Division 3-Trustee's responsibilities with respect to administration of insolvent deceased's estate 373.

This Division applies if the Court has made an Application of order that the estate of a deceased person be administered Division 3.

under this Part.

374.

The trustee has, in relation to the estate, the same Trustee's functions and powers as a bankruptcy trustee has in relation functions and powers in respect to the property of a bankrupt.

of insolvent deceased's estate.

375.

(1) The trustee shall distribute the estate in the Distribution of following order: insolvent deceased's estate.

(a) firstly, payment of all proper costs, charges, debts and expenses of the due administration of the estate, whether incurred before or after the order (b) secondly, payment of the deceased's reasonable funeral expenses; (c) thirdly, payment of the following expenses of the deceased incurred during the three months immediately before the deceased's death- (i) medical expenses; and (ii) reasonable expenses for hospital care provided for the deceased, so far as those expenses are lawfully recoverable; (d) fourthly, payment of other claims and interest in accordance with the Second Schedule.

(2) For the purposes ofsubsection (1)(d), a reference in the Second Schedule to the commencement of the bankruptcy is to be read as a reference to the date of the deceased's death.

376.

(l) In this section, "surplus" means the surplus How any surplus of assets that remains with the trustee after the trustee has is to be paid.

paid in tull- 1242 No.

18 InsolvencY 2015 (a) the debts due by the deceased debtor; (b) the costs of the administration under this Part; and (c) any other money that would be payable in a case ofbankruptcy.

(2) The trustee shall- (a) if there is an executor or administrator of the deceased's property that does not form part of the deceased's estate under this Part-pay the surplus to that executor or administrator; or (b) if there is no such executor or administrator- distribute the surplus in accordance with the directions of the Court.

(3) In giving any such directions, the Court shall have regard to the persons who are entitled to the surplus.

(4) The Court may make an order approving the distribution of the surplus as part of the order that the estate be administered under this Part, or at any time afterwards.

(5) If the Court has made such an order, it may from time to time vary it in relation to any part of the surplus that remains under the control of the trustee at the date of the variation.

377.\f an order that a deceased's estate be Creditor's notice administered under this Part is notified to the deceased's to executor or executor or administrator, the executor or administrator 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.

(1) A trustee may take a step that a bankruptcy Power of trustee trustee could have taken under Division 19 of Part III (for to act in relation to deceased's example, by cancelling an irregular transaction) as if the irregular deceased had been bankrupt at the time of death.

transactions.

(2) When a trustee takes such a step, the following fuither additional restrictions apply: (a) the trustee may not issue a notice cancelling a gift or voluntary settlement without first obtaining the approval of the Court; 1243 2015 Insolvency No.18 (b) the Court may make an order under section 212 only if it is satisfied that recovery of the deceased's contribution to the property of another is necessary to pay the debts of the estate in full (including interest).

(3) The Court may give approval for the purpose of subsection (2)(a) only if it is satisfied that recovery of the gift or settlement is necessary to pay the debts of the estate in full (including interest).

379.

The trustee may cancel an execution against the Trustee may deceased debtor's estate unless it was completed more than cancel execution against insolvent three months before the date of the order that the estate be deceased debtor's administered under this Part.

estate.

380.

A payment made, or an act done or omitted to be Certain acts of done, in good faith by an executor or administrator in executor or administrator respect of a deceased's estate before the executor or valid if done in administrator had notice of an intention to apply for an good faith.

order that the estate be administered under this Part is not invalidated by any other provision of this Act.

PART Vr-LTQUTDATTON OF COMPANIES Division l-Introductory provisions 381.

(l) This Part applies to the liquidation of a Scheme of Part company registered under the Companies Act,2015.

VI.

(2) A liquidation may be either- (a) voluntary in accordance with Divisions 2 to 5; or (b) by the Court in accordance with Division 6.

(3) This Division and Divisions 7 to 10 relate to liquidation generally, except when otherwise stated.

382.In this Part- Distinction between (a) a liquidation in the case of which a directors' "members"'and statutory declaration under section 398 has been "creditors"' voluntary made is a "members' voluntary liquidation"; and liquidation.

(b) a liquidation in the case of which such a declaration has not been made is a "creditors' voluntary liquidation".

383.

(l) In this Part, Interpretation Part VI.

"contributories" - 1244 Insolvency 2015 No.18 (a) means all persons liable to contribute to the assets of a company if it is liquidated; and (b) for the purposes of all proceedings for determining, and all proceedings before the final determination of, the persons who are to be treated as contributories for the purposes of this Part-includes all persons alleged to be contributories; "inability to pay its debts", in relation to a company, has the meaning given by section 384; "liquidation committee meeting", in relation to a company, means a committee appointed by the creditors of the company in accordance with section 409; "official rate", in relation to interest payable under this Part, is the rate fixed in accordance with subsection (3); "resolution for voluntary liquidation" means a resolution passed under section 393(l)(a) or (b).

(2) The reference in subsection (1) to persons liable to contribute to the assets of a company does not include a person so liable because of a declaration by the Court under section 506 or 507.

(3) The Cabinet Secretary may, by order published in the Gazette, fix from time to time the official rate of interest for the purpose of any provision of this Part in respect of which the expression "officialrate" is used.

384.

(1) For the purposes of this Part, a company is The circumstances unable to pay its debts- in which a company is unable (a) if a creditor (by assignment or otherwise) to to pay its debts.

whom the company is indebted for hundred thousand shillings or more has served on the company, by leaving it at the company's registered office, a written demand requiring the company to pay the debt and the company has for twenty-one days afterwards failed to pay the debt or to secure or compound for it to the reasonable satisfaction of the creditor; (b) if execution or other process issued on a judgment, decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part; or L245 Insolvency No.18 (c) if it is proved to the satisfaction of the Court that the company is unable to pay its debts as they fall due.

(2) A company is also unable to pay its debts for the purposes of this Part if it is proved to the satisfaction of the Court that the value of the company's assets is less than the amount of its liabilities (including its contingent and prospective liabilities).

(3) The insolvency regulations may increase or reduce the amount specified in subsection (1)(a).

385.

(1) When a company is being liquidated, every Liability as present and former member is liable to contribute to its contributories of present and assets to any amount sufficient for payment of its debts and former members.

liabilities, and the expenses of the liquidation, and for the adjustment of the rights of the contributories among themselves.

(2) Subsection (1) is subject to the following provisions: (a) a person who was formerly a member of the company is not liable to contribute if the person has ceased to be a member for twelve months or more before the commencement of the liquidation; (b) a person who was formerly a member of the company is not liable to contribute in respect of any debt or liability of the company contracted after the person ceased to be a member; (c) a former member is not liable to contribute, unless it appears to the Court that the existing members are unable to satisfy the contributions required to be made by them; (d) in the case of a company limited by shares-a contribution is not required from a member exceeding the amount (if any) unpaid on the shares for which the member is liable as a present or former member; (e) nothing in the Companies Act, 2015 or this Act invalidates any provision contained in a policy of insurance or other contract whereby the liability of individual members on the policy or contract is 1246 Insolvency 2015 No.18 restricted, or because of which the funds of the company are alone made liable in respect of the policy or contract; (0 an amount due to a member of the company as dividends, profits or otherwise is taken not to be a debt of the company, that is payable to the member in a case of competition between the member and any other creditor who is not a member of the company, but any such amount can be taken into account for the purpose of the final adjustment of the rights of the contributories among themselves.

(3) In the case of a company limited by guarantee, a member is not liable to contribute more than the amount that that the member has undertaken to contribute under the company's guarantee.

386.

(1) In this section, "relevant payment" means a Liability of past payment made out of capital in respect of the redemption or directors and shareholders.

purchase by a company of any of its own shares.

(2) This section applies if a company is in liquidation and- (a) it has, under the Companies Act, 2015, made a payment out of capital in respect of the redemption or purchase of any of its own shares; and (b) the aggregate amount of the company's assets and the amounts paid as a contribution to its assets (apart from under this section) are not sufficient for payment of its debts and liabilities and the expenses of the liquidation.

(3) If the liquidation commenced within twelve months after the date on which the relevant payment was made- (a) the person from whom the shares were redeemed or purchased; and (b) the directors who prepared the statement that the company will be able to continue to carry on business as a going concern under the Companies Act, 2015 for purposes of the redemption or purchase, except a director who shows that the 7247 Insolvency No.18 director had reasonable grounds for forming the opinion set out in the declaration, are, to the extent necessary to satisfy the insufficiency, liable to contribute to the company's assets as provided by subsections (4) and (5).

(4) A person from whom any of the shares were redeemed or purchased is liable to contribute an amount not exceeding so much of the relevant payment as was made by the company in respect of the person's shares; and the directors are jointly and severally liable with that person to contribute that amount.

(5) A person who has contributed an amount to the assets in accordance with this section may apply to the Court for an order directing any other person jointly and severally liable in respect of that amount to pay to the person such amount as the Court considers appropriate and equitable.

(6) Section 385 does not apply to a liability accruing under this section.

387.

(1) This section applies to a company that is in Position of limited liquidation if it was previously registered as unlimited but companies that were formerly has since become re-registered as a limited company.

unlimited.

(2) Despite section 385(2)(a), a former member who r woS a member of the company at the time of its re- registration is, if the liquidation commences within the three years from and including the date on which the company was re-registered,liable to contribute to the assets of the company in respect of debts and liabilities contracted before that time.

(3) If no persons who were members of the company at that time are existing members of it, a person who at that time was a present or former member is liable to contribute as required by subsection (2) even though the existing members have paid the contributions required to be made by them.

(4) Subsection (3) applies subject to section 385(2Xa) and to subsection (2) of this section, but despite section 38(2Xc).

(4) Despite section 385(2)(d) and (3), there is no limit on the amount that a person who, at that time, was a t248 No.

18 Insolvency 2015 past or present member of the company is liable to contribute.

388.

(1) This section applies to a company in Position of liquidation that has previously been registered as limited unlimited companies that but has since become re-registered as unlimited.

were formerly (2) A person who, at the time when the application limited.

for the company to be re-registered was lodged, was a former member of the company and did not after that time again become a member of it is not liable to contribute to the assets of the company any more than would have been the case had the company not been re-registered.

389.

The liability of a contributory creates an ordinary Nature of contract debt due from the contributory at the time when contributory's liability.

the contributor's liability began, but payable at the times when calls are made to enforce the liability.

390.

(1) If a contributory dies either before or after Death of being placed on the list of contributories, the contributory's contributories not to affect their personal representatives are, in administering the liability.

contributory's estate, liable to contribute to the assets of the company in discharge of the contributory's liability and are therefore contributories.

(2) If the personal representatives fail to pay money ordered to be paid by them, proceedings may be taken for administering the estate of the deceased contributory and for compelling payment from it of the money due.

391.

If a contributory is adjudged bankrupt, either Liability of before or after being placed on the list of contributories, the contributories who are adjudged following provisions apply: bankrupt.

(a) the contributory's bankruptcy trustee represents the contributory for all purposes of the liquidation and is therefore a contributory for the purposes of this Part; (b) that trustee may be required- (i) to admit to proof against the contributory's (ii) estate; or otherwise to permit the payment from the contributory's assets in due course of law, any money due from the contributory in respect of the contributory's liability to contribute to the company's assets; 1249 Insolvency No.18 (c) there may be proved against the contributory's estate the estimated value of the contributory's liability to future calls as well as to calls already made.

392.

(I) This section applies to a company in Liability of liquidation that is registered but was not formed under the contributories to contribute to debts Companies Act,2Ol5.

of company registered but not (2) A person is, in respect of the company's debts formed under and liabilities contracted before registration, a contributory Companies Act, if the person is liable- 2015.

(a) to pay, or contribute to the payment of, any debt or liability so contracted; (b) to pay, or contribute to the payment of, any amount for the adjustment of the rights of the members among themselves in respect of any (c) such debt or liability; or to pay, or contribute to the amount of, the expenses of liquidating the company, so far as relates to those debts or liabilities.

(3) A contributory is liable to contribute to the assets of the company, in the course of the liquidation, all amounts due from the contributory in respect of any such liability.

(4) If a contributory dies or becomes bankrupt, the provisions of this Act relating to the personal representatives of deceased contributories and to the bankruptcy trustees of bankrupt contributories respectively apply.

Division 2-Voluntary liquidation (introductory and general) 393.

(1) A company may be liquidated voluntarily- Circumstances in which company (a) when the period (if any) fixed for the duration of may be liquidated the company by the articles expires, or the event voluntarily.

(if any) occurs, on the occurrence of which the articles provide that the company is to be dissolved, and the company in general meeting has passed a resolution providing for its voluntary liquidation; or (b) if the company resolves by special resolution that it be liquidated voluntarily.

1250 Insolvency 2015 No.18 (2) Before passing a resolution for voluntary liquidation, the company shall give notice of the resolution to the holder of any qualifying floating charge in respect of the company's property.

(3) If notice is given proposing a resolution for the voluntary liquidation of a company, such a resolution may be passed only- (a) after the expiry of seven days from and including the date on which the notice was given; or (b) if the person to whom the notice was given has consented in writing to the passing of the resolution.

(4) The provisions of the Companies Act, 2Ol5 which deal with resolutions affecting a company's constitution apply to a resolution under paragraph (a) of subsection (1) as well as a special resolution under paragraph (b) of that subsection.

(5) For the purposes of this section, a person is the holder of a qualifying floating charge in respect of a company's property if the person holds one or more debentures of the company secured- (a) by a qualifying floating charge that relates to the whole or substantially the whole of the company's property; (b) by a number of qualifying floating charges that together relate to the whole or substantially the whole of the company's property; or (c) by charges and other forms of security that together relate to the whole or substantially the whole of the company's property and at least one of which is a qualifying floating charge.

394.

(l) Within fourteen days after a company has Notice of passed a resolution for its voluntary liquidation, it shall resolution to publish notice the resolution- liquidate.

a setting out (a) once in the Gazette; (b) once in at least two newspapers circulating in the area in which the company has its principal place of business in Kenya; and t25L 2015 Insolvency No.18 (c) on the company's website (if any).

(2) If a company fails to comply with subsection (1), the company, and each officer of the company who is in default, commit an offence and on conviction are each liable to a fine not exceeding five hundred thousand shillings.

(3) If, after a company or any of its officers is convicted of an offence, the company continues to fail to take any of the steps specified in subsection (1), the company, and each officer of the company who is in default, commit a further offence on each day on which the failure continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each such offence.

(4) For purposes of subsections (2) and (3), the liquidator is an officer of the company.

395.

The voluntary liquidation of a company when liquidation commences when the resolution for voluntary liquidation is passed.

396.

(1) On and after the COmmgnCemgnt Of Consequences of voluntary liquidation of a company, the company shall li,,T,|j'j,.i:." cease to carry on its business, except in so far as may be necessary for its beneficial liquidation.

(2) However, the corporate status and corporate powers of the company continue to have effect until the company is dissolved, even if the company's articles provide otherwise.

397.

The following are void if made after the Share transfers commencement of a voluntary liquidation of a company: and attempts to alter member's (a) any transfer of the company's shares (other than a status after liquidation transfer made to or with the sanction of the resolution to be liquidator); void.

(b) an alteration in, or an attempt to alter, the status of the company's members.

398.

(1) If it is proposed to liquidate a company Making and effect voluntarily, the directors (or, in the case of a company of declaration of solvency by having more than two directors, the majority of them) may directors of at a directors' meeting make a statutory declaration to the company.

effect- 1252 No.

18 Insolvency 2015 (a) that they have made a full inquiry into the company's affairs; and (b) that, having done so, they have formed the opinion that the company will be able to pay its debts in full, together with interest at the official rate, within such period (not exceeding twelve months from the commencement of the liquidation) as may be specified in the declaration.

(2) Such a declaration by the directors has no effect for purposes of this Act unless- (a) it is made within the five weeks immediately preceding the date of the passing of the resolution for liquidation, or on that date but before the passing of the resolution; and (b) it includes a statement of the company's assets and liabilities as at the latest practicable date before the making of the declaration.

(3) Within fourteen days after the date on which the resolution for liquidation is passed, the company shall lodge a copy of the declaration with the Registrar for registration.

(4) A director who makes a declaration under this section without having reasonable grounds for the opinion that the company will be able to pay its debts in full, together with interest at the official rate, within the specified period commits an offence and on conviction is liable to a fine not exceeding two million shillings or to imprisonment for a term not exceeding five years, or to both.

(5) For the purpose of subsection (4), it is to be presumed, unless the contrary is established, that the director did not have reasonable grounds for his or her opinion if- (a) the company is liquidated in accordance with a resolution passed within five weeks after the making of the declaration; and (b) its debts (together with interest at the official rate) are not paid or provided for in full within the specified period.

1253 2015 Insolvency No.18 (6) If a company fails to comply with subsection (3), the company, and each officer of the company who is in default, commit an offence and on conviction are each liable to a fine not exceeding two hundred thousand shillings.

(7) If, after a company or any of its officers is convicted of an offence under subsection (6), the company continues to fail to lodge the required declaration, the company, and each officer of the company who is in default, commit a further offence on each day on which the failure continues and on conviction are each liable to a fine not exceeding twenty thousand shillings for each such offence.

Division 3-Members' voluntary liquidation 399.

(1) In a members' voluntary liquidation, the Appointment of company in general meeting shall appoint one or more liquidator in members' liquidators for the purpose of liquidating the company's voluntary affairs and distributing its assets.

liquidation.

(2) On the appointment of a liquidator, all the powers of the directors cease, except in so far as the company in general meeting or the liquidator sanctions their continuance.

(3) Only an authorised insolvency practitioner is eligible for appointment under subsection (1).

400.

(1) If a vacancy occurs (whether by death, Power to fill resignation or otherwise) in the office of liquidator vacancy in office of liquidator.

appointed by the company, the company in general meeting shall, subject to any arangement with its creditors, appoint another authorised insolvency practitioner to till the vacancy.

(2) For the purposes of subsection (1), a general meeting may be convened- (a) by a contributory; or (b) if there was more than one liquidators-by the continuing liquidator or liquidators.

(3) The company shall hold the meeting- (a) in the manner provided by this Act or by its articles; or 1254 No.

18 Insolvency 2015 (b) in such manner as the Court determines on an application made by a contributory or by the continuing liquidator or liquidators.

401.

(1) If the liquidation of a company continues for General company a period of twelve months or more, the liquidator shall meeting at each year's end.

convene a general meeting of the company- (a) within three months after the end of that period of twelve months; and (b) within three months after the end of each subsequent period of twelve months.

(2) The liquidator shall lay before the meeting an account of the liquidator's acts and dealings, and of the conduct of the liquidation, during the preceding year.

(3) A liquidator who fails to comply with this section commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

(4) The Cabinet Secretary may extend the period of three months referred to in subsection (1)(a) or (b) if satisfied that there are extenuating circumstances for doing so, and if the Cabinet Secretary grants such an extension, that subsection is to be interpreted accordingly.

(5) This section is subject to sections 404 and 4lO.

402.

(l) As soon practicable after the liquidation of Final meeting the company's affairs is complete, the liquidator- prior to dissolution: (a) shall prepare an account of the liquidation members' voluntary showing how it has been conducted and how the liquidation.

company's property has been disposed of; and (b) shall then convene a general meeting of the company for the purpose of laying before it the account and giving an explanation of it.

(2) The liquidator- (a) shall convene the meeting by publishing, at least thirty days before the meeting, an advertisement- (i) once in the Gazette; (ii) once in at least two newspapers circulating in the area in which the company'has its principal place of business in Kenya; and 7255 2015 Insolvency No.18 (iii) on the company's website (if any); and (b) shall specify the time, date, place and purpose of the meeting.

(3) Within seven days after the meeting, the liquidator shall lodge with the Registrar a copy of the account, together with a return giving details of the holding of the meeting and of its date.

(4) If the copy and return are not lodged in accordance with subsection (3), the liquidator commits an offence and on conviction is liable to a fine not et-ceeding five hundred thousand shillings.

(5) If, after being convicted of an offence under subsection (4), a liquidator continues to fail to lodge the copy and the return, the liquidator commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding fifty thousand shillings for each such offence.

(6) If a quorum is not present at the meeting, the liquidator shall, instead of the return referred to in subsection (3), make a return that the meeting was duly convened and that no quorum was present; and on such a return being made, subsection (3) as to the lodging of the return is taken to have been satisfied.

(7) If the liquidator fails to convene a general meeting of the company as required by subsection (1), the liquidator commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

403.

(1) This section applies if the liquidator is of the Effect of opinion that the company will be unable to pay its debts in c6mpany's full (together with interest at the official rate) within the insolvency.

period stated in the directors' declaration under section 398.

(2) On forming the view that the company is or will be unable to pay its debts, the liquidator shall- (a) convene a meeting of creditors for a date not later than thirty days after the day on which the contributory formed that opinion; (b) send notices of the creditors' meeting to the creditors by post at least seven days before the day on which that meeting is to be held; 1256 Insolvency 2015 No.18 (c) publish notice of the creditors' meeting- (i) once in the Gazette; (ii) once in at least two newspapers circulating in the area in which the company has its principal place of business in Kenya; and (iii) on the company's website (if any); and (d) advertise the meeting in such other manner and place as the liquidator considers desirable in the interests of the creditors; (e) during the period before the day on which the creditors' meeting is to be held, provide creditors, free of charge, with such information concerning the affairs of the company as they may reasonably require; and (0 specify in the notice of the creditors' meeting the duty imposed by paragraph (e).

(3) The liquidator shall also- (a) prepare a statement setting out the financial position of the company that complies with subsection (4); (b) lay that statement before the creditors' meeting; and (c) attend and preside at that meeting.

(4) A statement complies with this subsection if it- (a) specifies- (i) the prescribed details of the company's assets, debts and liabilities; (ii) the names and addresses of the company's creditors; (iii) the securities (if any) respectively held by them and the dates on which they were respectively given; and (iv) such other information (if any) as may be prescribed by the insolvency regulations; and (b) is verified by a statutory declaration signed by the liquidator.

1257 2015 Insolvency No.18 (5) If the company's principal place of business was located in different places at different times during the relevant period, the duty imposed by subsection (2Xc) applies separately in relation to each of those places.

(6) If the company had no place of business in Kenya during the relevant period, the references in subsections (2Xc) and (5) to the company's principal place of business are taken to be references to its registered office.

(7) In this section, "the relevant period" means the period of six months immediately preceding the day on which were sent the notices convening the company meeting at which it was resolved that the company be liquidated voluntarily.

(8) A liquidator who, without reasonable excuse, fails to comply with this section commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

404.

As from and including the date on which the Conversion to creditors' meeting is held in accordance with section creditors' voluntary 403- liquidation.

(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.

(1) Except as provided by subsection (2), this Application of Division applies in relation to a creditors' voluntary Division 4.

liquidation.

(2) Sections 406 and 407 do not apply if, under section 404, a members' voluntary liquidation has become a creditors' voluntary liquidation.

406.

(1) A company that is in the course of Meeting of liquidation shall- creditors to be convened by t258 Insolvency 2015 No.18 (a) convene a meeting of the company's creditors for companv' a day not later than the fourteenth day after the day on which there is to be held the company meeting at which the resolution for voluntary liquidation is to be proposed; (b) send the notices of the creditors' meeting to the creditors not less than seven days before the day on which that meeting is to be held; and (c) ensure that notice of the creditors' meeting is published- (i) once in the Gazette; (ii) once in at least two newspapers circulating in the area in which the company has its principal place of business in Kenya; and (iii) on the company's website (if any).

(2) The company shall ensure that the notice of the creditors' meeting states either- (a) the name and address of a person authorised to act as an insolvency practitioner in relation to the company who, during the period before the day on which that meeting is to be held, will provide creditors free of charge with such information concerning the company's affairs as the creditors may reasonably require; or (b) a place in the area in which the company has its principal place of business in Kenya where, on the two business days occurring immediately before the day on which that meeting is to be held, a list of the names and addresses of the company's creditors will be available for inspection free of charge.

(3) If the company's principal place of business was located in different places at different times during the relevant period, the duties imposed by subsections (1)(c) and (2Xb) apply separately in relation to each of those places.

(4) If the company had no place of business in Kenya during the relevant period, the references in subsections (1)(c) and (3) to the company's principal place of business are taken to be references to its registered office.

t259 Insolvency 2015 No.18 (5) In this section, "the relevant period" means the period of six months immediately preceding the day on which were sent the notices convening the company meeting at which it was resolved that the company be liquidated voluntarily.

(6) If the company without reasonable excuse fails to comply with a requirement of subsection (1) or (2), the company, and each officer of the company who is in default, commit an offence and on conviction are each liable to a fine not exceeding five hundred thousand shillings.

(1) If, after a company or any of its officers is convicted of an offence under subsection (6), the company continues to fail to comply with the relevant requirement, the company, and each officer of the company who is in default, commit a further offence on each day on which the failure continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each such offence.

407.

(l) The directors of the company shall- Directors to lay statement of (a) prepare a statement setting out the financial financial position position of the company that complies with before creditors.

subsection (3); (b) lay that statement before the creditors' meeting under section 406; and (c) appoint one of their number to preside at that meeting.

(2) It is the duty of the appointed director to attend the meeting and preside over it.

(3) A statement complies with this subsection if it- (a) specifies- (i) the details of the company's assets, debts and liabilities prescribed by the insolvency regulations for the purposes of this section; (ii) the names and addresses of the company's creditors; (iii) the securities held by them respectively; (iv) the dates when the securities were respectively given; and 1260 Insolvency 201,5 No.18 (v) such further or other information as may be so prescribed; and (b) is verified by a statutory declaration signed by two or more of the company's directors.

(4) If the directors, without reasonable excuse, fail to comply with subsection (1)(a), (b) or (c), each of them commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

(5) A director who, without reasonable excuse, fails to comply with a duty imposed by subsection (2) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings.

408.

(1) The creditors and the company at their Creditors' respective meetings may nominate an authorised voluntary liquidation: insolvency practitioner to be liquidator for the purpose of appointment of liquidating the company's affairs and distributing its assets.

liquidator.

(2) The liquidator is the insolvency practitioner nominated by the creditors unless they fail to make a nomination, in which case the liquidator is the insolvency practitioner (if any) nominated by the company.

(3) If different insolvency practitioners are nominated, any director, member or creditor of the company may, within seven days after the date on which the nomination was made by the creditors, make an application to the Court for an order under subsection (4).

(4) On the hearing of an application made under subsection (3), the Court may make an order either- (a) directing the insolvency practitioner nominated as liquidator by the company to be liquidator instead of, or jointly with, the insolvency practitioner nominated by the creditors; or (b) appointing some other person to be liquidator instead of the insolvency practitioner nominated by the creditors.

409.

(1) The creditors at the meeting to be held in Creditors may accordance with section 406 or at any subsequent meeting appoint liquidation may, if they think appropriate, appoint a liquidation committee.

committee of not more than five persons to perform the functions imposed or conferred on such committees by or under this Act.

126L 2015 Insolvency No.18 (2) If such a committee has been appointed, the company may, either at the meeting at which the resolution for voluntary liquidation is passed or at any time subsequently in general meeting, appoint a number of persons, not exceeding five, to be members of the committee.

(3) However, the creditors may resolve that all or any of the persons so appointed by the company are disqualified from being members of the liquidation committee.

(4) If the creditors so resolve, the persons referred to in the resolution cease to be members of the committee, unless the Court, on the application of any of those persons, quashes the resolution.

(5) On the hearing of an application to the Court made by any of the creditors, the Court may appoint other persons to act as members of the committee in place of the persons mentioned in the resolution.

410.If, in the case of a liquidation that was under Creditors' section 404 converted to a creditors' voluntary liquidation, meeting if liquidation a creditors' meeting is held in accordance with section 403 converted under , any appointment made or committee established by that section 404.

meeting is taken to have been made or established by a meeting held in accordance with section 406 (meetings of creditors).

411.

On the appointment of a liquidator, all the powers Cessation of of the directors cease, except so far as the liquidation directors' powers committee, or if there is no such committee, the creditors, sanction their continuance.

412.(I) If a vacancy occurs in the OffiCe Of Vacancy in office liquidator, the creditors may fill the vacancy.

of liquidator: creditors' (2) Subsection (1) does not apply to a llqutdator voluntarv appointed by, or by the direction of, the Court liquidatiLn.

413.

(1) A liquidator who continues in office for Meetings of more than twelve months shall convene a general meeting company and company's of the company and a meeting of the creditors to be held- creditors to be held every twelve (a) within three months after the end of that period of months.

twelve months; and (b) within three months after the end of each subsequent period of twelve months.

1262 Insolvency 2015 No.18 (2) The liquidator shall lay before each of the meetings an account of the liquidator's acts and dealings and of the conduct of the liquidation during the preceding year.

(3) A liquidator is not required to convene a meeting of creditors as provided by subsection (1)(a) if- (a) under section 404, a members' voluntary liquidation has become a creditors' voluntary liquidation; and (b) the creditors' meeting under section 403 is held three months or less before the end of the twelve months after the commencement of the liquidation.

(4) The Cabinet Secretary may extend the period of three months referred to in subsection (1Xa) or (b) if satisfied that there are extenuating circumstances for doing so, and such an extension is granted, that subsection is to be interpreted accordingly.

(5) A liquidator who, without reasonable excuse, fails to comply with a requirement of this section commits an offence and on conviction is liable to a fine not exceeding one million shillings.

414.

(l) As soon practicable after the liquidation of Final meeting the company's affairs has been completed, the liquidator prior to dissolution: shall prepare an account of the liquidation and an creditors' explanation showing how it has been conducted and how voluntary the company's property has been disposed of liquidation.

(2) Within thirty days after preparing the account, the liquidator shall, by a notice published in accordance with subsection (3), convene a general meeting of the company and a meeting of the creditors to enable those attending the meetings to consider the account and explanation.

(3) The liquidator shall ensure- (a) that the notice is published- (i) once in the Gazette; (ii) once in at least two newspapers circulating in the area in which the company has its principal place of business in Kenya; and 7263 2015 Insolvency No.18 on the company's website (if any); and (b) that the notice specifies the time, date, place and purpose of the meeting.

(4) Within seven days- (a) after the date on which the meetings are held; or (b) if they are not held on the same date-after the date on which the later one is held, the liquidator shall lodge with the Registrar a copy of the account, together with a retum giving details of the holding of the meetings and the dates on which they were held.

(5) A liquidator who fails to lodge the copy and return as required by subsection (3) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings.

(6) If, after being convicted of an offence under subsection (5), a liquidator continues to fail to lodge the required copy and return, the liquidator commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for each such offence.

(7) If a quorum is not present at either of the meeting, the liquidator shall, instead of the return required by subsection (3), make a return to the effect that the meeting was duly convened but no quorum was present (8) On such return being made, the provisions of subsection (3) relating to the making of the return are, in respect of that meeting, taken to have been complied with.

(9) A liquidator who, without reasonable excuse, fails to convene a general meeting of the company or a meeting of the creditors as required by this section commits an offence and on conviction is liable to a fine not exceeding one million shillings.

Division S-Provisions applying to both kinds of voluntary liquidation 415.

(1) On the liquidation, the company's property Property of in the voluntary liquidation- company to be distributed among (a) are to be applied in satisfaction of the company's members after satisfaction of liabilities equally and without preference; and liabilities.

1264 Insolvency 2015 No.18 (b) subject to that application, are, unless the company's articles otherwise provide, to be distributed among the members according to their rights and interests in the company.

(2) Subsection (1) is subject to the provisions of this Act relating to preferential payments.

416.

(1) The Court may appoint a liquidator if for Appointment or any reason there is no liquidator or the liquidator is unable removal of liquidator by the to act, Court.

(2) The Court may, on cause shown, remove a liquidator and appoint another one.

(3) Only an authorised insolvency practitioner is eligible for appointment under this section.

(4) The acts of a person appointed by the Court as a liquidator of a company are valid despite any defect in the person's appointment or qualifications.

417.

(l) Within seven days after being appointed as Notice of liquidator of a company, the liquidator shall publish a appointment to be notice of the liquidator's appointment- published by liquidator.

(a) once in the Gazette; (b) once in at least two newspapers circulating in the area in which the company has its principal place of business in Kenya; and (c) on the company's website (if any).

(2) Within fourteen days after publishing (or first publishing) the notice of the liquidator's appointment, the liquidator shall lodge a copy of the notice with the Registrar for registration.

(3) A liquidator who fails to comply with subsection (1) commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

(4) If, after being convicted of an offence under subsection (3), a liquidator continues to fail to lodge the required notice, the liquidator commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding fifty thousand shillings for each such offence.

(5) A liquidator who fails to comply with subsection (1) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings.

L265 2015 Insolvency No.18 (6) If, after being convicted of an offence under subsection (5), a liquidator continues to fail to lodge the required notice, the liquidator commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for each such offence.

418.

(1) In this section- Power of liquidator to (a) the transferor company is a company to which accept shares or this section applies; and membership rights as consideration (b) a transferee company, or a transferee limited for sale of company's liability partnership, is the company or property.

partnership to which the property of the transferor company is proposed to be, or is to be, transferred or sold.

(2) This section applies to a company that is proposed to be, or is being, liquidated voluntarily if the whole or part of the company's business or property is proposed to be transferred or sold- (a) to a transferee company; or (b) to a transferee limited liability partnership.

(3) With the required approval, the liquidator of the transferor company may receive, in compensation or part compensation for the transfer or sale- (a) in the case of the transferee company-shares, policies or other similar interests in the transferee company for distribution among the members of the transferor company; or (b) in the case of the transferee limited liability partnership-membership rights in the transferee limited liability partnership for distribution among the members of the transferor company.

(4) The approval required under subsection (3) is- (a) in the case of a members' voluntary liquidation- a special resolution of the company, conferring either a general authority on the liquidator or an authority in respect of any particular arrangement; and (b) in the case of a creditors' voluntary liquidation- the approval of either the Court or the liquidation committee (if any).

1266 Insolvency 2015 No.18 (5) As an altemative to subsection (3), the liquidator may, with the required approval, enter into any other arrangement under which the members of the transferor company may- (a) in the case of the transferee company-instead of receiving cash, shares, policies or similar interests (or in addition to them), participate in the profits of, or receive any other benefit from, the transferee company; or (b) in the case of the transferee limited liability partnership-instead of receiving cash or membership rights (or in addition to them), participate in some other ^way in the profits of, or receive any other benefit from, that partnership.

(6) A sale or arrangement in accordance with this section is binding on members of the transferor company.

(7) A special resolution is not invalid for purposes of this section only because it is passed before or concurrently with a resolution for voluntary liquidation or for appointing a liquidator, but, if an order for the liquidation of the company is made by the Court within twelve months after the date on which the resolution was passed, the special resolution is valid only if approved by the Court.

(8) This section applies to a transferee company even if it is not a company registered under the Companies Act, zots).

419.

(1) This section applies to a voluntary Dissenting liquidation in relation to which the transferor company has member may require liquidator passed a special resolution, for the purposes of section to refrain from 418(3) or (5), providing the approval required for the giving effect to arrangement liquidator under that section.

under section 4l 8 or to purchase (2) If a member of the transferor company who did member's shares not vote in favour of the special resolution expresses the member's dissent from it in writing, addressed to the liquidator and left at the company's registered office within seven days after the passing of the resolution, the member may require the liquidator either- (a) to refrain from giving effect to the resolution; or (b) to purchase the member's interest at a price to be determined by agreement or by arbitration in accordance with the Arbitration Act, 1995.

7267 2015 Insolvency No.l8 (3) If the liquidator elects to purchase the member's No 4or1ee5' interest, the liquidator shall- (a) pay the purchase money before the company is dissolved; and (b) raise the money in such manner as may be determined by special resolution.

(4) If the member requires the liquidator to purchase the member's interest and no agreement is reached as to the price to be paid for the interest, the requirement to purchase the interest is, for the purposes of the Arbitration Act,1995, taken to be an arbitration agreement to determine that price.

420.(l) The liquidator, or a contributory or creditor, Questions relating may apply to the Court to determine any question arising in to liquidation may be referred to the the liquidation of a company, or to exercise, with respect to Court for the enforcing of calls or any other matter, all or any of the determination.

powers that the Court might exercise if the company were being liquidated by the Court.

(2) If satisfied that the determination of the question or the required exercise of power will be fair and beneficial, the Court may make an order acceding wholly or partially to the application on such terms as it considers appropriate, or may make such other order on the application as it considers appropriate.

(3) On the making of an order under subsection (2), the Registrar of the Court shall without delay forward a copy of the order to the Registrar of Companies for registration.

421.

(l) If, in the case of a company that is in Restrictions on voluntary liquidation, a liquidator has not been appointed directors' powers to appoint or or nominated by the company, the directors may exercise nominate their powers only- liquidator of company in (a) with the approval of the Court; or voluntary liquidation.

(b) in the case of a creditors' voluntary liquidation- so far as may be necessary to secure compliance with sections 406 and 407, during the period before the appointment or nomination of a liquidator of the company.

(2) Subsection (l) does not prevent the directors from exercising their powers- 1268 Insolvency 2015 No.18 (a) to dispose of perishable goods and other goods the value of which is likely to diminish if they are not immediately disposed of; and (b) to do all such other things as may be necessary for the protection of the company's assets.

(3) If the directors of the company, without reasonable excuse, fail to comply with subsection (1), each of them who is in default commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

422.The voluntary liquidation of a company does not Saving for certain prevent a creditor or contributory from seeking to have the rights.

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.(I) Only the High Court has jurisdiction to Jurisdiction of supervise the liquidation of companies registered in Kenya.

High Court to supervise (2) Subsection (l) does not apply to a company that liquidation of in voluntary liquidation in accordance with Divisions 2 companies.

is to 5.

424.(l) A company may be liquidated by the Court Circumstances in if- which company may be liquidated (a) the company has by special resolution resolved by the Court.

that the company be liquidated by the Court; (b) being a public company that was registered as such on its original incorporation- (i) the company has not been issued with a trading certificate under the Companies Act, 2015; and (ii) more than twelve months has elapsed since it was so registered; (c) the company does not commence its business within twelve months from its incorporation or suspends its business for a whole year; (d) except in the case of a private company limited by shares or by guarantee, the number of members is reduced below two; L269 2015 Insolvency No.18 (e) the company is unable to pay its debts; (0 at the time at which a moratorium for the company ends under section 645-a voluntary affangement made under Part IX does not have effect in relation to the company; or (g) the Court is of the opinion that it is just and equitable that the company should be liquidated.

(2) A company may also be liquidated by the Court on an application made by the Attorney General under section 425(6).

425.

(l) An application to the Court for the Applications to liquidation of a company may be made any or all of the the Court for liquidation of following: companies.

(a) the company or its directors; (b) a creditor or creditors (including any contingent or prospective creditor or creditors); (c) a contributory or contributories of the company; (d) a provisional liquidator or an administrator of the company; (e) if the company is in voluntary liquidation-the liquidator.

(2) However, except as otherwise provided by this section, a contributory is not entitled to make a liquidation application unless either- (a) the number of members is reduced below two; or (b) the relevant shares (or some of them) either- (D were originally allotted to the contributory, or have been held by the contributory, and registered in the contributory's' name, for at least six months during the eighteen months preceding the commencement of the liquidation;or (ii) have devolved on the contributory through the death of a former holder.

(3) A person who is liable under section 386 to contribute to a company's assets on its in liquidation may make an application on either of the grounds specified in Ii il 1270 L8 Insolvency 20ts No.

section azaQ)@) and (g), in which case subsection (2) does not apply, but, unless the person is a contributory otherwise than under section 386, the contributory may not as such make a liquidation application on any other ground.

(4) A liquidation application on the ground specified in section 424(I)(f) may only be made by one or more creditors.

(5) The Attorney General may make a liquidation application if- (a) the ground of the application is that specified in section 424(l)(b); or (b) it is a case to which section 426 appltes.

(6) The Attorney General may also make an application for the liquidation of a company if, after receiving from an inspector appointed to conduct an investigation into the affairs of a company under the Companies Act, 2015 a copy of a report of the investigation, the Attorney General considers that, as a result of the report, the company should be liquidated.

(7) Subject to subsection (8), the Official Receiver or by any other person authorised under the other provisions of this section may make a liquidation application to the Court in respect of a company that is in voluntary liquidation.

(8) The Court may make a liquidation order on such an application only if it is satisfied that the voluntary liquidation cannot be continued with due regard to the interests of the creditors or contributories.

426.(l) If, in relation to a company, it appears to the Application for Attorney General- liquidation of company on (a) from a report made or information obtained from grounds of public investigations carried out or inspection of interest.

documents produced under the Companies Act, 2015: (b) from a report made, or information obtained, by the Capital Markets Authority under the Capital Markets Act; (c) from information provided by the Registrar; or (d) as a result of the company or its directors having been convicted of an offence involving fraudulent conduct, 127L 20ts Insolvency No.18 that it would be in the public interest for the company to be liquidated, the Attorney General may make an Cap.485A application to the Court to make a liquidation order in respect of the company for its liquidation on the ground that it would be just and equitable for it to be so.

(2) Subsection (1) does not apply if the company is already in the process of liquidation by the Court.

427.

(l) On the hearing of a liquidation application, Powers of Court the Court may make such of the following orders as it on hearing of liquidation considers appropriate: application.

(a) an order dismissing the application; (b) an order adjourning the hearing, conditionally or unconditionally; (c) an interim liquidation order; or (d) any other order that, in its opinion, the circumstances of the case require.

(2) However, the Court may not refuse to make a liquidation order on the ground only that the company's assets have been mortgaged to an amount equal to or in excess of those assets, or that the company has no assets.

(3) If the application is made by members of the company as contributories on the ground that it is just and equitable that the company should be liquidated, the Court shall make a liquidation order, but only if of the opinion that- (a) that the applicants are entitled to relief either by liquidating the company or by some other means; and (b) that, in the absence of any other remedy, it would be just and equitable that the company should be liquidated, (4) Subsection (3) does not apply if the Court is also of the opinion that- (a) some other remedy is available to the applicants; and (b) they are acting unreasonably in seeking to have the company liquidated instead of pursuing that other remedy.

1272 Insolvency 2015 No.18 428.

(l) At any time after the making of a liquidation Power to stay or application, and before a liquidation order has been made, restrain proceedings the company, or any creditor or contributory, may- against company when liquidation (a) if legal proceedings against the company are application has pending in the Court-apply to the Court for the been made.

proceedings to be stayed; and (b) if proceedings relating to a matter are pending against the company in another court-apply to the Court to restrain further proceedings in respect of that matter in the other court.

(2) On the hearing of an application under subsection (lXa) or (b) , the Court may make an order staying or restraining the proceedings on such terms as it considers appropriate.

(3) If, in relation to a company registered (but not formed) under the Companies Act, 2015, the application is made by a creditor, this section extends to any contributory of the company.

429.

(l) In a liquidation ordered by the Court- Dispositions of property by (a) any disposition of the company's property; and company after commencement of (b) any transfer of shares, or alteration in the status liquidation to be of the company's members, void unless the Court otherwise made after the commencement of the liquidation is orders.

void, unless the Court otherwise orders.

(2) Subsection (1) does not apply to action taken by an administrator of a company while a liquidation application is suspended under section 558(lXb) (effect of administration order on pending liquidation application).

430.If a company is being liquidated by the Court, Attachments and any attachment, sequestration, distress or execution other forms of execution against instigated against the assets of the company after the company in commencement of the liquidation is void.

liquidation to be void.

431.

(1) If, before the making of an application for When liquidation the liquidation of a company by the Court, a resolution has of company by the Court commences.

been passed by the company for liquidating the company voluntarily- (a) the liquidation commences at the time of the passing of the resolution; and 1273 2015 Insolvency No.18 (b) unless the Court, on proof of fraud or mistake, directs otherwise, all proceedings taken in the voluntary liquidation are to be regarded as having have been validly taken.

(2) If the Court makes a liquidation order under section 534, the liquidation commences on the making of the order.

(3) In any other case, the liquidation of a company by the Court commences when the application for liquidation order is made.

432.

(l) Within seven days after a liquidation order Consequences of is made in respect of a company, the company shall lodge a liquidation order.

copy of the order with the Registrar for registration and also lodge a copy of it with the Official Receiver.

(2) When a liquidation order has been made or a provisional liquidator has been appointed, legal proceedings against the company may be begun or continued only with the approval of the Court and subject to such conditions as the Court considers appropriate.

(3) An order for liquidating a company operates in favour of all the creditors and of all contributories of the company as if made on the joint application of all of them.

433.

(1) If the Court has made a liquidation order or Official Receiver appointed a provisional liquidator in respect of a company, may require certain persons to the Official Receiver may require some or all of the submit statement prescribed persons to make out and submit to the Official relating to Receiver a statement of affairs relating to the company.

company's affairs (2) Those prescribed persons who are required to make out such a statement shall do so without delay and shall include in it- (a) such particulars of the company's assets, debts and liabilities as are prescribed by the insolvency regulations for the purposes of this section; (b) the names and addresses of the company's creditors; (c) the securities (if any) held by them respectively; (d) the dates when the securities were respectively given; and 1274 Insolvency 20r5 No.18 (e) such further or other information as the Official Receiver may reasonably require.

(3) The prescribed persons are- (a) those who are or have been officers of the company; (b) those who have taken part in the formation of the company at any time during the twelve months before the relevant date; (c) those who- (i) are in the company's employment, or have been in its employment during that period; and (ii) are in the Official Receiver's opinion capable of giving the information required; (d) those who are or have been within that period officers of, or in the employment of, a company that is, or within that period was, an officer of the company.

(4) Prescribed persons who under this section are required under this section to submit a statement of affairs to the Official Receiver shall, subject to subsection (5), do so within twenty-one days from and including the date on which notice of the requirement was given to those persons by the Official Receiver and verify the statement by statutory declaration.

(5) The Official Receiver may- (a) at any time release a person from an obligation imposed on the person under subsection (1) or by subsection (2); or (b) either when giving the notice referred to in subsection (4) or subsequently-extend the period referred to in that subsection.

(6) If the Official Receiver has declined to exercise a power conferred by subsection (5), the Court may, on the application of the Attorney General or a person who is dissatisfied with the Official Receiver's decision, exercise the power if it considers it appropriate to do so.

(7) In this section- t275 2015 Insolvency No.18 "employment" includes employment under a contract for the supply of services; and "the relevant date" means- (a) if a provisional liquidator is appointed-the date of the appointment; and (b) if no such appointment is made-the date of the liquidation order.

(8) A person who, without reasonable excuse, fails to comply with an obligation imposed by or under this section commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

(9) If, after being convicted of an offence under subsection (8), a person, without reasonable excuse, continues to fail to comply with the relevant obligation, the person commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding fifty thousand shillings for each such offence.

434.

(l) On the making of a liquidation order, the Duty of Official Official Receiver shall conduct an investigation- Receiver to conduct (a) if the company has failed-to discover why the investigation into failure of company failed; and company.

(b) generally, to investigate the promotion, formation, business, dealings and affairs of the company, and to make such report (if any) to the Court as the Official Receiver considers appropriate, (2) In any legal proceedings, the Official Receiver's report is evidence of the matters stated in it until the contrary is proved.

435.

(1) If a company is being liquidated by the Public Court, the Official Receiver may, at any time before the examination of officers and dissolution of the company, apply to the Court for the former officers of public examination of any person who- company.

(a) is or has been an officer of the company; (b) has acted as provisional liquidator, liquidator or administrator of the company; or (c) not being a person referred to in paragraph (a) or (b)-is or has been concerned, or has taken part, 1276 No.

18 Insolvency 2015 in the promotion, formation or management of the company.

(2) Unless the Court otherwise orders, the Official Receiver shall make an application under subsection (1) on receiving a written request to do so from- (a) creditors of the company holding not less than one-half in value of the total amount of the company's debts; or (b) contributories of the company holding not less than three-quarters of the voting rights at general meetings of the company.

(3) If, on the hearing of an application made under subsection (1), the Court is satisfied that a public examination of the person to whom the application relates is warranted, it shall make an order directing such an examination to be held on a date and at a time and place specified in the order.

(4) On being served with a copy of an order made under subsection (3), the person concerned shall attend on the date and at the time and place specified in the order and be publicly examined- (a) about the promotion, formation or management of the company; or (b) about the conduct of its affairs, or conduct or dealings in relation to the company.

(5) The persons specified in subsection (6) may- (a) participate in the public examination of a person under this section; and (b) may question the person concerning the matters referred to in subsection (4).

(6) The following persons are specified for the purpose of subsection (5): (a) the Official Receiver; (b) the liquidator of the company; (c) any person who has been appointed as special manager of the company's property or business; (d) any creditor of the company who has submitted a proof; (e) any contributory of the company.

1277 2015 Insolvency No.18 436.(1) A person who, without reasonable excuse, Consequences of fails at any time to attend the person's public examination failure to attend public under section 435 is guilty of a contempt of Court and is examination.

liable to be punished accordingly (in addition to any other punishment to which the person may be subject).

(2) If a person fails without reasonable excuse to attend the person's examination under section 434,or there are reasonable grounds for believing that a person has absconded, or is about to abscond, with a view to avoiding or delaying the examination, the Court may issue a warrant to be issued to a police officer or a prescribed officer of the Court- (a) for the arrest of that person; and (b) for the seizure of any documents or property in that person's possession.

(3) In such a case, the Court may authorise the person arrested under the warrant to be detained in custody, and anything seized under it to be kept, in accordance with the directions of the Court, until such time as the Court orders.

437.

(l) The Court may appoint a provisional Appointment and liquidator either on or after, or at any time before, the powers of provisional making of a liquidation order in respect of a company.

liquidator.

(2) Only the Official Receiver or an authorised insolvency practitioner is eligible for appointment as a provisional liquidator.

(3) A provisional liquidator shall perform such functions and may exercise such powers as the Court may specify in the order appointing the provisional liquidator.

(4) The acts of a person appointed as provisional liquidator of a company are valid despite any defect in the person's appointment or qualifications.

438.

(1) Subsections (2) to (7) have effect, subjecr to Functions and section 441 when the Court makes an order for the powers of Official Receiver in company to be liquidated.

relation to office (2) The Official Receiver becomes the liquidator of of liquidator.

the company and continues in office until some other person becomes liquidator under this Part.

(3) The Official Receiver is the liquidator during any vacancy in the office of liquidator.

t278 Insolvency 2015 No.18 (4) At any time while liquidator of the company, the Official Receiver may convene separate meetings of the company's creditors and the company's contributories for the purpose of choosing a person to be liquidator of the company in place of the Official Receiver.

(5) The Official Receiver shall- (a) as soon as practicable during the three months from and including the date on which the liquidation order was made, decide whether to exercise the power under subsection (4) to convene meetings; (b) if in accordance with paragraph (a), the Official Receiver decides not to exercise that power- give notice of the decision, before the end of that period, to the Court and to the company's creditors and contributories; and (c) (whether or not a decision to exercise that power has been made) exercise the power to convene meetings under subsection (4) if requested to do so by creditors who hold not less than one quarter in value of the total amount of the company's debts.

(6) If the duty imposed by subsection (5)(c) arises before the Official Receiver has performed the duty imposed by subsection (5)(a) or (b), the Official Receiver is not required to perform the latter duty.

(7) The Official Receiver shall include in a notice given under subsection (5Xb) an explanation of the creditors' power under subsection (5)(c) to require the Official Receiver to convene meetings of the company's creditors and contributories.

439.(l) In the case of a liquidation ordered by the Power of Official Court, the Official Receiver (being the liquidator) may, at Receiver to appoint liquidator any time, appoint a qualified person as liquidator instead.

in certain cases.

(2) If meetings are held in accordance with a decision under section 438(5)(a), but no person is chosen to be liquidator as a result of those meetings, the Official Receiver shall decide whether a liquidator should be appointed in respect of the company.

1279 2015 Insolvency No.l8 (3) On deciCing that such an appointment should be made, the Official Receiver shall appoint a qualified person as liquidator.

(4) Immediately after making an appointment under subsection (1) or (3), the Official Receiver shall notify the appointment to the Court.

(5) The person appointed shall, as soon as practicable (and not later than seven days) after being appointed- (a) send a notice of the appointment to the company's creditors; or (b) if, on application made to the Court, the Court so allows-advertise the appointment in accordance with the directions of the Court.

(6) If appointed under subsection (3), the person appointed shall state in the notice or advertisement- (a) whether it is proposed to convene a general meeting of the company's creditors under section 442 for the purpose of determining (together with any meeting of contributories) whether a liquidation committee should be established under that section; and (b) if it is not proposed to convene such a meeting- that the creditors are entitled under that section to require one to be convened.

440.(l) If a company is being liquidated by the Creditors' choice to Court and separate meetings of the company's creditors and prevail if meetings of crediton and the company's contributories are convened for the purpose contributors of choosing a person to be liquidator of the company, the nominate different creditors and the contributories at their respective meetings liquidatore.

may nominate a person to be the liquidator of the company.

(2) The liquidator is- (a) the person nominated by the creditors; or (b) if no person is so nominated-the person (if any) nominated by the contributories.

(3) If different persons are nominated, a contributory or creditor may, within seven days after the date on which the nomination was made by the creditors, apply to the Court for an order either- 1280 Insolvency 2015 No.18 (a) appointing the person nominated as liquidator by the contributories to be a liquidator instead of, or jointly with, the person nominated by the creditors; or (b) appointing some other person to be liquidator instead of the person nominated by the creditors.

441.

(l) If a liquidation order is made immediately Appointment of on the appointment of an administrator ceasing to have liquidator by the Court following effect, the Court may appoint as liquidator of the company administration or the person whose appointment as administrator has ceased voluntary to have effect.

arrangement.

is (2) If a liquidation order is made at a time when there a supervisor of a voluntary arrangement approved in relation to the company under Part IX, the Court may appoint as liquidator of the company the person who is the supervisor at the time when the liquidation order is made.

(3) If the Court makes an appointment under this section, the Official Receiver- (a) does not become the liquidator as provided by section 437(2); and (b) has no duty under section a376)@) or (b) to convene meetings of creditors or contributories.

442.(I) If, after a liquidation order has been made, Creditors' separate meetings of creditors and contributories have been meeting may appoint convened for the purpose of choosing a person to be liquidation liquidator, those meetings may establish a liquidation committee.

committee to perform the functions imposed and to exercise the powers conferred on it by or under this Act.

(2) The liquidator (not being the Official Receiver) may at any time, if of the opinion that it is appropriate to do so, convene separate general meetings of the company's creditors and contributories for the purpose of- (a) determining whether a liquidation committee should be established; and (b) if it is so determined-of establishing it.

(3) The liquidator (not being the Official Receiver) shall convene such a meeting if requested to do so by creditors of the company holding not less than one-tenth in value of the total amount of the company's debts.

t28L 2015 Insolvency No.18 (4) If meetings of creditors and contributories convened- (a) under this section; or (b) for the purpose of choosing a person to be liquidator, and either the meeting of creditors or the meeting of contributories decides that a liquidation committee should be established, but the other meeting does not so decide, or decides that a committee should not be established, such a committee is nevertheless required to be established, unless the Court otherwise orders.

(5) Except to the extent that the insolvency regulations otherwise provide, a liquidation committee may not, and may not be required to, perform its functions while the Official Receiver is liquidator.

(6) If, at the relevant time- (a) there is no liquidation committee; and (b) the liquidator is a person other than the Official Receiver, the Cabinet Secretary shall perform the functions of such a committee except in so far as the insolvency regulations otherwise provide.

U3.

(l) The functions of the liquidator of a company General functions that is being liquidated by the Court are- of liquidator when company is (a) to ensure that the assets of the company are liquidated by the realised and distributed to the company's Court.

creditors; and (b) if there is a surplus-to distribute the surplus to the persons entitled to it.

(2) If the liquidator of a company that is being liquidated is not the Official Receiver, the liquidator shall- (a) provide the Official Receiver with such information; (b) produce to the Official Receiver, and permit inspection by the Official Receiver of, such records and other documents; and 1282 Insolvency 2015 No.18 (c) give to the Official Receiver such other assistance, as the Official Receiver may reasonably require for the purposes of performing the Official Receiver's functions in relation to the liquidation.

(3) A liquidator who, without reasonable excuse, fails to comply with a requirement made by the Official Receiver under subsection (2) commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

444.

When- Liquidator to assume control of (a) a liquidation order has been made; or company's property when (b) a provisional liquidator has been appointed, liquidation order in respect of a company, the liquidator or the made.

provisional liquidator shall assume control of all the property to which the company is or appears to be entitled.

445.0) When a company is being liquidated by the Company's Court, the Court may, on the application of the liquidator, property to vest in by order direct all or any part of the property belonging to liquidator.

the company or held by trustees on its behalf to vest in the liquidator in that capacity.

(2) On the making of such an order, the property to which the order relates vests in the liquidator.

(3) After giving such indemnity (if any) as the Court may direct, the liquidator may begin or defend, or continue, any legal proceedings that relate to that property or that it is necessary to begin or defend, or continue, for the purpose of effectively liquidating the company and recovering its property.

446.

(l) If, in the case of a company that is being Duty of liquidator liquidated by the Court, the liquidator (not being the to convene final general meeting of Official Receiver) is satisfied that the liquidation of the company's company is for all practical purposes complete, the creditors.

liquidator shall convene a final general meeting of the company's creditors.

(2) At the final meeting, those present shall- (a) consider the liquidator's report of the liquidation; and 7283 2015 Insolvency No.18 (b) determine whether the liquidator should be released under section 471.

(3) If appropriate, the liquidator may give the notice convening the final general meeting at the same time as giving notice of any final distribution of the company's property.

(4) The liquidator shall ensure that sufficient funds from the company's property are retained to cover the expenses of convening and holding the meeting required by this section.

447.

(I) On the application of the liquidator, the Power of the Official Receiver or any creditor or contributory, and on Court to stay proof to the satisfaction of the Court that all proceedings in liquidation.

the liquidation ought to be stayed, the Court may, at any time after an order for liquidation is made, make an order staying the proceedings, either permanently or for a specified period, on such terms as the Court considers appropriate.

(2) Before making an order under subsection (1), the Court may require the Official Receiver to provide it with a report on any facts or matters that appear to the Official Receiver to be relevant to the application.

(3) The Official Receiver shall comply with such a requirement within such period as the Court specifies.

(4) Within seven days after the Court has made an order under this section, the company shall lodge a copy of the order with the Registrar for registration.

(5) If a company fails to comply with subsection (4), the company, and each officer of the company who is in default, commit an offence and on conviction are each liable to a fine not exceeding two hundred thousand shillings.

(6) If, after a company or any of its officers is convicted of an offence under subsection (5), the company continues to fail to lodge the required copy, the company, and each officer of the company who is in default, commit a further offence on each day on which the failure continues and on conviction are each liable to a fine not exceeding twenty thousand shillings for each such offence.

1284 Insolvency 2015 No.18 M8.

(I) As soon as practicable after making a Settlement of list liquidation order, the Court shall- of contributories and application of (a) settle a list of contributories, with power to assets.

rectify the register of members in all cases in which rectification is required; and (b) take all practicable steps to have the company's assets collected, and applied in discharge of its liabilities.

(2) If it appears to the Court that it will not be necessary to make calls ofl, or adjust the rights of contributories, the Court may dispense with the settlement of a list of contributories.

(3) In settling the list, the Court shall distinguish between persons who are contributories in their own right and persons who are contributories as being representatives of or liable for the debts of others.

449.(l) At any time after making a liquidation order, Recovery of debts the Court may make an order in respect of any contributory due from contributory to who is for the time being on the list of contributories company.

requiring the contributory to pay, in accordance with the order, an amount due from the contributory (or from the estate of the person whom the contributor represents) to the company, exclusive of any amount payable by the contributor or the estate because of a call.

(2\ In making such an order, the Court may- (a) in the case of an unlimited company-allow to the contributory as a set-off money due to the contributory or the estate that the contributory represents from the company on any independent dealing or contract with the company (but not money due to the contributory as a member of the company in respect of a dividend or profit); and (b) in the case of a limited company-make to a director or manager whose liability is unlimited, or to the estate of the director or manager, the same allowance.

(3) If, in the case of a company (whether limited or unlimited), all the creditors have been paid in full (together with interest at the official rate), money due on an account to a contributory from the company may be allowed to the contributory as a set off against any subsequent call.

7285 2015 Insolvency No.18 450.

(1) At any time after making a liquidation order, Power of the and either before or after the Court has ascertained the Court to make calls from sufficiency of the company's assets, it may- contributories.

(a) make calls on all or any of the contributories for the time being settled on the list of the contributories (to the extent of their liability) for payment of any money that the Court considers necessary - to satisfy the company's debts and liabilities and the expenses of liquidation; and (ii) for the adjustment of the rights of the contributories among themselves; and (b) make an order for payment of any calls so made.

(2) In making a call, the Court may take into consideration the probability that some of the contributories may partly or wholly fail to pay it.

451.

(1) The Court may order any contributory, Power of the purchaser or other person from whom money is due to the Court to order money due to company to pay the amount due into the Central Bank of company to be Kenya to the account of the liquidator instead of to the paid into Central liquidator, Bank.

(2) Such an order may be enforced in the same manner as if it had directed payment to the liquidator.

(3) All money and securities paid or delivered into the Central Bank of Kenya in relation to a liquidation by the Court are subject in all respects to the orders of the Court.

452.(l) An order made by the Court on a Order made by the contributory is conclusive evidence that any money Court against contributory to be appearing to be due or ordered to be paid by the conclusive contributory is due.

evidence that money ordered to (2) Subsection (1) is subject to the exercise of any be paid is due.

available right of appeal.

(3) All other pertinent matters stated in the order are to be taken as truly stated as against all persons and in all legal proceedings.

453.

The Court may fix deadlines by which creditors l:::'.:li* are required to prove their debts or claims or are to be :."":Tr::j[.

1286 No.

L8 Insolvency 2015 excluded from the benefit of any distribution made before proving claims' those debts are proved.

454.

The Court shall adjust the rights of the Court to adjust contributories among themselves and distribute any surplus rights of among the persons entitled to it.

contributories.

455.

(1) At any time after making a liquidation order, Power of the the Court may make such order for inspection of the Court to make orders enabling company's records by creditors and contributories as the creditors and Court considers appropriate.

contributories to inspect company's (2) The creditors and contributories of the company records.

are entitled to inspect all records in the company's possession or under its control, but except as provided by or under the authority of any other written law, no other persons are entitled to inspect those records.

456.

(1) If the assets of a company are insufficient to Payment of satisfy its liabilities, the Court may- expenses of (a) liquidation.

make an order for the expenses incurred in the liquidation to be paid out of the company's assets; and (b) direct that that payment be given such of priority as the Court considers appropriate.

(2) An order made under subsection (1) has effect irrespective of the provisions of this Act relating to preferential debts.

457.

(l) If, at any time either before or after making Power to arrest a liquidation order, the Court is satisfied on reasonable absconding contributory.

grounds that a contributory is- (a) about to leave Kenya or otherwise to abscond; or (b) has concealed or removed, or is about to conceal or remove, any of the contributory's property for the purpose of evading payment of calls, it may issue a warrant authorising the contributory to be arrested and the contributory's documents and moveable personal property to be seized.

(2) In such a case, the Court may authorise the person arrested under the warrant to be detained in custody, and anything seized under the warrant to be kept, in accordance with the directions of the Court, until such time as the Court orders.

1287 2015 Insolvency No.18 458.

Powers conferred on the Court by this Part are in Powers of the addition to any existing powers to bring legal proceedings Court to be against a contributory or debtor of the company, or the cumulative.

assets of a contributory or debtor, for the recovery of calls or other amounts.

459.

(l) The insolvency regulations may enable or Power of the require all or any of the functions imposed or powers Court to delegate its powers to conferred on the Court with respect to the matters specified liquidator.

in subsection (2) to be performed or exercised by the liquidator as an officer of the Court and in accordance with its directions.

(2) The following matters are specified for the purpose of subsection (1): (a) the convening and conducting of meetings to ascertain the wishes of creditors and contributories; (b) the settling of lists of contributories and the rectification of the register of members if required; (c) the collection and application of the assets; (d) the payment, delivery, transfer of money, property or documents to the liquidator; (e) the making of calls; (0 the fixing of a period within which debts and claims have to be proved.

(3) This section does not authorise the liquidator- (a) to rectify the company's register of members without the special approval of the Court; or (b) if there is a liquidation committee-to make a call without its approval.

Division 7 -Liquidators 460.

(1) The liquidator of a company iS in all Style and title of documents and communications relating.

liouidators.

to the Irqurdatron of the company to be referred to- (a) if a person other than the Official Receiver is liquidator-as "the liquidator" of the company; or 1288 No.

18 Insolvency 20ts (b) if the Official Receiver is liquidator-as "the Official Receiver and liquidator" of the company.

(2) In neither case is the liquidator to be referred to by the liquidator's personal name.

(3) A liquidator who fails to take all reasonably practicable steps to ensure that that subsections (1) and (2) are complied with commits an offence and on conviction is liable to a fine not exceeding one hundred thousand shillings.

461,.

A person who gives, or agrees or offers to give, Offence to make to any member or creditor of a company any valuable corrupt inducement consideration with a view to obtaining the person's own affecting appointment or nomination, or to obtaining or preventing appointment of the appointment or nomination of some other person, as the liquidator.

company's liquidator commits an offence and on conviction is liable to a fine not exceeding two million shillings.

462.

(l) This section has effect if a company is in Liquidator's voluntary' iiquidation, but subject to seciion 463 runctions: (liquidator's functions-creditors' -voluntary liquidation)in fiIl'ifl, the case of a creditor's voluntary liquidation.

(2) The liquidator may- (a) in the case of a members' voluntary liquidation- with the approval of a special resolution of the company; and (b) in the case of a creditors' voluntary liquidation- with the sanction of the Court or the liquidation committee (or, if there is no such committee, a meeting of the company's creditors), exercise any of the powers specified in Part 1 of the Third Schedule (payment of debts, compromise of claims, etc.).

(3) The liquidator may, without approval, exercise either of the powers specified in Part 2 of the Third Schedule (institution and defence of proceedings; carrying on the business of the company) and any of the general powers specified in Part 3 of that Schedule.

(4) The liquidator may- (a) exercise the Court's power of settling a list of contributories; 1289 Insolvency No.18 (b) exercise the Court's power of making calls; (c) convene general meetings of the company for the purpose of obtaining its approval by special resolution or for such other purpose as the liquidator considers appropriate.

(5) The liquidator shall pay the company's debts and adjust the rights of the contributories among themselves.

(6) If, in exercise of the powers conferred by this Act, the liquidator disposes of property of the company to a person who is connected with the company, the liquidator shall, if there is a liquidation committee, give notice to the committee of that exercise of the liquidator's powers.

(7) A liquidator who, without reasonable excuse, fails to comply with subsection (6) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings.

(8) A list of contributories settled by a liquidator in accordance with the power conferred by subsection (4)(a) is evidence of the liability of the persons named in it as contributories, until the contrary is proved.

463.

(l) If, in the case of a creditors' voluntary Liquidator's liquidation, a liquidator has been nominated by the functions: creditors' company, the powers conferred on the liquidator by section voluntary 462 may not be exercised, except with the sanction of the liquidation.

Court, during the period before the holding of the creditors' meeting under section 406.

(2) Subsection (1) does not apply to the power of the liquidator- (a) to assume control of all the property to which the company is or appears to be entitled; (b) to dispose of perishable goods and other goods the value of which is likely to diminish if they are not immediately disposed of; or (c) to take all such other action as may be necessary for the protection of the company's assets.

(3) The liquidator shall- (a) attend the creditors' meeting; and (b) shall report to the meeting on any exercise by the liquidator of the liquidator's powers (whether or 1290 Insolvency 2015 No.18 not under this section or under section 420 (questions relating to liquidation may be referred to the Court for determination) or section 471 (release of liquidator in the case of company liquidated by the Court).

(4) rf- (a) the company fails to comply with section 406(1) or (2); or (b) the directors fail to comply with section 407(1) or (2), the liquidator shall, within seven days after the relevant day, apply to the Court for directions as to the manner in which that default is to be remedied.

(5) In subsection (4), the relevant day is the day on which the liquidator was nominated by the company or the day on which the liquidator first became aware of the default, whichever is the later.

(6) A liquidator who, without reasonable excuse, fails to comply with a requirement of this section commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

464.

(I) If a company is being liquidated by the Liquidator's Court, the liquidator may- functions: liquidation by the (a) with the approval of the Court or the liquidation Court.

committee (if there is one), exercise any of the powers specified in Parts 1 and 2 of the Third Schedule; and (b) with or without that approval, exercise any of the general powers specified in Part 3 of that Schedule.

(2) If, in exercising the powers conferred on the liquidator by this Act, the liquidator- (a) disposes of property of the company to a person who is connected with the company; or (b) employs an advocate to assist the liquidator in performing the liquidator' s functions, the liquidator shall, if there is a liquidation committee, give notice to the committee of that exercise of the liquidator's powers.

L29L 2015 Insolvency No.18 (3) Subsection (2) does not apply if the Official Receiver is the liquidator.

(4) In a liquidation ordered by the Court, the exercise of the powers conferred by this section by the liquidator is subject to the control of the Court, and any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of any of those powers.

(5) A liquidator who, without reasonable excuse, fails to comply with subsection (2) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings.

465.

(l) If a company is being liquidated by the Liquidator's Court, the liquidator may convene general meetings of the functions: supplementary creditors or contributories for the purpose of ascertaining powers.

their wishes.

(2) The liquidator shall convene meetings at such times on such dates as the creditors or contributories by resolution (either at the meeting appointing the liquidator or otherwise) may direct, or whenever requested in writing to do so by a requisition signed by or on behalf of- (a) creditors holding not less than one tenth of the total amount of the company's debts; (b) contributories of the company holding not less than one-tenth of the voting rights at general meetings of the company.

(3) The liquidator may at any time apply to the Court for directions in relation to any particular matter arising in the liquidation.

(4) In accordance with this Part, the liquidator is required to use the liquidator's own discretion in the management of the assets and their distribution among the creditors.

(5) A person who is dissatisfied with an act or decision of the liquidator may apply to the Court for an order under subsection (6).

(6) On the hearing of an application made under subsection (5), the Court may- (a) make an order confirming, reversing or modifying the act or decision complained of; and r292 Insolvency 2015 No.18 (b) make such other order the case as it considers appropriate.

(1) If, at any time after a liquidation application has been made to the Court against a person, the attention of the Court is drawn to the fact that the person is a member of an insolvent partnership or a partner of a limited liability partnership, the Court may make an order as to the future conduct of the insolvency proceedings.

(8) The reference in subsection (7) to a person includes an insolvent partnership or other body that may be liquidated under Part VII as an unregistered company.

(9) An order made under subsection (7)- (a) may be made or given on the application of the Official Receiver, any authorised insolvency practitioner, the bankruptcy trustee of the partnership or any other interested person; and (b) may include provisions as to the administration of the joint estate of the partnership, and in particular how it and the separate estate of any member are to be administered.

466.

(l) If a liquidator has- Enforcement of liquidator's duties (a) in lodging, delivering or making a return, account to lodge, deliver or other document- and make retums.

accounts and other (D failed to prepare, make or lodge a return, documents.

account or other document as required by a provision of this Part; or (iD failed to give, publish or lodge a notice as required by such a provision; or (b) in giving a notice that the liquidator is by law required to deliver, make or give- (i) failed to prepare, make or lodge a return, account or other document as required by a provision of this Part; or (ii) failed to give, publish or lodge a notice as required by such a provision, and has failed to rectify the failure within fourteen days after the service on the liquidator of a notice requiring the liquidator to do so, any creditor or contributory of the L293 Insolvency 2015 No.18 company, or the Registrar, may make an application to the Court for an order under subsection(2).

(2) On the hearing of an application made under subsection (1), the Court may make an order directing the liquidator to rectify the failure within such period as may be specified in the order.

(3) The Court's order may provide for all costs of and incidental to the application to be borne by the liquidator.

(4) This section does not limit the operation of any enactment that provides for the imposition of fines or other penalties on a liquidator in respect of a failure referred to in this section.

467.

(l) This section applies to the removal from Circumstances in office and vacation of office of the liquidator of a company which liquidator may be removed that is in voluntary liquidation.

from office in the case of a (2) Subject to subsection (2), a liquidator may be voluntary removed from office only by an order of the Court or- liquidation.

(a) in the case of a members' voluntary liquidation- by a general meeting of the company convened specially for that purpose; or (b) in the case of a creditors' voluntary liquidation- by a general meeting of the company's creditors convened specially for that purpose.

(3) If the liquidator was appointed by the Court under section 416, a meeting such as is referred to in subsection (2) may be convened for the purpose of replacing the liquidator only if the liquidator considers it appropriate to do so or the Court so directs or the meeting is requested- (a) in the case of a members' voluntary liquidation- by members representing not less than one-half of the total voting rights of all the members having at the date of the request a right to vote at the meeting; or (b) in the case of a creditors' voluntary liquidation- by creditors holding not less than one-half in value of the total amount of the company's debts.

t- 1294 Insolvency 2015 No.18 (4) A liquidator (not being the Official Receiver) automatically vacates office if the liquidator ceases to hold an authorisation to act as an insolvency practitioner.

(5) A liquidator may, in the circumstances prescribed by the insolvency regulations, resign office by lodging with the Registrar a notice of resignation.

(6) rf- (a) in the case of a members' voluntary liquidation- a final meeting of the company has been held in accordance with section 402; or (b) in the case of a creditors' voluntary liquidation- final meetings of the company and of the creditors have been held in accordance with section 463, the liquidator whose report was considered at the meeting or meetings vacates office as soon as the liquidator has lodged with the Registrar a notice that the meeting has, or the meetings have, been held and of the decisions (if any) made at the meeting or meetings.

468.

(1) This section applies with respect to the Liquidator may be removal from office and vacation of office of- removed only by the Court or by general (a) the liquidator of a company that being liquidated meeting of creditom in the case of by the Court; or company being (b) a provisional liquidator.

liquidated by the Court.

(2) A liquidator may be removed from office only- (a) by an order of the Court; or (b) by a general meeting of the company's creditors convened specially for that purpose.

(3) A provisional liquidator may be removed from office only by an order of the Court.

(4) rf- (a) the Official Receiver is liquidator otherwise than as successor in accordance with section 438(3) to a person who held office as a result of a nomination by a meeting of the company's creditors or contributories; or (b) the liquidator - (i) was appointed by the Court otherwise than under section 440(3) or441(1); or L295 Insolvency 2015 No.18 (ii) was appointed by the Cabinet Secretary, a general meeting of the company's creditors is to be convened for the purpose of replacing the liquidator in the circumstances specified in subsection (5).

(5) The circumstances referred to in subsection (4) are that- (a) the liquidator considers it appropriate to convene a meeting of creditors; (b) the Court directs such a meeting to be held; or (c) the meeting is requested by creditors holding not less than one-quarter in value of the total amount of the company's debts.

(6) A liquidator or provisional liquidator (not being the Official Receiver) automatically vacates office on ceasing to be the holder of an authorisation to act as an insolvency practitioner.

(l) A liquidator may resign office by giving notice of the resignation to the Court.

(8) If a final meeting has been held in accordance with section M6, the liquidator whose report was considered at the meeting vacates office immediately after giving notice to the Court that the meeting has been held and of the decisions (if any) of the meeting.

(9) Within seven days after giving notice to the Court in accordance with subsection (8), the former liquidator shall lodge a copy of the notice with the Registrar for registration.

(10) A former liquidator who, without reasonable excuse, fails to comply with subsection (9) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings.

469.

(1) This section applies with respect to the Release of release of the liquidator of a company that is in voluntary liquidator in the case of company liquidation.

liquidated (2) person voluntarily.

A who has ceased to be a liquidator is entitled to be released from the liquidator's obligations with respect to the company with effect from the following time: 1296 Insolvency 20ts No.18 (a) in the case of a person who has been removed from office by a general meeting of the company or by a general meeting of the company's creditors that has not resolved against the liquidator's release or who has died-the time at which notice is lodged with the Registrar that the person has ceased to hold office as liquidator; (b) in the case of a person who- (i) has been removed from office by a general meeting of the company's creditors that has resolved against the liquidator's release, or by the Court; or (iD has vacated office under section 467(4), such time as the Cabinet Secretary may, on the application of the person, determine; (c) in the case of a person who has resigned-such time as may be prescribed by the insolvency regulations for the purposes of this paragraph; (d) in the case of a person who has vacated office under section a67(6)(a)-the time at which that person vacated office; (e) in the case of a person who has vacated office under section 467 (6)(b) - (i) if the final meeting of the creditors referred to in that subsection has resolved against that person's release-such time as the Cabinet Secretary may, on an application by that person, determine; and (ii) if that meeting has not resolved against that person's release-the time at which that person vacated office.

(3) If a liquidator is released in accordance with subsection (2), the liquidator is, with effect from whichever time specified in that subsection is relevant, discharged from all liability both in respect of acts or omissions of the liquidator's in the liquidation and otherwise in relation to conduct as liquidator.

(4) However, nothing in this section prevents the exercise, in relation to a person who has been released L297 2015 Insolvency No.18 under subsection (2), of the Court's powers under section 504 (power of Court to make orders against delinquent directors, liquidators, etc).

470,(l) This section applies with respect to the Release of release of the liquidator of a company that is in liquidation liquidator in the case of company by the Court, or of a provisional liquidator.

liquidated by the (2) On ceasing to be liquidator and being succeeded Court.

by another person as liquidator, the Official Receiver is released from the responsibilities a liquidator with effect from- (a) if the successor was nominated by a general meeting of creditors or contributories, or was appointed by the Cabinet Secretary-the time at which the Official Receiver gives notice to the Court that the Official Receiver has been succeeded by another person; or (b) if the successor is appointed by the Court-such time as the Court may determine.

(3) If the Official Receiver while a liquidator gives notice to the Cabinet Secretary that the liquidation is for all practical purposes complete, the Official Receiver is released with effect from such time as the Cabinet Secretary may determine.

(4) A person other than the Official Receiver who has ceased to be a liquidator is released with effect from whichever of the following times is relevant to the person: (a) if the person has been removed from office by a general meeting of creditors that has not resolved against the person's release, or the person has died-the time at which notice is given to the Court that the person has been removed from office or has died; (b) if the person has been removed from office- (i) by a general meeting of creditors that has resolved against the person's release; or (ii) by the Court or the Cabinet Secretary, such time as the Cabinet Secretary may, on an application made by the person, determine; 1298 Insolvency 2015 No.18 (c) if the person has vacated office under section 468(7)-such time as the Cabinet Secretary may, on an application made by the person, determine; (d) if the person has resigned as liquidator-such time as may be prescribed by the insolvency regulations for the purposes of this paragraph; (e) if the person has vacated office under section 468(9) and the final meeting referred to in that subsection has resolved against the person's release-such time as the Cabinet Secretary may, on an application by the person, determine; (0 if the person has vacated office under section 468(9) and the final meeting referred to in that subsection has not resolved against the person's release-the time at which the person vacated office.

(5) On the hearing of application to the Court of a person who has ceased to hold office as a provisional liquidator, the person is released with effect from such time as the Court may determine.

(6) On being released under this section, the Official Receiver or a liquidator or provisional liquidator is, with effect from the time specified in subsection (2), (3), (4) or (5), discharged from all liability both in respect of acts or omissions in the liquidation and otherwise in relation to conduct as liquidator or provisional liquidator.

(7) However, nothing in this section prevents the exercise, in relation to a person who has been released under this section, of the Court's powers under section 504 (power of Court to make orders against delinquent directors, liquidators, etc.).

Division 8-Provisions applying to all kinds of liquidation 471.

(1) The liquidator of a company that is in Preferential debts liquidation shall distribute the assets of the company (general available for the payment of creditors in accordance with provision).

the Second Schedule.

(2) Subsection (1) is subject to the provisions of this Part.

7299 Insolvency 2015 No.18 472.

(l) This section applies to a company that is Preferential being liquidated by the Court.

charge on property of (2) If a person (whether or not a landlord or person company within distrained entitled to rent) has distrained on the property of the three months company during the three months immediately preceding before making of the date of the liquidation order, that property, or the liquidation order.

proceeds of its sale, is charged for the benefit of the company with the preferential debts of the company to the extent that the company's assets are for the time being insufficient to satisfy them.

(3) If, because of a charge under subsection (2), a person surrenders property to a company or pays money to a company, the person ranks, in respect of the amount of the proceeds of sale of the property by the liquidator, or the amount money paid, as a preferential creditor of the company, except as against so much of the company's property as is available for the payment of preferential creditors because of the surrender or payment.

(4) This section does not limit the effect of section 430.

473.(l) The expenses of liquidating a company, so Expenses of far as the assets of the company available for payment of liquidation to have priority over claims general creditors are insufficient to meet those expenses, under floating chilge have priority over any claims to property comprised in or subject to any floating charge created by the company and are to be paid out of any such property accordingly.

(2) In subsection (1)- (a) the reference to assets of the company available for payment of general creditors does not include an amount made available under section aTaQ)@); (b) the reference to claims to property comprised in or subject to a floating charge is to the claims of- (i) the holders of debentures secured by, or holders (ii) of, the floating charge; and any preferential creditors entitled to be paid out of that property in priority to them.

(3) Provision may be made restricting the application of subsection (1), in such circumstances as may be 1300 No.

18 Insolvency 20ts prescribed by the insolvency regulations, to expenses authorised or approved- (a) by the holders of debentures secured by, or holders of, the floating charge and by any preferential creditors entitled to be paid in priority to them; or (b) by the Court.

(4) References in this section to the expenses of the liquidation are to all expenses properly incurred in the liquidation, including the remuneration of the liquidator.

474.(l) This section applies to a company in respect Share of assets to of which a floating charge relates to its property- be made available for unsecured (a) if the company is in liquidation or under creditors where floating charge administration; or relates to company's (b) if a provisional is appointed in respect property.

of it.

(2) If this section applies to a company, the liquidator, administrator or provisional liquidator- (a) shall make available for the satisfaction of unsecured debts such portion of the company's net assets as is prescribed by the insolvency regulations for the purposes of this subsection; and (b) may not distribute that part to the proprietor of a floating charge except to the extent that it exceeds the amount required for the satisfaction of unsecured debts.

(3) Subsection (2) does not apply to a company if- (a) the company's net assets are less than the minimum prescribed by the insolvency regulations for the purposes of this subsection; and (b) the liquidator, administrator or provisional Iiquidator believes that the cost of making a distribution to unsecured creditors would be disproportionate to the benefits.

(4) Subsection (2) also does not apply to a company if, or in so far as, it is disapplied by- 1301 Insolvency -I 2015 No.

18 (a) a voluntary arrangement in respect of the company in accordance with Part IX; or (b) a compromise or iurangement agreed under the Companies Act,20l5.

if- (5) Subsection (2) also does not apply to a company (a) the liquidator, administrator or provisional liquidator applies to the Court for an order under this subsection on the ground that the cost of making a distribution to unsecured creditors would be disproportionate to the benefits; and (b) as a result of such an application, the Court orders that subsection (2) is not to apply.

(6) In subsections (2) and (3) a company's net assets is the amount of its assets that would, but for this section, be available for satisfaction of claims of holders of debentures secured by, or holders of, any floating charge created by the company.

(7) The regulations referred to in subsection (2) prescribing part of a company's net assets may, in particular, provide for its calculation- (a) as a percentage of the company's net assets; or (b) as an aggregate of different percentages of different parts of the company's net assets.

(8) In this section, "floating charge" means a charge that is a floating charge on its creation and that is created after the regulations referred to in subsection (2)(a) take effect.

475.(l) If a company is in liquidation or a Power of the provisional liquidator is appointed in respect of the Court to appoint special manager company, the Court may, on an application made under of company's subsection (2), appoint a person to be the special manager business or property when of the business or property of the company.

company is in liquidation or (2) An application to the Court to appoint a special provisional manager may be made by the liquidator or provisional liquidator liquidator if it appears to the applicant that the nature of the appointed.

business or property of the company, or the interests of the company's creditors or contributories or members generally, require the appointment of another person to manage the company's business or property.

II 1302 No.18 Insolvency 20ts (3) A special manager has such powers as the Court specifies in the special manager's appointment or in directions given as a result of an application by that manager.

(4) The Court's power to confer powers to the special manager includes power to direct that any provision of this Act that has effect in relation to a provisional liquidator or liquidator of a company has the same effect in relation to the special manager for the purposes of performing any of the functions of the provisional liquidator or liquidator.

(5) A special manager shall- (a) give such security as may be prescribed by the insolvency regulations for the purposes of this section; (b) prepare and keep such accounting records as may be so prescribed; and (c) produce those records in accordance with the insolvency regulations to the Court or to such other persons as may be so prescribed.

(6) A special manager's appointment does not take effect until the security referred to in subsection (5Xa) has been given.

(7) A special manager who fails to comply with subsection (5Xb) or (c) is guilty of contempt of the Court and is liable to be punished accordingly (in addition to any other punishment to which the person may be subject).

476.(l) The liquidator may, by the giving such Power of notice as is prescribed by the insolvency regulations, liquidator to disclaim onerous disclaim any onerous property and may do so even if the property.

liquidator has taken control of it, tries to sell it, or otherwise exercised rights of ownership in relation to it.

(2) The following is onerous property for the purposes of this section: (a) an unprofitable contract; (b) other property of the company that is unsalable or not readily saleable or is such that it may give rise to a liability to pay money or perform any other onerous act.

1303 Insolvency 2015 No.

18 (3) A disclaimer under this section- (a) operates so as to determine, as from the date of the disclaimer, the rights, interests and liabilities of the company in or in respect of the property disclaimed; but (b) does not, except so far as is necessary for the purpose of releasing the company from any liability, affect the rights or liabilities of any other person.

(5) A notice of disclaimer may not be given under this section in respect of any property if- (a) a person interested in the property has applied in writing to the liquidator, or a predecessor of the liquidator, requiring the liquidator or liquidator's predecessor to decide whether the property will be disclaimed or not; and (b) thirty days from and including the date on which that application was made (or such extended period as the Court may allow) has expired without a notice of disclaimer having been given under this section in respect of the property.

(6) A person who has sustained loss or damage in consequence of the operation of a disclaimer under this section is a creditor of the company to the extent of the loss or damage and accordingly may prove for the loss or damage in the liquidation.

477.

(l) The disclaimer under section 476 of any Special provisions property comprising a leasehold interest does not take relating to disclaimer of effect unless a copy of the disclaimer has been served on leaseholds.

every person claiming under the company as under-lessee or mortgagee whose address is known to the liquidator and either- (a) an application under section 479 has not been made with respect to that property within fourteen days from and including the date on which the last notice served under this subsection was served;or (b) if such an application is made-the Court makes an order directing the disclaimer to take effect.

(2) If the Court makes an order under subsection (1)(b), it may also, instead of or in addition to any order it 1304 Insolvency 20t5 No.18 makes under section 479, make such orders with respect to fixtures, tenant's improvements and other matters arising out of the lease as it considers appropriate.

478.

(1) If, as a result of the disclaimer under section Effect of 476 of land subject to a rentcharge, the land vests by disclaimer in relation to land operation of law in a person, the person is not subject to subject to any liability in respect of amounts becoming due under the rentcharge.

rentcharge except amounts that become due after the proprietor, or some person claiming under or through the proprietor, has taken possession or control of the land or has occupied it.

(2) The reference in subsection (1) to a person includes the State and to any a successor in title to the person.

479.(l) This section and section 480 apply to General powers of property that the liquidator has disclaimed in accordance the Court in respect of with section476.

disclaimed (2) property.

An application to the Court for an order under subsection (3) may be made by- (a) any person who claims an interest in the disclaimed property; or (b) any person who is under a liability in respect of the disclaimed property, other than a liability discharged by the disclaimer.

(3) On the hearing of an application made under subsection (2),the Court may make an order, on such terms as it considers appropriate, for the vesting of the disclaimed property in, or for its delivery to- (a) a person entitled to it or a trustee for such a person; or (b) a person subject to such a liability as is referred to in subsection (2Xb) or a trustee for such a person.

(4) The Court may make an order under subsection (3)(b) only if it appears to the Court that it would be just to do so for the purpose of compensating the person subject to the liability in respect of the disclaimer.

(5) The effect of an order made under this section is to be taken into account in assessing for the purpose of 1305 2015 Insolvency No.18 section 476(6) the extent of any loss or damage sustained by a person in consequence of the disclaimer.

(6) It is not necessary for an order under this section vesting property in a person to be completed by transfer.

480.

(1) The Court may not make an order under Powers of the section 479 vesting a leasehold interest in a person Court in respect of leaseholds held by claiming under the company as underlessee or mortgagee company in except on terms making the person- liquidation.

(a) subject to the same liabilities and obligations as the company was subject to under the lease at the cofllmencement of the liquidation; or (b) if the Court considers appropriate-subject to the same liabilities and obligations as the person would be subject to if the lease had been assigned to the person at the commencement of the liquidation.

(2) For the purposes of an order under section 479 relating only to the part of the property comprising a lease, the requirements of subsection (1) apply as if the lease was the only property to which the order relates.

(3) If subsection (1) applies and no person claiming under the company as underlessee or mortgagee is willing to accept an order under section 479 on the terms required under that subsection, the Court may make an order vesting the company's interest in the lease in any person who is liable (whether personally or in a representative capacity, and whether alone or jointly with the company) to perform the lessee's covenants under the lease.

(4) The Court may vest that estate and interest in such a person freed and discharged from all estates, encumbrances and interests created by the company.

(5) If subsection (1) applies and a person claiming under the company as underlessee or mortgagee declines to accept an order under section 479, the person is excluded from all interest in the property.

481.

(1) rf- Creditor not entitled to retain (a) a creditor- benefit of execution or (i) has issued execution against the goods or attachment against liquidator unless land of a company; or creditor completes execution or 1306 Insolvency 2015 No.18 (ii) has attached any debt due to it; and attachment before commencement of (b) the company is subsequently liquidated, liquidation.

the creditor is not entitled to retain the benefit of the execution or attachment against the liquidator unless the creditor has completed the execution or attachment before the commencement of the liquidation.

(2) However- (a) if a creditor has had notice of a meeting having been convened at which a resolution for voluntary liquidation is to be proposed-the date on which the creditor had notice is, for the purpose of subsection (1), substituted for the date of commencement of the liquidation; (b) a person who, under a sale conducted by the enforcement officer or other officer charged with the execution of the writ goods of a company on which execution has been levied, purchases the goods in good faith acquires a good title to them as against the liquidator; and (c) the Court may set aside the rights conferred on the liquidator by subsection (1) in favour of the creditor to such extent and subject to such terms as it considers just.

(3) For purposes of this Act- (a) an execution against goods is completed by seizure and sale; (b) an attachment of a debt is completed by receipt of (c) the debt; and an execution against land is completed by its seizure or by any other event prescribed by the insolvency regulations for the purposes of this section.

482.

(I) This section applies if- Duties ofjudicial enforcement (a) a company's goods are taken in execution; and officers charged with execution of (b) before their sale or the completion of the writs and other execution (whether by the receipt or recovery of processes involving the full amount of the levy)-notice is served on companies in the judicial enforcement officer charged with liquidation.

execution of the writ or other process- 7307 Insolvency No.18 that a provisional liquidator has been (ii) appointed; that a liquidation order has been made; or (iii) that a resolution for voluntary liquidation has been passed.

(2) If so required, the judicial enforcement officer concerned shall deliver the goods and any money seized or received in part satisfaction of the execution to the liquidator.

(3) However, the costs of execution are a first charge on the goods or money so delivered, and the liquidator may sell the goods, or a sufficient part of them for the purpose of satisfying the charge.

(4) If, under an execution in respect of a judgement for an amount exceeding fifty thousand shillings, a company's goods are sold or money is paid in order to avoid sale, the judicial enforcement shall deduct the costs of the execution from the proceeds of sale or the money paid and retain the balance for not less than fourteen days.

(5) If, within that period- (a) notice is served on the judicial enforcement officer to the effect that- (i) an application for the liquidation of the company has been made; or (ii) a meeting has been convened at which there is to be proposed a resolution for voluntary liquidation; and (b) an order is made or a resolution passed, that officer shall pay the balance to the liquidator, who is entitled to retain it as against the execution creditor.

(6) The rights conferred by this section on the liquidator may be set aside by the Court in favour of the creditor to such extent and subject to such terms as the Court considers appropriate.

(7) The insolvency regulations may increase or reduce the amount specified in subparagraph (4).

483.

(1) A person who is, as against the liquidator, Power of the entitled to the benefit or subject to the burden of a contract Court to rescind contracts entered into by company 1308 No.18 Insolvency 2015 made with the company, may make an application for an inliquidation' order under subsection (2).

(2) On the hearing of an application made under subsection (1), the Court may make an order rescinding the contract on such terms as to payment by or to either party of damages for the non-performance of the contract, or otherwise, as the Court considers appropriate (3) Damages payable to a person under the order are provable by the person as a debt in the liquidation.

484.

(1) On the liquidation of a company (whether Power of by the Court or voluntarily), the liquidator may, in liquidator to transfer assets of accordance with this section, make any payment that the company to its company has, before the commencement of the liquidation, employees.

decided to make under the Companies Act, 2015 to employees or former employees on cessation or transfer of business.

(2) After the liquidation has commenced, the liquidator may make any such provision to employees or former employees on cessation or transfer of business under the Companies Act,2015 only if- (a) the company's liabilities have been fully satisfied and provision has been made for the expenses of the liquidation; (b) the exercise of the power has been authorised by a resolution of the company; and (c) the requirements of the company's articles (if any) as to the exercise of the power conferred by that section are complied with.

(3) A payment that can be made by a company under this section after the commencement of its liquidation may be made only out of the company's assets that are available for distribution to the company's members at the conclusion of the liquidation.

(4) If the company is being liquidated by the Court, the exercise by the liquidator of a power under this section is subject to the Court's control, and any creditor or contributory may apply to the Court for an order giving directions with respect to any exercise or proposed exercise of the power.

1309 Insolvency 2015 No.18 (5) Subsections (l) and (Z)have effect irrespective of what is stated in any rule of law or in section 415.

485.

(1) A company that is in liquidation shall ensure Company in that the following documents state that the company is in liquidation required to state liquidation: that it is in liquidation in all (a) every invoice, order for goods or services, invoices, letters business letter or order form (whether in hard and other copy, electronic or any other form) issued by or communications on behalf of the company, or a liquidator of the company or a receiver or manager of the company's property; (b) each of the company's websites (if any).

(2) If the company fails to comply with a requirement under subsection (1), the company, and each officer who is in default, commit an offence and on conviction are each liable to a fine not exceeding two hundred thousand shillings.

(3) If, after a company or any of its officers is convicted of an offence under subsection (2), the company continues to fail to comply with the relevant requirement, the company, and each officer of the company who is in default, commit a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for each such offence.

486.

(1) In a company liquidation, interest is payable Interest on debts in accordance with this section on any debt proved in the to be paid if liquidation, including so much of any such debt as surplus permits.

represents interest on the remainder.

(2) The liquidator shall, before applying any surplus remaining after the payment of the debts proved in a liquidation for any other purpose, apply the surplus in paying interest on those debts in respect of the periods during which they have been outstanding since the liquidation commenced.

(3) All interest under this section ranks equally (whether or not the debts on which it is payable rank equally).

(4) The rate of interest payable under this section in respect of any debt is the rate for the time being prescribed by the insolvency regulations for the purposes of this section.

l3l0 Insolvency 20ts No.18 (5) Interest payable under this section in respect of a debt is payable at the official rate.

487.

(1) If a company is in liquidation, the following Certain documents are exempt from stamp duty: documents relating to (a) every transfer relating solely to freehold or company in liquidation to be leasehold property, or to any interest in, any real exempt from or personal property, that forms part of the stamp duty.

company's assets and that, after the execution of the transfer, either at law of in equity, is or remains part of those assets; and (b) every writ, order or other document relating solely to- (i) property of the company referred to in paragraph (a); or (i0 any legal proceeding arising under the liquidation.

(2) Subsection (1) does not apply if the liquidation is a members' voluntary liquidation.

48E.

When a company is in liquidation, all records of Records of the company and of the liquidator are (as between the company in liquidation to be contributories of the company) evidence of the truth of all evidence.

matters purporting to be recorded in them, until the contrary is proved.

489.

(1) If the liquidation of a company is not Liquidator to completed within twelve months after its commencement, lodge periodic statements with the liquidator shall, at such intervals as are prescribed by Registrar of the insolvency regulations and until the liquidation is Companies with respect to current completed,lodge with the Registrar a statement containing position of the particulars so prescribed with respect to the proceedings liquidation.

in, and position of, the liquidation.

(2) A liquidator who fails to lodge a statement as required by subsection (1) commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

(3) If, after being convicted of an offence under subsection (2), a liquidator continues to fail to lodge a statement as required by subsection (1), the liquidator commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding fifty thousand shillings for each such offence.

1311 2015 Insolvency No.18 490.If a resolution is passed at an adjourned meeting Effect of of a company's creditors or contributories, the resolution is resolutions passed at adjoumed for all purposes taken to have been passed on the date on meetings of which it was in fact passed, and not as having been passed company's on any earlier date.

creditors and contributories.

491.

(1) The Court may- court may order meetings to be (a) as to all matters relating to the liquidation of a held to ascertain company, have regard to the wishes of the wishes of creditors or creditors or contributories (as proved to it by any contributories.

sufficient evidence); and (b) if it considers appropriate, for the purpose of ascertaining those wishes - (i) direct meetings of the creditors or contributories to be convened, held and conducted in such manner as the Court directs; and (ii) appoint a person to act as chairperson of any such meeting and report the result of it to the Court.

(2) In the case of creditors, the Court shall take into account the value of each creditor's debt.

(3) In the case of contributories, the Court shall take into account the number of votes conferred on each contributory.

492.1n all proceedings under this Part, all courts and Judicial notice to tribunals, all judges and persons acting judicially, and all be taken of documents of the officers of a court or tribunal, or employed in enforcing the Court.

process of a court or tribunal, are required to take judicial notice of- (a) the signature of an officer,'of the High Court; and (b) the official seal or stamp of that Court affixed to or impressed on any document made, issued or signed under a provision of this Act or the Companies Act, 2015, or any official copy of such a document.

493.

(1) An affidavit required to be sworn under or Affidavits for the purposes of this Part may be sworn in Kenya- required to be swom for (a) before any court, tribunal, judge or person purposes of this lawfully authorised to take and receive affidavits; Part.

or t3t2 9o.18 Insolvency 2015 (b) before any diplomat representing the Government of Kenya in any place outside Kenya.

(2) A11 courts, tribunals, judges and other persons acting judicially are required to take judicial notice of the seal or stamp or signature of any such court, tribunal, judge, person or diplomat affixed to, impressed on, or subscribed to any such affidavit, or to any other document to be used for the purposes of this Part.

Division 9-Dissolution of companies after liquidation 494.

(l) This section applies to a company in Dissolution voluntary liquidation if the liquidator has sent to the (voluntary Registrar the liquidator's final account and return in liquidation) accordance with section 402 or 414.

(2) As soon as practicable after receiving the account and return, the Registrar shall register them.

(3) At the end of three months from the registration of the account and return, the company is dissolved.

(4) However, the Court may, on the application of the liquidator or any other person who appears to the Court to have a legitimate interest in the matter, make an order deferring the date at which the dissolution of the company is to take effect for such period as the Court considers appropriate.

(5) Within seven days after an order is made under subsection (4), the person on whose application the order was made shall lodge with the Registrar a copy of the order for registration.

(6) A person who, without reasonable excuse, fails to comply with subsection (5) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings.

(7) If, after being convicted of an offence under subsection (6), a person continues to fail to lodge the required copy with the Registrar, the person commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for each such offence.

495.

(1) This section applies when an order for the Early dissolution liquidation of a company has been made by the Court and of company.

the Official Receiver is the liquidator of the company.

1313 2015 Insolvency No.18 (2) On being satisfied- (a) that the realisable assets of the company are insufficient to cover the expenses of the liquidation; and (b) that the affairs of the company do not require any further investigation, the Official Receiver may apply to the Registrar for the early dissolution of the company.

(3) The Official Receiver may make such an application only if at least thirty days' notice of the Official Receiver's intention to make the application has been given to the company's creditors and contributories.

(4) On giving that notice, the Official Receiver is, subject to any directions given under section 496,no longer required to perform any functions imposed on the Official Receiver in relation to the company, its creditors or contributories because of any provision of this Act, apart from a duty to make an application under subsection (2).

(5) As soon as practicable after receiving the Official Receiver's application, the Registrar shall register it.

(6) At the end of the three months from and including the date of the registration of the application the company is dissolved.

496.(l) If a notice has been given in accordance Consequence of with section 495(3), the Official Receiver or any creditor or notice given under contributory of the company may apply to the Court for section 495(3).

directions under this section.

(2) The grounds on which such an application may be made are- (a) that the realisable assets of the company are sufficient to cover the expenses of the liquidation; (b) that the affairs of the company do require further investigation; or (c) that for any other reason the early dissolution of the company is inappropriate.

(3) Directions under this section- (a) are directions making such provision as the Court considers appropriate for enabling the liquidation t3t4 No.

18 Insolvency 2015 of the company to proceed as if no notice had been given under section 495(3); and (b) may, in the case of an application under section 495(7), include a direction deferring the date at which the dissolution of the company is to take effect for such period as the Court considers appropriate.

(4) Within seven days after directions are given under this section, the person on whose application directions were given, shall lodge with the Registrar for registration a copy of the directions or determination.

(5) A person who, without reasonable excuse, fails to lodge a copy as required by subsection (4) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings.

(6) If, after being convicted of an offence under subsection (5), the person continues to fail to lodge the relevant copy with the Registrar for registration, the person commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for each such offence.

497.

(l) This section applies to a notice that is- Dissolution otherwise than (a) served for the purposes ofsection 468(9); or under sections (b) 494-496.

from the Official Receiver that the liquidation of a company by the Court is complete.

(2) As soon as practicable after such a notice is lodged for registration, the Registrar shall register it.

(3) At the end of the three months from and including date of registration of the notice, the company is dissolved.

(4) However, on the application of the Official Receiver or any other person who appears to the Court to have a legitimate interest in the matter, the Court may make an order deferring the date at which the dissolution of the company is to take effect to such other date as the Court considers appropriate.

(5) Within seven days after an order is made under subsection (4), the person on whose application the order was made shall lodge with the Registrar a copy of the order for registration.

1315 2015 Insolvency No.

L8 (6) A person who, without reasonable excuse, fails to lodge a copy of the order as required by subsection (5) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings.

(7) If, after being convicted of an offence under subsection (6), a person continues to fail to lodge the required copy with the Registrar, the person commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for each such offence.

Division l0-Offences relating to conduct before and during liquidation and criminal proceedings relating to those offences 498.

(1) This section applies in relation to a Offence involving company- commission of fraudulent acts in (a) in respect of which the Court has made a anticipation of liquidation order; or liquidation.

(b) that has passed a resolution for the voluntary (2) liquidation of the company.

An officer or former officer of the company commits an offence if, within the twelve months immediately preceding the commencement of the liquidation of the company, the officer or former officer- (a) concealed any part of the company's property to the value of fifty thousand shillings or more; or (b) concealed any debt due to or from the company; fraudulently removed any part of the company's property to the value of fifty thousand shillings or (c) more; concealed, destroyed, mutilated or falsified any document affecting or relating to the company's (d) affairs or property; made any false entry in any document affecting or relating to the company's affairs or property; (e) fraudulently parted with, altered or made any omission in any document affecting or relating to (0 the company's affairs or property; or pawned, pledged or disposed of any property of the company that has been obtained on credit and has not been paid for.

1316 No.

18 Insolvency (3) Subsection (3)(f) does not apply if the pawning, pledging or disposal was done in the ordinary course of the company's business.

(4) An officer or former officer of the company also commits offence- (a) if, within the twelve months period referred to in subsection (2), the officer or former officer has been privy to the doing by others of any of the acts referred to in paragraphs (c), (d) and (e) of that subsection; or (b) if, at any time after the commencement of the liquidation, the officer or former officer- (i) does any ofthe acts referred to in paragraphs (a) to (0 of that subsection; or (ii) is privy to the doing by others of any of the acts referred to in paragraphs (c) to (e) of that subsection.

(s) In a prosecution for an offence under- (a) paragraph (a) or (f) of subsection (2); or (b) subsection (a) in respect of an act referred to in either of those paragraphs, it is a defence to prove that the officer or former officer had no intention to defraud.

(6) In a prosecution for an offence under- (a) paragraph (c) or (d) ofsubsection (2);or (b) subsection (4) in respect of an act referred to in either of those paragraphs, it is a defence to prove that the officer or former officer had no intention to conceal the state of affairs of the company or to defeat the law.

(7) If property is pawned, pledged or disposed of in circumstances that constitute an offence under subsection (2X0, a person who takes in pawn or pledge, or otherwise receives, the property knowing it to have been pawned, pledged or disposed of in such circumstances, commits an offence.

(8) A person found guilty of an offence under this section is liable on conviction to a fine not exceeding two L3t7 2015 Insolvency No.18 million shillings or to imprisonment for a term not exceeding five years, or to both.

(9) The insolvency regulations may increase or reduce the amounts specified in subsection (2)(a) and (b).

499.(l) This section applies in relation to a Offences company- involving transactions to (a) in respect of which the Court has made a defraud creditors of company in liquidation order; or liquidation.

(b) that has passed a resolution for the voluntary liquidation of the company.

(2) An officer or former officer of the company commits an offence if the officer or former officer- (a) has made or caused to be made a gift or transfer of, or charge on, or has caused or connived at the levying of execution against, the company's property;or (b) has concealed or removed any part of the company's property since, or within the two months preceding, the date of any unsatisfied judgment or order for the payment of money obtained against the company.

(3) A person is not liable to be charged with an offence under subsection (2) 1f the conduct alleged to constitute the offence occurred more than five years before the commencement of the liquidation.

(4) In a prosecution for an offence under subsection (2)(a), it is a defence to prove that the officer or former officer did not, at the time of the alleged offence, have any intent to defraud the company's creditors.

(5) An officer or former officer of company who is found guilty of an offence under this section is liable on conviction to a fine not exceeding one million shillings or to imprisonment or a fine not exceeding two years, or to both.

500.

(1) This section applies in relation to a company Offence involving that is in liquidation, whether voluntary or by the Court.

misconduct committed in (2) An officer or former officer of the company course of liquidation of commits an offence if the officer or former officer- company.

1318 Insolvency 2015 No.18 (a) does not to the best of the officer's or former officer's knowledge and belief fully and truly disclose to the liquidator all of the company's property, and how and to whom and for what consideration and when the company disposed of any part of that property (except such part as has been disposed of in the ordinary course of the company's business); (b) does not deliver to the liquidator, or in accordance with the directions of the liquidator, all such part of the company's property as is under the control of the officer or former officer, and that the officer or former officer is required by law to deliver to the liquidator; (c) fails to deliver to the liquidator, or in accordance with the liquidator's directions, all documents under the control of the officer or former officer that belong to the company and that the officer or former officer is required by law to deliver to the liquidator; (d) knowing or believing that a false debt has been proved by any person in the liquidation, fails to inform the liquidator of that knowledge or belief as soon as is practicable; or (e) after the corrmencement of the liquidation- prevents the production of any document affecting or relating to the company's affairs or property.

(3) An officer or former officer also commits an offence if, after the commencement of the liquidation, the officer or former officer attempts to account for any part of the company's property by means of fictitious losses or expenses.

(4) An officer or former officer is presumed, in the absence of evidence to the contrary, to have committed an offence under subsection (3) if the officer or former officer has made an attempt of the kind referred to in that subsection at a meeting of the company's creditors held within the twelve months immediately preceding the cornmencement of the liquidation.

1319 20ts Insolvency No.18 (5) In a prosecution for an offence under subsection (2)(a), (b) or (c), it is a defence to prove that the officer or former officer had no intention to defraud.

(6) In a prosecution for an offence under subsection (2)(e), it is a defence to prove that the officer or former officer had no intention to conceal the state of affairs of the company or to defeat the law.

(7) An officer or former officer found guilty of an offence under this section is liable on conviction to a fine not exceeding two million shillings or to imprisonment for a term not exceeding five years, to both.

501.

(l) This section applies in relation to a company Offence to falsify that is in liquidation, whether voluntary or by the Court.

documents in relation to (2) An officer or contributory of the company company in commits an offence if, during the liquidation, the officer or liquidation.

contributory, with intent to defraud or deceive the company or any other person- (a) destroys, damages, alters or falsifies a security or other document of the company; or (b) makes or is privy to the making of a false or fraudulent entry in any record or other document of the company.

(3) A person who is found guilty of an offence under subsection (l) is liable on conviction to a fine not exceeding two million shillings or to imprisonment for a term not exceeding five years, to both.

502.

(1) This section applies to a company that is in Offence to make liquidation, whether voluntary or by the Court.

material omission from statement (2) relating to An officer or former officer of the company financial position commits an offence if, during the liquidation, the officer or of company in former officer makes a material omission from a statement liquidation relating to the company's financial position.

(3) An officer or former officer of the company is also taken to have committed an offence under subsection (2) if , before the commencement of the liquidation, the officer or former officer has made any material omission from a statement relating to the company's financial position.

1320 Insolvency 2015 No.18 (4) In a prosecution for an offence under this section, it is a defence to prove that the officer or former officer had no intention to defraud.

(5) A person who is found guilty of an offence under this section is liable on conviction to a fine not exceeding one million shillings or to imprisonment for twelve months, or to both.

503.

(1) This section applies to a company that is in Offence to make liquidation, whether voluntary or by the Court.

false representations to (2) An officer or former officer of the company creditors of if- company in commits an offence liquidation.

(a) the officer or former officer makes a false representation; or (b) does any other fraudulent act, for the purpose of obtaining the consent of the company's creditors or any of them to an agreement relating to the company's affairs or to the liquidation.

(3) An officer or former officer of the company is also to be taken to have committed an offence under subsection (2) if, before the commencement of the liquidation, the officer or former officer - (a) made any false representation; or (b) did any other fraudulent act, for the purpose of obtaining that consent.

(4) An officer or former officer who is found guilty of an offence under this section is liable on conviction to a fine not exceeding two million shillings and to imprisonment for a term not exceeding five years, or to both.

504.

(1) This section applies to the following persons: Power of the Court to make (a) an officer or former officer of a company that is orders against in liquidation (whether by the Court or delinquent voluntarily); directors, liquidators, etc.

(b) a person who is or has acted as the liquidator of such a company; (c) not being a person referred to in paragraph (a) or (b)-a person who has been concerned in the promotion, formation or management of such a company.

L32L 2015 Insolvency No.18 (2) If, during the course of the liquidation of a company, it appears that a person to whom this section applies has or may have- (a) misapplied or retained, or become accountable for, money or property of the company; or (b) committed misfeasance or a breach of any fiduciary or other duty in relation to the company, the Official Receiver, the liquidator of the company or a creditor or contributory of the company may make an application to the Court to conduct an examination under subsection (6).

(3) The reference in subsection (2) to misfeasance or a breach of any fiduciary or other duty in relation to the company includes, in the case of a person who has acted as liquidator of the company, any misfeasance or breach of any fiduciary or other duty in connection with the carrying out of the liquidator's functions as liquidator of the company.

(4) An application under subsection (2) may be made in relation to a person who has acted as liquidator of the company only with the approval of the Court given after the person has been released from the responsibilities of liquidator.

(5) A contributory may make an application under subsection (2) only with the approval of the Court.

(6) On the hearing of an application made under subsection (2), the Court may undertake an examination into the conduct of the person in relation to whom the application was made.

(7) If, at the conclusion of the examination, the Court finds that the person examined has engaged in conduct of a kind referred to in subsection (2), it may make an order compelling the person- (a) to repay, restore or account for the money or property or any part of it, with interest at such rate as the Court considers appropriate; or (b) to contribute such amount to the company's assets as compensation for the misfeasance, breach of fiduciary or other duty as the Court considers fair and reasonable.

1322 No.

L8 Insolvency 20ts 505.

(l) A liquidator of a company may make an Power of the application to the Court to make an order under subsection Court to make orders against (2) it- officers of company and (a) in the course of the liquidation of the company, others found to the liquidator forms the view that a business of have participated in fraudulent the company has been carried on with intent to trading by defraud creditors of the company or creditors of company in any other person, or for any fraudulent purpose; liquidation.

and (b) the liquidator believes that specified persons participated (directly or indirectly) in the business with the knowledge that the business was being carried on in that manner.

(2) If, on hearing an application made under subsection (1), the Court finds that the persons specified in the application did in fact participate (directly or indirectly) in a business of the company with the knowledge that it was being carried on in the manner referred to in subsection (lXa), it may order those persons (or any of them) to make such contributions to the company's assets as the Court considers fair and reasonable.

(3) The persons specified in an application made under subsection (2) are entitled to be served with a copy of the application and to appear and be heard as respondents at the hearing of the application, (4) If the Court makes an order against a person under subsection (2), it may also make an order disqualifying the person from- (a) being or acting as a director of a company or a partner of a limited liability partnership; (b) being or acting as a liquidator, provisional liquidator or administrator of a company or limited liability partnership; (c) being or acting as a supervisor of a voluntary :rrrangement approved by the company or a limited liability partnership; or (d) in any way, whether directly or indirectly, being concerned in the promotion, formation or management of a company or limited liability partnership, 1323 2015 Insolvency No.18 for such period, not exceeding fifteen years, as may be specified in the order.

506.

(l) This section applies- Power of the Court to make (a) to a company that is in insolvent liquidation; and orders against officers of (b) to a person who, at a time before the company engaging in commencement of the liquidation, was an officer wrongful trading.

of the company.

(2) For the purposes of this section- (a) a company is in insolvent liquidation if, at the time the liquidation commences, its assets are insufficient for the payment of its debts and other liabilities and the expenses of the liquidation; and (b) the person in respect of whom an application is made under subsection (3) is the respondent to the application.

(3) If, in the course of the liquidation of a company, it appears to the liquidator that a person to whom this section applies knew or ought to have known that there was no reasonable prospect that the company would avoid being placed in insolvent liquidation, the liquidator may make an application to the Court for an order under subsection (5).

(4) The Court may hear an application made under subsection (3) only if the person in respect of whom the application was made has been served with a copy of the application.

(5) On the hearing of an application made under subsection (3), the Court may make an order declaring the respondent to be liable to make such contribution (if any) to the company's assets as the Court considers appropriate, but only if it is satisfied that, at the relevant time, the respondent knew or ought to have known that there was no reasonable prospect that the company would avoid being placed in insolvent liquidation.

(6) However, the Court may not make such an order if satisfied that the respondent took such steps to avoid potential loss to the company's creditors as the respondent ought reasonably to have taken, assuming that the respondent knew that there was no reasonable prospect of the company avoiding going into solvent liquidation.

1324 No.

18 Insolvency 2015 (7) Nothing in this section affects the operation of section 505.

(8) If the Court makes an order against a person under subsection (5), it may also make an order disqualifying the person from- (a) being or acting as a director of a company or limited liability partnership ; (b) being or acting as a liquidator, provisional liquidator or administrator of a company or limited liability partnership; (c) being or acting as a supervisor of a voluntary arrangement approved by the company or limited liability partnership; or (d) in any way, whether directly or indirectly, being concerned in the promotion, formation or management of a company or limited liability partnership, for such period, not exceeding fifteen years, as may be specified in the order.

507.

(1) On the hearing of an application under Supplementary section 505 or 506, the liquidator may personally give provisions relating to proceedings evidence or call witnesses.

under sections 505 (2) If makes 505 or and 506.

the Court an order under section 506, it may make such further orders as it considers appropriate for giving effect to the order.

(3) [n panicular, the Court may- (a) provide for the liability of any person under the order to be a charge- (i) on any debt or obligation due from the company to the person; or (ii) on any mortgage or charge or any interest in a mortgage or charge on assets of the company held by or vested in the person, or any other person on the person's behalf, or any other person who claims as an assignee from or through the person liable, or any person acting on that person's behalf; and 7325 2015 Insolvency No.18 (b) from time to time make such further order as may be necessary for enforcing a charge imposed under paragraph (a).

(4) For the purposes of subsection (3)(a)(ii), "assignee"- (a) includes a pgrson to whom or in whose favour, by the directions of the person made liable, the debt, obligation, mortgage or charge was created, issued or transferred or the interest created; but (b) does not include an assignee for valuable consideration (not including consideration by way of marriage) given in good faith and without notice of any of the matters on the ground of which the order is made.

(5) If the Court makes an order under section 505 or 506 in relation to a person who is a creditor of the company, it may direct that the whole or any part of any debt owed by the company to that person, and any interest on the debt, ranks in priority after all other debts owed by the company and after any interest on those debts.

(6) The Court can make an order under section 505 or 506 even if the person concerned may be criminally liable in respect of matters giving rise to the making of the order.

508.

(1) This section applies to a person if- Director of company in (a) a company is in insolvent liquidation on or after insolvent liquidation the commencement of this section; and prohibited from being director of, (b) the person was a director of the company at any or being involved time during the twelve months immediately with, any other company that is preceding the date on which the liquidation of the known by a company commenced.

prohibited name.

(2) For the purposes of this section, a name is a prohibited name in relation to such a person if- (a) it is a name by which the company was known at any time during that period of twelve months; or (b) it is a name that is so similar to a name of the kind referred to in paragraph (a) as to suggest an association with the company.

1326 Insolvency 2015 No.18 (3) Except with approval of the Court, or in such circumstances as rnay be prescribed by the insolvency regulations, a person to whom this section applies shall not at any time during the five years from and including the date on which the liquidation of the company commenced- (a) be a director of any other company, or any limited liability partnership, that is known by a prohibited name; (b) in any way (directly or indirectly) be concerned or take part in the promotion, formation or management of any such company or partnership; or (c) in any way (directly or indirectly) be concerned or take part in the carrying on of a business carried on (otherwise than by a company or limited liability partnership) under a prohibited name.

(4) A person who contravenes this section commits an offence and on conviction is liable to a fine not exceeding one million shillings or to imprisonment for a term not exceeding twelve months, or to both.

(5) A reference in this section, in relation to a time, to a name by which a company or limited liability partnership is known is a reference to the name of the company or partnership at that time or to any name under which the company or partnership carried on business at that time.

(6) For the purposes of this section, a company is in insolvent liquidation if, at the time the liquidation commences, the company's assets are insufficient for the payment of its debts and other liabilities and the expenses of the liquidation.

(7) In this section, "company" includes a company to which Part VII applies.

509.

(1) A person is personally responsible for all the Circumstancos in relevant debts of a company if at any time- which persons arr personally liablc (a) the person is involved in the management of the for debts of compsny.

company in contravention of section 508; or L327 2015 Insolvency No.18 (b) while involved in the management of the company-the person acts or is willing to act on instructions given (without the approval of the Court) by a person to whom subsection (2) applies.

(2) This subsection applies to the following persons: (a) a person who is involved in the management of the company in contravention of section 508; (b) a person who is subject to a disqualification order or disqualification undertaking, or foreign restrictions, under the Companies Act, 2015; (c) a person who is subject to any other restriction or disability prescribed by the insolvency regulations for the purposes of this section.

(3) If, because of subsection (1), a person is personally responsible for the relevant debts of a company, the person is jointly and severally liable for those debts with the company and any other person who, whether under this section or otherwise, is so liable.

(4) For the purposes of this section, the relevant debts of a company are- (a) in relation to a person who is personally responsible under paragraph (a) of subsection (1)-such debts and other liabilities of the company as are incurred at a time when the person was involved in the management of the company; and (b) in relation to a person who is personally responsible under paragraph (b) of that subsection-such debts and other liabilities of the company as are incurred at a time when the person was acting or was willing to act on instructions given as referred to in that paragraph.

(5) For the purposes of this section, a person is involved in the management of a company if the person- (a) is a director of the company; or (b) is concerned, whether directly or indirectly, or takes part, in the management of the company.

1328 Insolvency 2015 No.18 (6) For the purposes of this section, a person who, as a person involved in the management of a company, has at any time acted on instructions given (without the approval of the Court) by a person to whom subsection (2) applies is presumed, unless the contrary is shown, to have been willing at any later time to act on any instructions given by that person.

(7) In this section, "company" includes a company to which Part VII applies.

510.

(1) If, in the course of liquidating a company, Prosecution of the Court concludes that a person who was at the relevant delinquent officers and time a past or present officer, or a member, of the company members of may have committed an offence in relation to the company company in for which the person is criminally liable, the Court may liquidation.

(either on the application of a person interested in the liquidation or on its own initiative) direct the liquidator to report the matter to the Official Receiver.

(2) If, in the case of a company being liquidated by the Court, the liquidator (not being the Official Receiver) concludes that a person who, at the relevant time was a past or present officer, or a member, of the company, may have committed an offence in relation to the company for which the person is criminally liable, the liquidator shall report the matter to the Official Receiver.

(3) If, in the course of a voluntary liquidation, the liquidator concludes that a person who, at the relevant time, was a past or present officer, or a member, of the company, may have committed an offence in relation to the company for which the person is criminally liable, the liquidator shall immediately report the matter to the Official Receiver.

(4) In making a report to the Official Receiver in accordance with subsection (1), (2) or (3), the liquidator shall provide the Official Receiver with- (a) such information; and (b) such access to and facilities for inspecting and taking copies of documents, as the Official Receiver reasonably requires and the liquidator is reasonably able to give or provide.

(5) As soon as practicable after receiving a report of a matter in accordance with subsection (I), (2) or (3), the _r_l L329 20ts Insolvency No.18 Official Receiver shall forward the report to the Attorney General for further investigation, together with- (a) the information and documents (if any) given or provided in accordance with subsection (4); and (b) such observations on the report and on the information and documents (if any) as the Official Receiver considers relevant.

(6) If the liquidator of a company being liquidated by the Court is the Official Receiver and the Official Receiver concludes that a person who, at the relevant time was a past or present officer, or a member, of the company, may have committed an offence in relation to the company for which i the person is criminally liable, the Official Receiver shall I immediately report the matter to the Attorney General for I further investigation, together with such observations on the matter as the Official Receiver considers relevant.

(7) On receiving a report made under subsection (5) I or (6), the Attorney General shall investigate the matter reported and such other matters relating to the affairs of the company as appear to the Attorney General to require [- investigation.

(8) For the purpose of an investigation under I subsection (7), the Attorney General may exercise any of the powers conferred on an inspector appointed under the Companies Act,2015 to investigate a company's affairs.

(9) If, in the course of a voluntary liquidation, the l Court concludes that- (a) any past or present officer of the company, or any member of it, has committed an offence as I referred to in subsection (1); and (b) no report with respect to the matter has been made by the liquidator in accordance with subsection (3), I the Court may, on the application of any person interested in the liquidation or on its own initiative, direct the liquidator to make such a report.

(10) On the making of a report in accordance with subsection (9), this section has effect as though the report had been made in accordance with subsection (3).

1330 Insolvency 2015 No.18 511.

(1) For the purpose of an investigation by the Obligations Attorney General under 510(4), a person has the same arising under obligation to produce documents or give information, or section 5 10.

otherwise assist the Attorney General, as the person would have in relation to an inspector appointed under the Companies Act,2015.

(2) An answer given by a person to a question put to the person in exercise of the powers conferred by section 510(8) may be used in evidenc against the person.

(3) However, in criminal proceedings in which that person is charged with an offence to which this section applies- (a) evidence relating to the answer may not be adduced; and (b) questions relating to it may not be asked, by or on behalf of the prosecution, unless evidence relating to it is adduced, or a question relating to it is asked, in the proceedings by or on behalf of that person.

(4) This section applies to all offences other than an offence under sections 108 and 114 of the Penal Code (which respectively deal with false statements made on oath otherwise than in judicial proceedings or made cap.63 otherwise than on oath).

(5) If criminal proceedings are begun by the Director of Public Prosecutions following an investigation under section 510(7), the liquidator and every officer and agent of the company past and present (other than the defendant) shall provide the Director of Public Prosecutions with such assistance in connection with the prosecution as the liquidator, officer or agent is reasonably able to give.

(6) In subsection (5), "agent" includes any bank or advocate of the company and any person employed by the company as auditor, whether that person is or is not an officer of the company.

(7) If a person fails to provide assistance as required by subsection (5), the Court may, on the application of the Director of Public Prosecutions or the Attorney General, make an order directing the person to comply with that subsection.

1331 Insolvency 2015 No.18 (8) If the application is made with respect to a liquidator, the Court may also make an order directing the costs to be borne by the liquidator personally.

(9) However, the Court may not make such an order if it is established that the failure to comply was due to the liquidator having insufficient assets of 'fhe company to enable the liquidator to provide the required assistance.

PART VII-LIQUIDATION OF UNREGISTERBD COMPANIES 512.

For the purposes of this Part, "unregistered Meaning of company" includes any association and any company, other "unregistered company" for than a company registered under the Companies Act, 2015.

purposes of this Part.

513.

Subject to the provisions of this Part- Liquidation of unregistered (a) any unregistered company may be liquidated companies.

under Pat VI; and (b) the provisions of that Part relating to liquidation apply to an unregistered company.

(2) An unregistered company cannot be liquidated under this Part voluntarily.

514.

(1) The circumstances in which an unregistered Circumstances in company can be liquidated are as follows: which unregistered (a) if the company is dissolved, or has ceased to company can be carry on business, or is carrying on business only liquidated.

for the purpose of liquidating its affairs; (b) if the company is unable to pay its debts; (c) if the Court is of opinion that it is just and equitable that the company should be liquidated.

(2) An unregistered company is, for the purposes of subsection (lxb), unable to pay its debts if there is a creditor, by assignment or otherwise, to which the company owes an amount exceeding seventy-five thousand shillings then due and- (a) the creditor has served on the company, by leaving at its principal place of business, or by delivering to an officer of the company, or by otherwise serving in such manner as the Court may approve or direct, a written demand requiring the company to pay the amount due; and 1332 No.

18 Insolvency 2015 (b) the company has, within the twenty-one days after the service of the demand, failed to pay the amount or to secure or compound for it to the creditor's satisfaction.

(3) The amount of money for the time being specified in subsection (2) is subject to inciease or reduction by the insolvency regulations, but no increase in the amounts so specified affects any case in which the liquidation application was made before the increase took effect.

(4) An unregistered company is, for the purposes of subsection (lxb), also unable to pay its debts if legal proceedings have been brought against any member of the company for a debt or demand due, or claimed to be due, from the company, or from the member as such, and- (a) notice of the bringing of the proceedings has been served on the company by leaving it at the company's principal place of business (or by delivering it to an officer of the company, or by otherwise serving it in such manner as the Court may approve or direct); and (b) the company has not within twenty-one days after service of the notice- (i) paid, secured or compounded for the debt or demand; (ii) obtained a stay to the proceedings; or (iii) indemnified the defendant to the defendant's reasonable satisfaction against the proceedings, and against all costs, damages and expenses to be incurred by the defendant because of it.

(5) An unregistered company is, for the purposes of subsection (lxb), also unable to pay its debts- (a) if execution or other process issued on a judgment, decree or order obtained in any Court in favour of a creditor against the company, or any member of it as such, or any person authorised to be sued as nominal defendant on behalf of the company, is returned unsatisfied; or 1333 Insolvency No.

lE (b) if it is otherwise proved to the satisfaction of the Court that the company is unable to pay its debts as they fall due.

(6) An unregistered company is also unable to pay its debts for the purposes of subsection (1)(b) if it is proved to the satisfaction of the Court that the value of the company's assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities.

(7), In this section (3), "officer", in relation to an unregistered company, means the secretary, or a director, manager or principal officer, of the company.

515.

(1) If a company incorporated outside Kenya Company that has been carrying oh business in Kenya ceases to carry incorporated outside Kenya on business there, it can be liquidated as an unregistered may be liquidated company under this Act.

though dissolved.

(2) Subsection (1) has effect even if the company has been dissolved or has otherwise ceased to exist as a company in accordance with the laws of the country under which it was incorporated.

516.

(1) If an unregistered company is in liquidation, Contributories in each person is a contributory who is liable- liquidation of unregistered (a) to pay or contribute to the payment of any debt or company.

liability of the company; (b) to pay or contribute to the payment of any amount for the adjustment of the rights of members among themselves; or (c) to pay or contribute to the payment of the expenses of liquidating the company.

(2) Each contributory is liable to contribute to the company's assets all amounts due from the contributory in respect of the contributory is liable under subsection (1).

517.

The provisions of this Part with respect to staying Power ofthe or restraining legal proceedings against a company after the Court to stay or restrain making of an application for liquidation and before the proceedings.

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.If an order has been made for liquidating an Actions stayed on unregistered company, no legal proceedings may be begun liquidation order.

1334 Insolvency 2015 No.18 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.

(1) The provisions of this Part with respect to Provisions of this unregistered companies uue in addition to those of Part VI Part to be with respect to the liquidation of companies by the Court.

cumulative.

(2) The Court or liquidator may exercise any powers or do any act in the case of unregistered companies that might be exercised or done by it or by the liquidator in liquidating a company that is registered under the Companies Act,2015.

PART VIII-ADMINISTRATION OF INSOLVENT COMPANIES Division 1-Introductory provisions: nature and objective of administration 520.In this Part- Interpretation: in relation to a company, means a Part VIII.

"administrator", 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.

1335 Insolvency No.18 521.

For the purposes of this Act- What is (a) a company is "under administration" while the administration? appointment of an administrator of the company continues to have effect; (b) a company "enters administration" when the appointment of an administrator takes effect; (c) a company ceases to be under administration when the appointment of an administrator of the company ends in accordance with this Part; and (d) a company does not cease to be under administration only because an administrator vacates office (whether through resignation, death, removal or otherwise).

522.

(l) The objectives of the administration of a rhe objectives or company dr6 ttre follo"wing: administration' (a) to maintain the company as a going concern; (b) to achieve a better outcome for the company's creditors as a whole than would likely to be the case if the company were liquidated (without first being under administration); (c) to realise the property of the company in order to make a distribution to one or more secured or preferential creditors.

(2) Subject to subsection (4), the administrator of a company shall perform the administrator's functions in the interests of the company's creditors as a whole.

(3) The administrator shall perform the administrator's functions with the obiective specified in subsection (1)(a) unless the administrat6r believes either- (a) that it is not reasonably practicable to achieve (b) that objective; or that the objective specified in subsection (1)(b) would achieve a better result for the company's creditors as a whole.

(4) The administrator may perform the administrator's functions with the obiective specified in subsection (1)(c) only if- (a) the administrator believes that it is not reasonably practicable to achieve either of the objectives specified in subsection (lXa) and (b); and r336 Insolvency 2015 No.18 (b) the administrator does not unnecessarily harm the interests of the creditors of the company as a whole.

Division 2-Appointment of administrators otherwise than by the Court 523.

A person may be appointed as administrator of a Who can appoint company- an administrator? (a) by administration order of the Court in accordance with Division 3; (b) by the holder of a floating charge under section 534; or (c) by the company or its directors under section 541.

SA.The administrator of a company shall perform the Duty of administrator's functions as quickly and efficiently as is administrator.

reasonably practicable.

525.

An administrator is an officer of the Court, Status of whether or appointed by the Court or not.

administrator.

526.

A person may be appointed as administrator of a Qualification for company only if the person is an authorised insolvency appointment of administrators.

practitioner.

527.(1) Except as provided by subsection (2), a Administrator not r1 I to be appointed if person may not be appointed as administrator of a company company is : that is already under adminisffation.

already under I administration.

! (2) Subsection (1) is subject to sections 606 to 613 ( and sections 616 to 619.

I 528.

(1) A person may not be appointed as Administrator not administrator of a company that is in liquidation because to be appointed if I company is in of- liquidation.

i (a) a resolution for voluntary liquidation; or (b) a liquidation order.

(2) Subsection (1)(a) is subject to section 557 (power of liquidator to make an application for administration).

(3) Subsection (1)(b) is subject to sections 556 (application if company is subject to a floating charge).

529.

(l) A person may not be appointed under this Administrator not Part as administrator of* to be appointed in respect of banking, finance -4 7337 Insolvency No.18 (a) a company that is a bank; or and insurance (b) companies.

a company that enters into contracts of insurance or carries on insurance business.

(2) Subsection (1) is subject to section 35A of the cap'488 Banking Act.

Division 3-Appointment of administrators by the Court 530.

An administration order is an order appointing a What is an person as the administrator of a company and providing for administration order? the administration of the company by that person.

531.

The Court may make an administration order in Conditions for relation to a company only if satisfied- making administration (a) that the company is or is likely to become unable orders.

to pay its debts; and (b) that the administration order is reasonably likely to achieve an objective of administration.

532.

(1) An application to the Court for an Who may make administration order in respect of a company may be made an application to the Court to for an only by the following persons: administration order in respect of (a) the company; company.

(b) the directors of the company; (c) one or more creditors of the company; (d) a combination of persons specified in paragraphs (a) to (c); (e) any other person of a class prescribed by the insolvency regulations for the purposes of this section.

(2) As soon as is reasonably practicable after the making of an application for administration, the applicant shall notify- (a) any person who is or may be entitled to appoint an administrator of the company under section 534; and (b) such other persons (if any) as may be prescribed by the insolvency regulations for the purposes of this section.

1338 Insolvency No.18 (3) An application for administration may not be withdrawn without the approval of the Court.

(4) In subsection (1), "creditor" includes a contingent creditor and a prospective creditor.

533.

(1) On hearing an application for an Powers of the administration order in respect of a company, the Court Court on hearing application for may- administration (a) make the administration order sought; order.

(b) dismiss the application; (c) adjourn the hearing or unconditionally; (d) make an interim order; (e) treat the application as a liquidation application and make any order that the Court could make (0 under section 426; make any other order that the Court considers appropriate.

(2) An appointment of an administrator by an administration order takes effect- (a) at a time specified in the order; or (b) if no time is specified, when the order is made.

(3) An interim order under subsection (1)(d) may, in particular- (a) restrict the exercise of a power of the directors or the company; (b) make provision conferring a discretion on the Court or on a person qualified to act as an insolvency;or (c) do either of those things.

Division 4-Appointment of administrator by holder of floating charge 534.

(1) The holder of a qualifying floating charge in Holder of floating respect of a company's property may appoint an charge may appoint administrator of the company.

administrator, (2) For the purposes of subsection (1), a floating charge is a qualifying floating charge if it is created by a document that- 1339 2015 Insolvency No.18 (a) states that this section aoplies to the floating charge; or (b) purports to empower the holder of the floating charge to appoint an administrator of the company.

(3) For the purposes of subsection (1), a person is the holder of a qualifying floating charge in respect of a company's property if the person holds one or more debentures of the company secured- (a) by a qualifying floating charge that relates to the whole or substantially the whole of the company's property; (b) by a number of qualifying floating charges that together relate to the whole or substantially the whole of the company's property; or (c) by charges and other forms of security that together relate to the whole or substantially the whole of the company's property and at least one of which is a qualifying floating charge.

535.

(1) A person may not appoint an administrator Restrictions on the under section 534 unless the person has given at least three power of holder of floating charge to days' notice to the holder of any prior floating charge that appoint satisfies subsection (2) of that section.

administrator.

(2) For the purposes of subsection (1), a floating charge has priority over another if- (a) it was created first; or (b) it is to be treated as having priority in accordance with an agreement to which the holder of each floating charge was party.

536.

A person may not be appointed as administrator Administrator not under section 534 if the floating charge on which the to be appointed if relevant floating appointment depends is unenforceable.

charge is not enforceable.

537.

(1) A person who appoints an administrator of a Holder of rclevant company under section 534 shall lodge with the Court- floating charge to notify the Court (a) a notice of appointment that complies with on appointing subsections (2); and administrator.

(b) such other documents as may be prescribed by the insolvency regulations for the purposes of this section.

1340 No.

18 Insolvency 2015 (2) A notice of appointment complies with this subsection if- (a) it includes a statutory declaration by or on behalf of the person who makes the appointment- (i) that the person is the holder of a qualifying floating charge in respect of the company's property; (ii) that each floating charge relied on in making the appointment is (or was) enforceable on the date of the appointment; and (iii) that the appointment is in accordance with this Part; and (b) it identifies the administrator and is accompanied by a statement by the administrator- (i) that the administrator consents to the appointment; (ii) that in the administrator's opinion the purpose of administration is reasonably likely to be achieved; and (iii) giving such other information and opinions of a kind prescribed by the insolvency regulations for the purposes of this section.

(3) A statutory declaration under subsection (2) is rl I not effective unless it is made during the period prescribed I by the insolvency regulations for the purposes of this I section.

ii 538.

The appointment of an administrator under When section 534 takes effect when the requirements of section administrator'sI appointment takes I 537are satisfied.

effect.

539.

(1) As soon as is reasonably practicable after Duty of holder of i the requirements of section 537 are satisfied, the person relevant floating I charge to notify who appointed the administrator under section 534 shall appointment to i notify the administrator, and such other persons as may be administrator and t other persons.

I prescribed by the insolvency regulations for the purposes of 1 this section, that those requirements have been satisfied.

{ (2) A person who, without reasonable excuse, fails to comply with subsection (1) commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

It 1341 I 20rs Insolvency No.18 I 540.

(1) If- Power of the Court to order (a) a person purports to appoint an administrator person invalidly I under section 534; and appointed to be indemnified (b) the appointment is discovered to be invalid, against liability.

i any person who appears to the Court to have aI legitimate interest in the matter may apply to the Court for an order under subsection (2).

iI (2) On the hearing of an application made under i subsection (1), the Court may order the person who l purported to make the appointment to indemnify the person inted inst liabilityliability is to the appor against that solely attributable t appointment's invalidity.

I Dlvislon 5-Appoin,."t,[:Hnistrator by company or I 541.

(1) A company may appoint an administrator.

Adminisilator I may be appointed I (2) The directors of a company may appoint an by company or by its directors.

i administrator.

I S42.lt an administrator of a company- Restrictions on I power of company (a) is appointed under section 541; or or its directors to appoint i (b) is appointed on an application for administration administfator, i made by the company or its directors, il, axother person may not be appointed as an t administrator of the company appointed under that section I during the twelve months from and including the date the I on which the appointment referred to in paragraph (a) or (b) I ends.

I 543.

(l) If a moratorium for a company under Other restrictiotis l Division 2 of Part IX ends on a date when no voluntary on power of company or its I arTangement is in force in respect of the company, this directors to I section applies for the twelve months from and including appoint that date.

administrator- lI (2) This section also applies for the period of twelve t months from and including date on which a voluntary I arrangement in respect of a company ends if- (a) the arrangement was made during a moratorium i for the company under Part IX; and I (b) the arrangement endS prematurely.

IIII lr 1342 Insolvency 2015 No.18 (3) While this section applies, an administrator of the company may not be appointed under section 541.

544.

An administrator of a company may not be Circumstances in appointed under section 541if which company or - its directors may (a) an application for the liquidation of the company not appoint administrator.

has been presented and is not yet disposed of; (b) an application for administration has been made and is not yet disposed of; or (c) an administrative receiver of the company is in office.

545.

(1) A person who proposes to make an Notice to be given appointment under section 541 shall give to any person of intention to appoint who is or may be entitled to appoint an administrator of the administrator.

company under section 534 a notice that complies with subsection (3).

(2) A person who proposes to make an appointment under section 541 shall also give such a notice to such other persons as may be prescribed by the insolvency regulations for the purposes of this section.

it- (3) A notice complies with this subsection only if (a) identifies the proposed administrator ; (b) contains such other information (if any) as may be prescribed by the insolvency regulations for the purposes of this section; and (c) is given at least seven days' before the appointment is to be made.

546.

(1) As soon as practicable after a person has Person giving given notice of an intention to make an appointment under notice of intention to appoint section 545, the person shall lodge with the Court- administrator to lodge certain (a) a copy of the notice and of any document that documents with accompanied it; and the Court.

(b) a statutory declaration by the person that complies with subsection (2).

(2) A statutory declaration complies with this subsection if- (a) it declares- 1343 2015 Insolvency No.l8 (i) that the company is or is likely to become unable to pay its debts; I (ii) that the company is not in liquidation; and : iI (iii) that, so far as the declarant is able to I prevented I ascertain, the appointment is not I by sections 542to 544; I (b) (if contains such additional information any) as I may be prescribed by the insolvency regulations II for the purposes of this section; and i (c) is made within such period as is so prescribed.

II 547.

(l) An appointment may not be made under Further I restrictions on tI section 54lunless the person who makes the appointment making I has complied with the requirements of section 545 and 546 appointments I and- under section 541.

III (a) the period of notice specified in section 545(1) ) I has expired; or II (b) each person to whom notice has been given under II section 545(1) has consented in writing to the I making of the appointment.

II (2) An appointment may not be made under section i 541 after the period of fourteen days beginning with the II date on which the notice of intention to appoint is lodged Ii under section 546(1).

i, 548.

(1) A person who appoints an administrator of a Person appointing company under section 541 shall lodge with the Court- administrator under section 541 (a) a notice of appointment that identifies the to lodge certain documents with administrator; the Court.

(b) a statement by the administrator that complies i with subsection (2); (c) a statutory declaration by the person making the appointment that complies with subsection (3); and (d) such other documents ,(if any) as may be prescribed by the insolvency regulations for the purposes of this section.

(2) A staternent complies with this subsection if it- (a) states that the administrator consents to the appointment; t3M No.lE Insolvency 2015 (b) states that jn the administrator's opinion, the objective of the administration is reasonably likely to be achieved; and (c) gives such other information and opinions (if any) as may be prescribed by the insolvency regulations for the purposes of this section.

(3) A statutory declaration complies with this subsection if it- (a) declares- (i) that the declarant is entitled to make an appointment under section 541; (ii) that the appointment is in accordance with this Part; and (iii) that, so far as the declarant is able to ascertain-the statements made and information given in the statutory declaration lodged with the notice of intention to appoint remain accurate; and (b) is made within such period as is prescribed by the insolvency regulations for the purposes of this subsection.

(4) For the purpose of a statement under subsection (2), an administrator may rely on information supplied by directors of the company, unless the administrator has reason to doubt its accuracy.

(5) Any person who fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding five hundred thousand shillings.

549.If no person is entitled to notice of intention to What happens if appoint under section 545(1) so that section 547 does not no one is entitled to notice of apply, the statutory declaration accompanying the notice of intention to appointment is ineffective unless it includes the statements appoint and information required under section 546(2), in which administrator.

case section 5a8(2)(c) does not apply.

550.

The appointment of an administrator under When section 541 takes effect when the requirements of section appointment of administrator 548 are satisfied.

under this Division takes effect.

1345 2015 Insolvency No.18 551.

(l) As soon as is reasonably praaticable after Person making the requirements of section 548 are satisfied, the person appointment to notify who has appointed the administrator under section 541 appointment !o shall notify the administrator, and such other persons as administrator and may be prescribed by the insolvency regulations for the others.

purposes of this section, that those requirements have been satisfied.

(2) A person who, without reasonable excuse, fails to comply with subsection (1) commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

552.If, before the requirements of section 548 are Appointment satisfied, the company enters administration under an under section 541 not to take effect administration order, or because of an appointment under in certain cases.

section 534- (a) the appointment under section 541has no effect; and (b) the requirement imposed by section 551 does not apply.

s53.

(r) rf- Power ofthe Court to order (a) a person purports to appoint an administrator person invalidly appointed to be under section 541; and indemnified (b) the appointment discovered to be invalid, against liability.

is any person who appears to the Court to have a legitimate interest in the matter may apply to the Court for an order under subsection (2).

(2) On the hearing of an application made under subsection (l), the Court may order the person who purported to make the appointment to indemnify the person appointed against liability that is solely attributable to the appointment's invalidity.

Division 6-Applications for administration-special cases 554.

(l) If an application for administration in Power of the respect of a company- Court to make administration of (a) qualifying order in respect is made by the holder of a floating company on charge in respect of the company's property; and application made by holder of 1346 Insolvency 20t5 No.18 (b) includes a statement that the application is made qualifying floating in reliance on this section, charge even if company may be able to pay its the Court may make an administration order whether debts.

or not it is satisfied that the company is or is likely to become unable to pay its debts.

(2) However, the Court may make such an order only if it is satisfied that the applicant could properly appoint an administrator under section 534.

555.

If- Holder of qualifying floating (a) an application for administration in respect of a charge may company is made by a person who is not the intervene in application made holder of a qualifying floating charge in respect by person who is of the company's property; and not the holder of such a charge.

(b) the holder of a qualifying floating charge in respect of the company's property applies to the Court to have a specified person appointed as administrator and not the person specified by the administration applicant, the Court shall grant the application unless the Court believes it should be refused because of the particular circumstances of the case.

556.

(1) If the holder of a qualifying floating charge Other in respect of a company's property could appoint an circumstance in which holder of administrator under section 534 but for section 528(1)(b), qualifying floating that holder may nevertheless make an application to the charge may make application for Court for an administration order under subsection (2).

administration (2) If the Court makes an administration order on order, hearing an application made under subsection (1), the Court- (a) shall discharge the liquidation order; (b) shall make provision for such matters as may be prescribed by the insolvency regulations for the purposes of this section; (c) may make such other provision of a consequential nature as it considers appropriate; and (d) shall specify which of the powers under this Part are to be exercisable by the administrator.

1347 2015 Insolvency No.18 (3) If the Court specifies the powers under this Part that are to be exercisable by the administrator, this Part has, in relation to the exercise of those powers, effect with such modifications as the Court may specify.

557.

(1) The liquidator of a company may make an Power of application to the Court for an administration order under liquidator of company to make subsection (2).

an application for its administration (2) If the Court makes an administration order on the hearing of an application made under subsection (1), the Court- (a) shall discharge any liquidation order existing in respect of the company; (b) may make such other provision of a consequential nature as it considers appropriate; and (c) shall specify which of the powers under this Pan are to be exercisable by the administrator.

(3) If the Court specifies the powers under this Part that are to be exercisable by the administrator, this Part has, in relation to the exercise of those powers, effect with such modifications as the Court may specify.

Division 7-Effect of administration orders 558.

(1) On the making of an administration order in Administration respect of a company- order in respect of company prevents (a) an application for the liquidation of the company making of application for may not be made; and liquidation order and suspends (b) any application for the liquidation of the pending company that is then pending is suspended while applications for liquidation order.

the company is under administration.

(2) Subsection (lXa) does not prevent an application from being made for the liquidation of the company under section 425 or the Court from making a liquidation order in respect of such an application.

(3) If an administrator becomes aware that an application was made under section 425 before the administrator's appointment, the administrator shall apply to the Court for directions under section 580.

r348 No.

18 Insolvency 2015 559.

(l) While a company is under administration- Moratorium on insolvency (a) a resolution for the liquidation of the company proceodings while may not be made; and administration (b) order has effect.

the Court may not make an order for the liquidation of the company.

(2) Subsection (lxb) does not prevent an application from being made for the liquidation of the eompany under section 425 or the Court from making a liquidation order in respect of such an application.

(3) On becoming aware that an application for a liquidation order has been made under section 425, the administrator shall apply to the Court for directions under section 580.

560.

(1) While a company is under administration- Moratorium on other legal pmcess (a) a person may take steps to enforce a security over while the company's property only with the consent of adminisration the administrator or with the approval of the order has effect.

Court; (b) a person may take steps to repossess goods in the company's possession under a credit purchase transaction only with the consent of the administrator or with the approval of the Court; if the Court gives approval-subject to such conditions as the Court may impose; (c) a landlord may exercise a right of forfeiture by peaceable re-entry in relation to premises let to the company only with the consent of the administrator or with the approval of the Court; and (d) a person may begin or continue legal proceedings (including execution and distress) against the company or the company's property only with the consent of the administrator or with the approval of the Court.

(2) In giving approval for a transaction under subsection (1), the Court may impose a condition on, or a requirement in connection with, the transaction.

561.

(1) This section applies if an aoolication for Interim ,--rr;-- --: -:- moratoriumwhen administration in respoct of a company nas Deen ma0e apptication for and- administration order has been 1349 Iisolvency No.lt (a) the application has not yet been granted or made' dismissed; or (b) the application has been granted but the administration order has not yet taken effect.

(2) This section also applies from the time when a copy of notice of intention to appoint an administrator lrnder section 523 is lodged with the Court until- (a) the appointment of the administrator takes effect; or (b) seven days from and including the date of lodgement without an administrator having been appointed.

(3) This section applies from the time when a copy of notice of intention to appoint an administrator is lodged with the Court under section 546(l) until- (a) the appointment of the administrator takes effect; or o) the period specified in section 547(2) expires without an administrator having been appointed.

(4) When this section applies, the following provisions have effect: (a) a resolution may not be passed for the liquidation of the company; (b) the Court may not make an order for the liquidation of the company; (c) a person may take steps to to enforce security over the company's property only with the approval of the Court; (d) a person may take steps to repossess goods in the company's possession under a hire purchase agreement only with the approval of the Court.

(e) a landlord may exercise a right of forfeiture by peaceable re-entry in relation to premises let to (0 the company only with the approval of the Court; a person may begin or continue legal process (including legal proceedings, execution, distress and diligence) against the company or property of the company only with the approval of the Court; 1 350 Insolvency 2015 No.18 (e) a person may take steps to enforce security over the company's property only with the approval of the Court; (0a person may take steps to repossess goods in the company's possession under a hire purchase agreement only with the approval of the Court.

(5) In giving approval for a transaction under subsection (4), the Court may impose a condition on, or a requirement in connection with, the transaction.

(6) Subsection (4Xb) does not prevent an application from being made for the liquidation of the company under section 425 or the Court from making a liquidation order in respect of such an application.

562.

(I) While a company is under administration, Company's the administrator shall ensure that all business documents business documents to state issued by or on behalf of the company or the administrator, that company's and all the company's websites, state- affairs are under (a) administration.

the name of the administrator; and (b) that the affairs and property of the company are being managed by the administrator.

(2) An administrator who, without reasonable excuse, fails to comply with subsection (1) commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

(3) If, while under administration, a company sends or publishes a business document that does not state- (a) the name of the administrator; and (b) that the affairs and property of the company are being managed by the administrator, in the company, and each officer of the company who is default, commit an offence and on conviction are each liable to a fine not exceeding five hundred thousand shillings.

(4) In this section, "business document" means- (a) an invoice; (b) an order for goods or services; (c) a business letter; or 1351 2015 Insolvency No.18 (d) an order form, whether in hard copy, electronic or any other form.

Division 8-Process of administration 563.

(1) As soon as practicable after becoming Announcement of administrator of a company, the administrator shall comply administrator's with subsection (2) and (3).

appointment.

(2) The administrator shall - (a) send a notice of the administrator's appointment to the company; and (b) publish a notice of the administrator's appointment in such publications and in such locations as are prescribed by the insolvency regulations for the purposes of this section.

(3) The administrator shall also- (a) obtain a list of the company's creditors; and (b) send a notice of the administrator's appointment to each creditor of whose claim and address the administrator is aware.

(4) Within seven days from and including the prescribed date, the administrator shall lodge with the Registrar for registration a notice of the administrator's appointment.

(5) Within fourteen days from and including the prescribed date, the administrator shall also send a notice of the administrator's appointment to such classes of persons as may be prescribed by the insolvency regulations for the purposes of this section.

(6) The prescribed date for the purpose of subsections (4) and (5) is- (a) in the case of an administrator appointed by administration order-the date of the order; (b) in the case of an administrator appointed under section 534-the date on which the administrator receives notice under section 539; and (c) in the case of an administrator appointed under section 541-the date on which the administrator receives notice under section 551.

t352 Insolvency 20ls No.l8 (7) On the application of the administrator, the Court may order that subsection (3)(b) or (5)- (a) is not to apply; or (b) is to apply with the substitution of a different period.

(8) An administrator who fails without reasonable excuse to comply with a requirement of this section commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

(9) If, after being convicted of an offence under subsection (B), an administrator continues to fail to comply with the relevant requirement, the administrator commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding fifty thousand shillings for each such offence.

554.

(l) As soon as practicable after becoming Relevant persons administrator of a company, the administrator shall give to provide adminisuator with notice requiring one or more relevant persons to provide stetcment of the administrator with a statement of the company's affairs company's affairs.

that complies with subsection (2).

(2) A statement complies with this subsection if it* (a) is verified by a statutory declaration; (b) gives the particulars of the company's property, debts and liabilities prescribed by the insolvency regulations for the purposes of this section; (c) gives the names and addresses of the company's creditors; (if (d) specifies the security any) held by each creditor; (e) gives the date on whistr oach such security was (0 given; and (if contains such other information any) as may be so prescribed.

(3) In subsection (l) "relevant person" means any of the following: (a) a person who is an officer of the company; (b) a person who took part in the formation of the company during the period of twelve months 1353 Insolvency No.l8 ending with the date on which the company enters administration ; (c) a person employed by the company during that period; (d) a person who is or has been during that period an officer or employee of the company.

(4) For the purpose of subsection (3), a reference to being employed includes being employed through a contract for the supply of services.

565.

(1) The deadline for submitting a statement of Deadline fot financial position is the end of twelve days from and submitting statement of including the day on which the relevant person receives affairs.

notice of the requirement.

(2) The administrator may- (a) revoke a requirement under section 564(l); or (b) extend the deadline specified in subsection (1) (whether before or after expiry).

(3) If the administrator refusps a request to act under subsection (2)- (a) the person whose request is refused may apply to the Court; and (b) the Court may take action of a kind specified in subsection (2).

(4) A person who, without reasonable excuse, fails to comply with a requirement under section 564(1) commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

(5) If, after being convicted of an offence under subsection (4), a person continues to fail to comply with the relevant requirement, the person commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding fifty thousand shillings for each such offence.

566.

(l) The administrator of a company shall make Administrator to a statement setting out proposals for achieving the purpose make statement setting out of administration.

administrator's proposals for (2) The administrator shall ensure that the achieving the proposals* purpose of the 1354 Insolvency 2015 No.18 (a) deal with such matters as may be prescribed by administration.

the insolvency regulations for the purposes of this section; and (b) if applicable, explain why the administrator believes that the objective specified in section 522(l)(a) or (b) cannot be achieved.

(3) Proposals under this section may include- (a) a proposal for a voluntary anangement under Part IX;or (b) a proposal for a compromise or arrangement to be sanctioned under the Companies Act, 2015.

(4) The administrator- (a) shall send a copy of the statement of the administrator' s proposals - (i) to every creditor of the company of whose claim and address the administrator is aware; and (ii) to every member of the company of whose address the administrator is aware; and (b) shall lodge a copy of the statement with the Registrar for registration.

(5) The administrator shall comply with subsection (4)- (a) as soon as is reasonably practicable after the company enters administration; and (b) in any case, not later than sixty days after the date on which the company enters administration, (6) Subsection (a)(a)(ii) is complied with if the administrator publishes in accordance with the insolvency regulations a notice undertaking to provide a copy of the statement of proposals free of charge to any member of the company who applies in writing to a specified address.

(7) An administrator who fails, without reasonable excuse, to comply with subsection (5) commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

(8) If, after being convicted of an offence under subsection (7), an administrator continues to fail to comply 1355 2015 Insolvency No.18 with the relevant requirement of this section, the administrator commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding fifty thousand shillings for each such offence.

(9) A period specified in this section can be varied in accordance with section 622.

567.

The person presiding at a creditors' meeting shall Conduct of ensure that it is conducted in the manner prescribed by the creditors' insolvency regulations.

meetings.

568.

(1) The administrator shall ensure that each Requirement to copy of the administrator's statement of proposals sent to a convene initial creditor in accordance with section 566(4Xb) is creditors' meeting accompanied by an invitation to an initial creditors' meeting to be held- (a) as soon as is reasonably practicable after the company enters administration; and (b) in any case, within seventy days from and including the date on which the company enters administration.

(2) The administrator shall present a copy of the administrator's statement of proposals to the initial creditors' meeting.

(3) The period specified in subsection (lXb) can be varied in accordance with section622.

569.

(1) Section 568(1) does not apply if the when statement of proposals states that the idministrator l"I;:*lll; beligVeS - convene meeting.

(a) that the company has sufficient property to enable each creditor of the company to be paid in full; (b) that the company has insufficient property to enable a distribution to be made to unsecured creditors otherwise than in accordance with section 474(2)(a); or (c) that neither of the objectives specified in section 522(l)(a) and (b) can be achieved.

(2) However, the administrator shall convene an initial creditors' meeting if requested to do so- 1356 Insolvency 2015 No.lt (a) by creditors of the company holding debts amounting to at least ten percent of the total debts of the company; and (b) in the manner, and within the period, prescribed by the insolvency regulations for the purposes of this section.

(3) The administrator shall convene a meeting reguested under subsection (2) for a date within the period prescribed fgr the purpose of subsection (2)(b).

(4) The period so prescribed can be varied in accordance with section 622.

(5) An administrator who fails, without reasonable excuse, !o comply with subsection (3) commits an offence and on coriviction is liable to a fine not exceeding five hundred thousaad shillings.

(6) If, after being convicted of an offence under subsection (5), an administrator continues to fail to convene a creditors' meeting as required by subsection (3), the administrator commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding fifty thousand shillings for each such offence.

570.

(l) An initial creditors' meeting to which an Business to be administrator's proposals are presented shall consider them conducted at initial creditors' and may- meeting and obligation of (a) approve them without modification; or administrator to rcpoft outcome to (b) approve them with modifications to which the the Court and administrator consents.

others, (2) As soon as practicable after the initial creditors' meeting has ended, the administrator- (a) shall report any decision at the meeting taken- (i) to the Court; and (ii) to such other persons as may be prescribed by the insolvency regulations for the purposes of this section; and (b) shall lodge a copy of the report with the Registrar for registration.

(3) An administrator who, without reasonable excuse, fails to comply with subsection (2)(a) or (b) L357 20ts Insolvency No.18 commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings.

(4) If, after being convicted of an offence under subsection (3), an administrator continues to fail to comply with the relevant requirement of that subsection, the administrator commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for each such offence.

571.

(1) This section applies if- Administrator's proposals can be (a) an administrator's proposals have been approved revised.

(with or without modification) at an initial creditors' meeting; (b) the administrator proposes a revision to the proposals; and (c) the administrator believes that the proposed revision is substantial.

(2) When this section applies, the administrator shall- (a) convene a creditors' meeting; (b) send a statement of the proposed revision with the notice of the meeting sent to each creditor; (c) send a copy of the statement, within the period prescribed by the insolvency regulations for the purposes of this paragraph, to each member of the company of whose address the administrator is aware; and (d) present a copy of the statement to the meeting.

(3) An administrator complies with subsection (2Xc) by publishing a notice undertaking to provide a copy of the statement free of charge to any member of the company who applies in writing to the administrator at an address specified in the notice.

(4) The administrator shall publish the notice in such publications and within such period as may be prescribed by the insolvency regulations for the purposes of this subsection.

(5) A creditors' meeting to which a proposed revision is presented shall consider it and may- I 358 No.l8 Insolvency 2015 (a) approve it without modification; or (b) approve it with modifications to which the administrator consents.

(6) As soon as practicable after the coreclusion of a creditors' meeting, the administrator- (a) shall report every decision taken at the meeting- (i) to the Court; and (ii) to such other persons as may be prescribed by the insolvency regulations for the purposes of this section; and (b) shall lodge a copy of the report with the Registrar for registration.

(7) An administrator who, without reasonable excuse, fails to comply with a requirement of this section commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

(8) If, after being convicted of an offence under subsection (7), an administrator continues to comply with the relevant requirement, the administrator commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding fifty thousand shillings for each such offence.

572.

(I) This section applies if an administrator Consequences of reports to the Court that- failure to obtain approval of (a) an initial creditors' meeting has failed to approve administrator's proposals.

the administrator's proposals presented to it; or (b) a creditors' meeting has failed to approve a revision of the administrator's proposals presented to it.

(2) The Court may- (a) make an order terminating the appointment of an administrator with immediate effect or with effect from a specified date; (b) adjourn the hearing conditionally unconditionally; (c) make an interim order; 13s9 20ts Insolvency No.18 (d) make an order declaring an application for a liquidation order to be suspended because of section 558(1)(b); or (e) make any other order (including an order making consequential provision) that the Court considers appropriate.

573.

(1) The administrator of a company shall Power of convene a creditors' meeting if- administrator to convene further (a) in the manner prescribed by the insolvency creditors' regulations, it is requested by creditors of the meetings.

company holding debts amounting to at least ten percent of the total debts of the company; or (b) the administrator is directed by the Court to convene a creditors' meeting.

: (2) An administrator who, without reasonable I excuse, fails to convene a creditors' meeting as required by I this section commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

i (3) If, after being convicted of an offence under ) subsection (2), an administrator continues to fail to comply I with the relevant request, the administrator commits a funher offence on each day on which the failure continues and on conviction is liable to a fine not exceeding fifty l thousand shillings for each such offence.

(4) The fact that an administrator may be prosecuted i for, and convicted of an offence, under this section does not I preclude the Court from finding the administrator guilty of I contempt of the Court for failing to comply with a direction I of the Court.

574.(l) A creditors'meeting may establish a Crcditors' meeting creditors' committee.

may cstablish (2) crcditors' committcc.

A creditors' committee shall perform the functions conferred on it by or under this Act.

(3) A creditors' committee may require the administrator- (a) to appear before the committee at any reasonable time of which the administrator is given at least seven days' notice; and 1360 No.l.8 Insolvency 2015 (b) to provide the committee with such information about the performance of the administrator's functions as the committee reasonably requires.

575.

(1) Any matter or decision that is required or Creditors' permitted by or under this Pan to be dealt with or made at a meeting can be conducted by creditors' meeting may be dealt with or made by correspondence.

correspondence between the administrator and creditors- (a) as provided by the insolvency regulations; and (b) subject to any condition specified in those regulations for the purposes of this section.

(2) A reference in this Part to anything done at a creditors' meeting includes anything done in the course of correspondence in reliance on subsection (1).

(3) A requirement to hold a creditors' meeting is satisfied by conducting correspondence in accordance with this section.

Division 9-Functions and powers of administrator 576.

The administrator of a company has the functions Specifrc functions and powers specified in the Fourth Schedule.

of administrator 577,The administrator of a company- Power of (a) remove a director of the company from administrator to may ;;T;;::13*"^ office; and ofcompany.

(b) may appoint a person to be director of the company (whether or not to filI a vacancy).

578.

The administrator of a company may convene a Power of admitristrator meeting of members or creditors of the company.

to @nvene metings of membem md creditom ofcompany.

579.

(1) On the application of the administrator of a Power of adminishator company, the Court may give directions with respect to the to seek directions frcm the Court.

performance and exercise of the administrator's functions and powers and the conduct of the administration generally.

(2) An administrator shall comply with any directions given to the administrator under subsection (1).

580.

(1) The administrator of a company may take General powers of any action that contributes to, or is likely to contribute to, administrator.

the effective and efficient management of the affairs and property of the company.

1351 2015 Insolvency No.18 (2) A provision of this Part that expressly permits the administrator to do or not to do a specified act does not limit the effect of subsection (1).

(3) A person who'deals with the administrator of a company in good faith and for value need not inquire whether the administrator is acting within the administrator's powers.

581.

(1) A company under administration, or an Company under officer of a company under administration, shall not administration not to perform perform or exercise a management function without the management consent of the administrator.

functions without administrator's (2) For the purpose of subsection (1)- consent- (a) "management function" means a function or power that could be performed or exercised so as to interfere with the exercise of the administrator' s functions; and (b) consent may be general or specific.

(3) A company that contravenes subsection (1) commits an offence and on conviction is liable to a fine not exceeding one million shillings.

(4) An officer of a company who contravenes subsection (1) commits an offence commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings or to imprisonment for a term not exceeding six months, or to both.

582.

(1) The administrator of a company may make a Powcr of distribution to creditors of the company.

administrator to distribute (2) Section 471 and the Second Schedule apply in company's assets relation to a distribution under this section as they apply in to creditors.

relation to the liquidation of a company.

(3) In the case of a creditor of the company who is neither a secured nor a preferential creditor, a payment may be made to the creditor as part of a distribution under this section only with the approval of the Court.

(4) An administrator who makes a payment in contravention of subsection (3) is guilty of contempt of the Court and is liable to be punished accordingly (in addition to any other punishment to which the administrator may be subject).

I r362 Insolvency 20ts No.18 583.

The administrator of a company may make a Power of payment otherwise than in accordance with section 582 or administrators to make special paragraph 13 of the Fourth Schedule if the administrator payments in believes it likely to assist achievement of the puipose of certain cases.

administration.

584.Immediately on being appointed as administrator Duty of of a company, the administrator shall assume control of all administrator to assume control of the property to which the administrator believes the property of company is entitled.

company.

585.

(1) Subject to subsection (2), the administrator Duty of of a company shall manage its affairs and property in administrator to manage affairs accordance with- and property of (a) company.

any proposals approved under section 570; (b) any revision of those proposals that is made by the administrator and that the administrator does not consider substantial; and (c) any revision of those proposals approved under section 571.

(2) If the Court gives directions to the administrator of a company in connection with any aspect of the administrator's management of the company's affairs, business or property, the administrator shall comply with the directions.

(3) The Court may give directions under subsection (2) only if- (a) no proposals have been approved under section 570; (b) the directions are consistent with any proposals under section 570 or revision approved under section 571; (c) the Court believes that the directions are required in order to reflect a change in circumstances since the approval of proposals under section 570 or a revision under section 571;or (d) the Court believes the directions are desirable because of a misunderstanding about proposals approved under section 570 or a revision approved under section 571.

1363 2015 Insolvency No.18 586.In performing and exercising the administrator's Administrator is functions and powers under this Part, the administrator of a agent of company.

company acts as its agent.

587.

(1) The administrator of a company may Power of dispose of, or take action relating to, property that is subject administrator to dispose of, and to a floating charge as if it were not subject to the charge.

deal with, charged property: floating (2) If property is disposed of in reliance on charge.

subsection (1), the holder of the floating charge has the same priority in respect of acquired property as that holder had in respect of the property disposed of.

(3) In subsection (2), "acqlired property" means property of the company that directly or indirectly i represents the property disposed of.

I 588.

(1) On the application of the administrator of a Power of t company, the Court may make an order enabling the administrator to dispose of, and I administrator to dispose of property that is subject to a deal with, charged security as if it were not subiect to the security.

property: non- (2) (1) floating charge.

An order under subsection may be made if the I Court believes that disposal of the property would be likely to promote the purpose of the administration of the l' company.

(3) An order under this section is subject to the condition that- I (a) the net proceeds ofdisposal ofthe property; and (b) any additional money required to be added to the I net proceeds so as to produce the amount I determined by the Court as the net amount that I would be realised on a sale of the property at market value, I will be applied towards discharging the amounts secured by the security.

I (4) If an order under this section relates to more than one security, the administrator shall apply the net proceeds of disposal in the order of the priorities of the securities.

(5) Within fourteen days after the date on which an i order is made under this section, the administrator shall I lodge a copy of the order with the Registrar for registration.

(6) An administrator who, without reasonable I excuse, fails to comply with subsection (5) commits an IIl, 1364 No.

18 Insolvency 2015 offence and on conviction is liable to a fine not exceeding two hundred shillings.

(7) If, after being convicted of an offence under subsection (6), the administrator continues to fail to lodge the required order with the Registrar, the administrator commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for each such offence.

589.

(1) The Court may make an order authorising Power of the administrator of a company to dispose of goods that are administrator to dispose of goods in the possession of the company under a credit purchase that are subject to transaction as if all the rights of the owner under the credit purchase agreement were vested in the company.

transaction.

(2) An order under subsection (1) may be made- (a) only on the application of the administrator; and (b) only if the Court believes that disposal of the goods would be likely to promote the purpose of administration of the company.

(3) An order under subsection {1) is subject to the condition that- (a) the net proceeds ofdisposal ofthe goods; and (b) any additional money required to be added to the net proceeds so as to produce the amount determined by the Court as the net amount that would be realised on a sale of the goods at market value, will be applied towards discharging the amounts payable under the credit purchase transaction.

(4) Within fourteen days from and including the date of the order, an administrator who makes a successful application for an order under this section shall lodge a copy of the order with the Registrar for registration.

(5) An administrator who, without reasonable excuse, fails to comply with subsection (4) and on conviction is liable to a fine not exceeding two hundred thousand shillings.

(6) If, after being convicted of an offence under subsection (5), an administrator continues to fail to lodge the required copy, the administrator commits a further 1365 2015 Insolvency No.18 offence on each day on which the failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for each such offence.

590.

(1) An administrator's statement of proposals Protection for under section 566 may not include action that- secured and preferential (a) affects the right of a secured creditor of the creditors.

company to enforce the creditor's security; (b) would result in a preferential debt of the company being paid otherwise than in priority to its non- preferential debts; or (c) would result in one preferential creditor of the company being paid a smaller proportion of that creditor's debt than another.

(2) Subsection (1) does not apply to- (a) action to which the relevant creditor consents; (b) a proposal for a voluntary anangement under Part IX; (c) a proposal for a compromise or arrangement to be sanctioned under the Companies Act, 2015; or (d) a proposal for a cross-border merger.

, (3) The reference to a statement of proposals in subsection (1) includes a reference to a statement as revised or modified.

591.

(1) A creditor or member of a company under Administrator's administration may apply to the Court claiming- conduct of administration can (a) that the administrator is acting or has acted so as be challenged.

to detrimentally affect the interests of the applicant (whether alone or in common with some or all other members or creditors of the company); or (b) that the administrator proposes to act in a way that would detrimentally affect the interests of the applicant (whether alone or in common with some or all other members or creditors).

(2) A creditor or member of a company under administration may apply to the Court on the ground that the administrator is not performing the administrator's 1366 No.

1g Insolvency 2015 functions as quickly or as efficienlly as is reasonably practicable.

(3) On the hearing of an application made under subsection (1) or (2),the Court may- (a) make an order granting relief; (b) make an order dismissing the application; (c) adjourn the hearing conditionally or unconditionally; (d) make an interim order; or (e) make such other order as it considers appropriate.

(4) In particular, an order under this section may do all or any of the following: (a) regulate the aciministrator's performance or exercise of the administrator's functions or powers; (b) require the administrator to do or not do a specified act; (c) require a creditors' to be held for a specified purpose; (d) enC the appointment of an administrator; (e) make provisions of a consequential nature.

(5) An order may be made on a claim made under subsection (1) whether or not the action complained of- (a) is within the administrator's powers under this (b) was taken in on an order under 588 or 589.

(6) An order may not be made under this section would impede or prevent the implementation of- (a) a voluntary arrangement approved under Part IX; (b) a compromise or :rrrangement sanctioned under the Companies Act, 2015; (c) a merger of a kind prescribed by the insolvency regulations made for the purposes of this section; or L367 2015 Insolvency No.l8 (d) proposals or a revision approved under section 570 or 571 more than thirty days before the day on which the application for the order under this section is made.

592.(I) The Court may examine the conduct of a Power of the person who- Court to examine conduct of1s, (a) is or purports to be the administrator of a administrator's administration of company;or the company.

(b) has been, or has purported to be, the administrator of a company.

(2) An examination under this section may be held only on the application of- (a) the Official Receiver; (b) the administrator of the company; (c) the liquidator (if any) of the company; (d) a creditor of the company; or (e) a contributory of the company.

(3) An application under subsection (2) may be made only if it alleges that the administrator or person purporting to be the administrator- (a) has misapplied or retained money or other property of the company; (b) has become accountable for money or other property of the company; (c) has breached a fiduciary or other duty in relation to the company; or (d) has been guilty of misfeasance.

(4) On an examination under this section into the conduct of an administrator or a person purporting to act as such, the Court may order the administrator or person to do all or any of the following: (a) to repay, restore or account for money or property; (b) to pay interest; (c) to contribute an amount to the company's property as compensation for breach of duty or misfeasance.

1368 Insolvency 2015 No.18 (5) An application under subsection (2) may be made in respect of an administrator who has been discharged under section 614 only with the approval of the Court.

593.

The appointment of an administrator Automatic end of automatically ends at the end of twelve months from and administration.

including the date on which it took effect.

594.

(1) Despite section 593- Circumstances in which (a) on the application of an administrator, the Court administrator's may by order extend the administrator's term of term ofoffice can office for a specified period; and be extended.

(b) an administrator's term of office may be extended by consent for a specified period not exceeding six months.

(2) An order of the Court made under subsection (1)(a)- (a) may be made in respect of an administrator whose term of office has already been extended; but (b) may not be made after the administrator's term of office has ended.

(3) As soon as practicable after an order is made under (lXa), the administrator shall lodge a copy of the order with the Registrar for registration.

(4) In subsection (1)(b), "consent" means- (a) the consent of each secured creditor of the company; and (b) if the company has unsecured debts-the consents of creditors of the company holding debts amounting to more than fifty percent of the company's unsecured debts (disregarding debts held by any creditor who does not respond to an invitation to give or withhold consent).

(5) However, if the administrator has made a statement under section 569(1)(b), "consent" means- (a) the consent of each secured creditor of the company; or (b) if the adminisffator believes that a distribution may be made to preferential creditors- 1359 2015 (i) Insolvency No.lE the consent of each secured creditor of the (ii) company; and the consents of preferential creditors of the company holding debts amounting to more than fifty percent of the preferential debts of the company (disregarding debts held by any creditor who does not respond to an invitation to give or withhold consent).

(6) Consent for the purposes of subsection (1)(b) may be- (a) written; or (b) signified orally at a creditors' meeting.

(7) An administrator's term of office- (a) may be extended by consent only once; (b) may not be extended by consent after it has been extended by an order of the Court; and (c) may not be extended by consent after it has ended.

(8) As soon as practicable after an administrator's term of office is extended by consent, the administrator shall- (a) lodge a notice of the extension with the Court; and (b) lodge a copy of the notice with the Registrar for registration.

(9) An administrator who, without reasonable excuse, fails to comply with subsection (3) or (8) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings for each such offence.

(10) If, after being convicted of an offence under subsection (9), an administrator continues to fail to lodge the required copy, the administrator commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for each such offence.

595.

(1) The administrator of a company shall make Couft may an application to the Court for an order terminating the terminate administration on administrator's appointment - application of administrator.

t37A No.18 Insolvency 2015 (a) on forming the belief that- (i) the objective of the administration cannot be achieved in relation to the company; or (ii) the company should not have entered administration; or (b) if a creditors' meeting requires the administrator to make such an application.

(2) An administrator shall also make such an application if- (a) the administration results from an administration order; and (b) the administrator believes that the purpose of administration has been sufficiently achieved in relation to the company.

(3) On the hearing of an application made under this section, the Court may make- (a) an order terminating the administrator's appointment with immediate effect or from a specified later date; (b) an order dismissing the application; or (c) an interim order.

(4) If the Court makes an order under subsection (3), it may also make- (a) an order adjourning the hearing conditionally or unconditionally; and (b) such ancillary or supplementary order as it considers appropriate.

596.

(1) This section applies to an administrator of a Termination of company who is appointed under section 534 or 541.

administration when objective (2) If the administrator believes that the purpose of achieved, administration has been sufficiently achieved in relation to the company, the administrator may lodge- (a) with the Court; and (b) with the Registrar, a notice containing the information prescribed by the insolvency regulations for the purposes of this section.

t37t 20ts Insolvency No.18 (3) The administrator's appointment ends when the requirements of subsection (2) are satisficd.

(4) W,thin seven days after lodging a notice with the Court under subsection (2), the administrator shall send a copy of it to every creditor of the company of whose claim and address the administrator is aware.

(5) The insolvency regulations may provide that the administrator is taken to have complied with subsection (4) if, before the end of the period specified in that subsection, the administrator publishes in such publications, and in such locations, as may be specified in those regulations a notice undertaking to provide a copy of the notice under subsection (2) to any creditor of the company who applies in writing to a specified trddress.

(6) An administrator who, without reasonable excuse, fails to comply with subsection (4) commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.

(7) If, after being convicted of an offence under subsection (6), an administrator continues to fail to comply with the relevant requirement, the administrator commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding fifty thousand shillings for each such offence.

597.

(1) A creditor of a company that is under Court may administration may make an application to the Court for an terminate administrator's order terminating the appointment of an administrator of appointment on the company.

application of (2) creditor.

An application under subsection (1) may be made only if it alleges an improper motive- (a) in the case of an administrator appointed by the Court-on the part of the applicant for the order; or (b) in any other case-on the part of the person who appointed the administrator.

(3) On the hearing of an application made under subsection (1), the Court may make- (a) an order terminating the administrator's appointment with immediate effect or from a specified later date; 1372 No.l8 Insolvency 2015 (b) an order dismissing the application; or (c) an interim order.

(4) If the Court makes an order under subsection (3), it may also make- (a) an order adjourning the hearing conditionally or unconditionally; and (b) such ancillary orders as it considers appropriate.

598.

(l) If a liquidation order is made for the Court to terminate liquidation of a company under administration on an administrator's appointment on application made under section 425,the Court shall make making of public an order- interest (a) liquidation order.

terminating the appointment of the administrator; or (b) directing the appointment of the administrator to continue to have effect.

(2) If the Court makes an order under subsection (1)(b), it may also- (a) specify which of the powers under this Part are to be exercisable by the administrator; and (b) order that this Part has effect in relation to the administrator with specified modifications.

599.

(1) This section applies if the administrator of a Procedure for company believes- moving from administration to (a) that the amount that each secured creditor of creditors' total voluntary the company is likely to receive has been paid to liquidation.

the creditor or set aside for the creditor; and (b) if there are any unsecured creditors-that a distribution will be made to them.

(2) The administrator may lodge with the Registrar for registration a notice that this section applies.

(3) On receipt of a notice under subsection (2), the Registrar shall register it.

(4) As soon as practicable lodging a notice under subsection (2), the administrator shall - (a) lodge a copy of the notice with the Court; and L373 2015 Insolvency No.18 (b) send a copy of the notice to each creditor of whose claim, and of whose address, the administrator is aware.

(5) On the registration of a notice in accordance with subsection (3)- (a) the administrator's appointment in respect of the company ends; and (b) the company is required to be liquidated as if a resolution for voluntary liquidation under section 393 were passed on the day on which the notice is registered.

is- (6) The liquidator for the purposes of the liquidation (a) a person nominated by the creditors of the company in the prescribed manner and within the prescribed period; or (b) if no person is nominated under paragraph (a)- the administrator.

(7) In the application of Part VI to a liquidation in accordance with this section- (a) section 393 does not apply; (b) section 394 applies as if the reference to the time of the passing of the resolution for voluntary liquidation were a reference to the beginning of the date of registration of the notice under subsection (2); (c) section 397 does not apply; (d) sections 405,406 and 407 do not apply; (e) section 430 applies as if the reference to the time of the passing of the resolution for voluntary liquidation were a reference to the beginning of the date of registration of the notice under subsection (2); and (0 any creditors' committee that is in existence immediately before the company ceased to be under administration continues in existence after that time as if appointed as a liquidation committee under section 409.

1374 Insolvency 2015 No.18 600.

(1) Cn forming the belief that a company that is Moving from under administration has no property that might allow a administration to distribution to its creditors, the administrator shall lodge dissolution.

with the Registrar a notice to that effect.

(2) On the application of the administrator of a company, the Court may disapply subsection (1) in respect of the company.

(3) On receiving of a notice lodged under subsection (1), the Registrar shall register it.

(4) The appointment of the administrator ends when the notice is registered.

(5) As soon as practicable after lodging a notice under subsection (1), the administrator shall- (a) lodge a copy of the notice with the Court; and (b) send a copy of the notice to each creditor of whose claim, and whose address, the administrator is aware.

(6) At the end of three months from and including the date of registration of a notice in respect of a company under subsection (1) the company is dissolved.

(7) On an application in respect of a company made by the administrator or some other person who has a legitimate interest in the matter, the Court may- (a) extend the period specified in subsection (6); (b) suspend that period; or (c) disapply subsection (6).

(8) As soon as practicable after an order is made under subsection (7), the administrator shall lodge a copy of the order with the Registrar for registration.

(9) On receiving of a notice lodged under subsection (8), the Registrar shall register it.

(10) An administrator who, without reasonable excuse, fails to comply with a requirement of this section commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings.

(11) If, after being convicted of an offence under subsection (10), an administrator continues to fail to L375 2015 Insolvency No.18 comply with the relevant requirement, the administrator commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for each such offence.

601.

The Court shall discharge an administration order Discharge of if- administration order if (a) it has made an order under this Part terminating administrator's appointment is an administrator's appointment; and terminated.

(b) the administrator was appointed by the Court.

602.

(1) Within fourteen days after the Court has Administrator to made an order under this Part terminating the appointment lodge copy of order ofthe Court of an administrator, the administrator shall lodge a copy of terminating the order with the Registrar for registration.

appointment with Registrar of (2) On receiving the copy lodged under subsection Companies, (1), the Registrar shall register it.

(3) An administrator who, without reasonable excuse, fails to comply with subsection (1) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings.

(4) If, after being convicted of an offence under subsection (3), an administrator continues to fail to comply with the relevant requirement, the administrator commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings for each such offence.

Division l0-Termination of appointment and replacement of administrators 603.

(1) An administrator may resign only in the Resignation of circumstances prescribed by the insolvency regulations for adminisEator.

the purposes of this section.

(2) If a circumstance has arisen that permits an administrator to resign, the administrator may do so only- (a) in the case of an administrator appointed by the Court-by notice given to the Court; (b) in the case of an administrator appointed under section 534-by notice given to the holder of the floating charge under which the appointment was made; 1376 Insolvency 2015 No.18 (c) in the case of an administrator appointed under section 541(1)-by notice given to the company; or (d) in the case of an administrator appointed under ' section SalQ)-by notice given to the directors of the company.

604.

The Court mo), by order, remove an Court may remove administrator from office if satisfied that circumstances administrator exist that make it inappropriate for the from office.

administrator to continue in office.

605.

(l) An administrator of a company vacates A.dministrator to office if the administrator ceases to be an authorised vacate office on ceasing to be insolvency practitioner.

qualified.

(2) If an administrator vacates office because of subsection (1), the administrator shall give notice of that fact- (a) in the case of an administrator appointed by administration order-to the Court; (b) in the case of an administrator appointed under section 534-by notice given to the holder of the floating charge under which the appointment was made; (c) in the case of an administrator appointed under section 5a1(1)-by notice given to the company; or (d) in the case of an administrator appointed under section SalQ)-by notice given to the directors of the company.

(3) An administrator who, without reasonable excuse, fails to comply with subsection (2) commits an offence and on conviction is liable to a fine not exceeding one million shillings.

(4) If, after being convicted of an offence under subsection (3), an administrator continues to fail to comply with the relevant requirement, the administrator commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding one hundred thousand shillings for each such offence.

t377 2015 Insolvency No.

lg 606.

Sections 607 to 611 apply to an administrator Fillingvacancvin who- office of (a) administrator.

dies; (b) resigns; (c) is removed from office under section 604; or (d) vacates office under section 605.

607.

(1) Any of the following may make an Power of the application under subsection (2) for the replacement of an Court to replace administrator appointed by the administrator.

Court: (a) a creditors' committee of the company; (b) the company; (c) the directors of the company; (d) one or more creditors of the company; or (e) if more than one person was appointed to act jointly or concurrently as the administrator-any of the persons who remain in office.

(2) An application may be made by a person or persons referred to subsection (lXb), (c) or (d) only if- (a) there is no creditors' committee of the company; (b) the Court is satisfied that the creditors' committee or a remaining administrator is not taking reasonable steps to make a replacement; or (c) the Court is satisfied that for any other reason it is right for the application to be made.

(3) On the hearing of an application made under subsection (1), the Court shall make an order replacing the administrator if satisfied the administrator has died, is for any other reason not able to act as such or is not performing his or her duties in a competent manner 608.If the administrator was appointed under section Power of holder 534, the holder of the floating charge under which the offloating charge to appoint appointment was made may replace the administrator.

replacement administrator appointed under section 534.

609.

(1) If the administrator of a company was Power of appointed under section 541(1), the company may replace company to appoint the administrator.

replacement administrator 1378 Insolvency 2015 No.18 (2) A replacement under this section may be made appointed under only- section 541(1).

(a) with the consent of each person who is the holder of a qualifying floating charge in respect of the company's property; or (b) if consent is withheld-with the approval of the Court.

610.

(1) If the administrator of a company was Power of directors appointed under section 541(2), the directors of the of company to appoint company may replace the administrator.

replacement administrator (2) A replacement under this section may be made appointed under only- section 541(2).

(a) with the consent of each person who is the holder of a qualifying floating charge in respect of the company's property; or (b) if consent is withheld-with the approval of the Court.

611.

(l) The Court may make an order replacing an Power of the administrator on the application of a person by whom an Court to replace administrator in application is made under section 607(1) if the Court- certain other (a) is that a relevant person is not taking circumstances.

satisfied reasonable steps to make a replacement; or (b) that for another reason it is right for the Court to make the replacement.

(2) In subsection (1), a relevant person is a person who is entitled to replace the administrator under any of sections 608 to 610.

612.

(l) If an administrator of a company is Court may replace appointed under section 534 by the holder of a qualifying administrator when there is a floating charge in respect of the company's property, the competing holder of a prior qualifying floating charge in respect of the floating charge- company's property may apply to the Court for the holder.

administrator to be replaced by an administrator nominated by the holder of the prior floating charge.

(2) On the hearing of an application made under subsection (1), the Court may make an order replacing the existing administrator with the person nominated by the applicant, but only if satisfied that to do so would result in 1379 Insolvency 20ts No.18 the company being administered more effectively and efficiently, (3) An application made under subsection (l)may not be heard unless the existing administrator and the holder of the qualifying floating charge who appointed that administrator have been served with a copy of the application and have been given an opportunity to appear at the hearing as parties (4) One floating charge is prior to another for the purposes of this section if- (a) it was created first; or (b) it is to be treated as having priority in accordance with an agreement to which the holder of each floating charge was party.

613.

(1) A creditors' meeting may replace an Creditors' administrator of a company if- meeting may replace (a) the administrator has been appointed by the administrator appointed by company or its directors under section 541; and company or (b) there is no holder of a qualifying floating charge directors.

in respect of the company's property.

(2) A creditors' meeting may act under subsection (1) only if the replacement administrator's written consent to act is presented to the meeting before the replacement is made.

614.

(I) If the appointment of a person as the Discharge from administrator of a company ends (for whatever reason), the liability on administrator's administrator is discharged from liability in respect of all vacating office.

acts done or omitted to be done as administrator.

(2) The discharge provided by subsection (1) takes effect- (a) in the case of an administrator who dies-on the lodging with the Court of notice of the administrator' s death; (b) in the case of an administrator appointed under section 534 or 541-at a time fixed by resolution of the creditors' committee or, if there is no creditors' committee, by resolution of the creditors; or 1380 Insolvency 2015 No.18 (c) m any other case-at a time specified by the Court.

(3) For the purpose of the application of subsection (2Xb), if the administrator has made a statement that the company has insufficient property to enable a distribution to be made to unsecured creditors otherwise than in accordance with section 474(2)(a), a resolution is taken to have been passed if (and only if) passed with the approval of- (a) each secured creditor of the company; or (b) if the administrator has made a distribution to preferential creditors or believes that a distribution may be made to preferential creditors- (i) each secured creditor of the company; and (ii) preferential creditors whose debts amount to more than fifty percent of the preferential debts of the company, disregarding debts of any creditor who does not respond to an invitation to give or withhold approval.

(4) A discharge- (a) applies to liability accrued before the discharge takes effect; and (b) does not prevent the exercise of the Court's powers under section 592.

615.

(1) This section applies if a DefSOn'S Former , ' gn0g([ administrator's appointment as the administrator of a company nas remuneration and for whatever reason.

expenses payable of company's (2) In this section- property and to (a) have priority over "the former administrator" means the person holders of floating referred to in subsection (1); and charges.

(b) "termination" means the time when the person's appointment as the company's administrator ended.

(3) The former administrator's remuneration and expenses is- (a) a charge on and payable out of property over which the person had control immediately before the termination; and 1381 2015 Insolvency No.

L8 (b) payable in priority to any security to which section 587 applies.

(4) An amount payable in respect of a debt or liability arising out of a contract entered into by the former administrator or a predecessor before the termination is- (a) a charge on and payable out of property over which the former administrator had control immediately before the termination; and (b) payable in priority to any charge arising under subsection (3).

(5) Subsection (4) applies to a liability arising under a contract of employment that was adopted by the former administrator or a predecessor before the termination; and for that purpose- (a) action taken within fourteen days after an administrator's appointment is not to be treated as action adopting or contributing to adopting the contract; (b) no account is to taken of a liability that arises, or in so far as it arises, by reference to anything that is done or that occurs before the adoption of the contract of employment; and (c) no account is to be taken of a liability to make a payment other than wages or salary.

(6) In subsection (5)(c), "wages or salary" includes- (a) amounts payable in respect of periods of holiday (for which purpose the amounts are to be treated as relating to the period by reference to which the entitlement to holiday accrued); (b) amounts payable in respect of periods of absence through illness or other good cause; (c) amounts payable instead of a period of holidays; (d) in relation to a particular period-amounts that would be treated as earnings by any enactment prescribed by the insolvency regulations for the purposes of this section; and (e) contributions to occupational pension schemes.

,:i 1382 Insolvency 2015 No.18 Division 11 -Supplementary provisions 616.

(l) In this Part- (a) a reference to the appointment of an administrator of a company includes a reference to the appointment of a number of persons to act jointly or concunently as the administrator of a company; and (b) a reference to the appointment of a person as administrator of a company includes a reference to the appointment of a person as one of a number of persons to act jointly or concurrently as the administrator of a company.

(2) A person who appoints more than one person as an administrator of a company shall specify- (a) which (if any) functions are to be performed by the persons appointed acting jointly; and (b) which (if any) functions are to be exercised by any or all of the persons appointed.

617.

(l) If two or more persons are appointed to act Offences as joint administrators of a company, a reference to the committed by joint administrator of the company in this Part is to those persons administrators.

acting jointly.

(2) However, a reference to the administrator of a company in Division 10 is to all or any of the persons appointed to act jointly.

(3) If- (a) a provision of this Part requiring an administrator of a company to comply with a specified requirement constitutes an offence; (b) the requirement is not complied with relation to a particular company; and (c) two or more administrators are appointed to act jointly in respect of the company, each of the persons commits the offence and may be proceeded against and punished individually.

(5) The reference in section 562(L) to the name of the administrator is a reference to the name of each of the persons appointed to act jointly.

1383 2015 Insolvency No.18 (6) If persons are appointed to actjointly to perform or exercise only some of the functions or powers of the administrator of a company, this section applies only in relation to the functions or powers in respect of which those persons are appointed.

618.If two or more persons are appointed to act Administrators concurrently as the administrator of a company, a reference acting to the administrator of a company in this Part is to any of concurrently.

the persons appointed or to any combination of them.

619.(1) If a company is under administration, a Powertoappoint person may'be appointed to act as administrator jointly or ::[Ti:[ffffi;: concurrently with the person or persons acting as the administrator of the company.

(2) If a company entered administration by administration order, an appointment under subsection (1) may be made only by the Court on the application of- (a) a person or group listed in section 532(1)(a) to (e); or (b) the administrator of the company.

(3) If a company entered administration because of an appointment under section 534, an appointment under subsection (1) may be made only by- (a) the holder of the floating charge under which the appointment was made; or (b) the Court on the application of the administrator of the company.

(4) If a company entered administration because of an appointment under section 541(1), an appointment under subsection (l) may be made only- (a) by the Court on the application of the administrator of the company; or (b) by the company with the consent of each person who is the holder of a qualifying floating charge in respect of the company's property or, if consent is withheld, with the approval of the Court.

(5) If a company entered administration because of an appointment under section 541(2), an appointment under subsection (1) may be made only- 1384 No.

18 Insolvency 2015 (a) by the Court on the application of the administrator of the company; or (b) by the directors of the company with the consent of each person who is the holder of a qualifying floating charge in respect of the company's property or, if consent is withheld, with the approval of the Court.

(6) An appointment under subsection (1) may be made only with the consent of the administrator of the company.

620.

An act of the administrator of a company is valid Presumption of even if the administrator's appointment or qualification is validity of acts of administrator.

subsequently found to be defective.

621.

A reference in this Part to act done or omitted to Majority decision be done by the directors of a company includes the same of directors.

act done or omitted to be done by a majority of the directors of a company.

622.

(l) If a provision of this Part relating to a Power to extend company under administration provides that a period can be time limits.

varied in accordance with this section, the Court may vary the period on the application of the administrator of the company.

(2) A period of time period can be extended under this section- (a) more than once in relation to the same company and the same provision; and (b) after the period has expired.

623.

(l) A period specified in section 566(5) or certain specined 568(1) may be varied in respect of a company by the frl$i;T"X"*.

administrator with consent.

(2) In subsection (1), "consent" means- (a) the consent of each secured creditor of the company; and (b) if the company has unsecured debts-the consents of creditors whose debts amount to more than fifty percent in value of the company's unsecured debts, disregarding debts of any creditor who does not respond to an invitation to give or withhold consent.

1385 Insolvency No.18 (3) However, if the administrator has made a statement of the kind to which section 569(1)(b) applies, "consent" mgans- (a) the consent of each secured creditor of the (b) company; or if the administrator believes that a distribution may be made to preferential creditors- (D the consent of each secured creditor of the (ii) company; and the consents of preferential creditors whose debts amount to more than fifty percent in value of the total preferential debts of the company, disregarding debts of any creditor who does not respond to an invitation to give or withhold consent.

(4) Consent for the purposes of subsection (1) may (a) written; or (b) signified orally at a creditors' meeting.(1)- (5) The power to extend under subsection (a) may be exercised in respect of a period only (b) once; may not be exercised to extend a period by more (c) than thirty days; may not be exercised to extend a period that has (d) been extended by the Court; and may not be exercised to extend a period after it has expired.

PART IX_COMPAI{Y VOLUNTARY ARRANGEMENTS Division l-Proposals for company voluntary arrangements 624.In this Division- Interprctation: Division 1.

"prescribed publication", in relation to a company, means- (a) a newspaper circulating in the area in which the company carries on business; (b) the company's website (if any); or 1386 Insolvency 2015 No.18 (c) any other publication of a description prescribed by the insolvency regulations for the purposes of this Part; "proposal" means a proposal by the directors of a company for a voluntary arrangement made in accordance with section625; "proposers", in relation to a proposal for a voluntary iurangement in respect of a company, means the directors making the proposal; "supervisor" means the person appointed to supervise a voluntary {rrrangement, and includes any teplacement supervisor appointed under section 626 or 627; "voluntary arrangement", in relation to a company means a composition or scheme of arrangement that has effect as provided by section 630.

625,(l) The directors of a company may make a Proposal for proposal under this Division to the company and to its voluntary creditors for a voluntary arrangement under which the arTangement, company enters into a composition in satisfaction of its debts or a scheme for arranging its financial affairs.

(2) In making such a proposal, the directors shall provide for the appointment of a person to supervise the implementation of the voluntary arrangement.

(3) Only an authorised insolvency practitioner may be appointed to supervise a voluntary arrangement.

(4) A proposal under this Division may also be made- (a) if the company is under administration-by the I administrator; or (b) if the company is in liquidation-by the liquidator.

626.

(1) This section applies if the provisional Procedure if I provisional ! supervisor in respect of a director's proposal is not the supervisor is not liquidator or administrator of the company and the directors the liquidator or do not propose to take steps to obtain a moratorium for the administrator.

l company under Division 2.

l (2) The provisional supervisor shall, within thirty l days (or within such extended period as the Court may II 7387 Insolvency 2015 No.18 allow) after that supervisor is given notice of the proposal, submit a report to the Court stating- (a) whether, in that supervisor's opinion, the proposal has a reasonable prospect of being approved and implemented; (b) whether, in that supervisor's opinion, meetings of the company and of the company's creditors should be convened to consider the proposal; and (c) if that supervisor believes that those meetings should be convened-the date on which, and the time and place at which, it is proposed to hold the meetings.

(3) For the purposes of enabling the provisional supervisor to prepare the report, the proposers shall submit to that supervisor- (a) a document setting out the terms of the proposal; and (b) a statement of the company's financial position containing- (i) such particulars of its creditors and of its debts and other liabilities and of its assets as may be prescribed by the insolvency regulations for the purposes of this subsection; and (ii) such other information as may be so prescribed.

(4) An application may be made to the Court for an order under subsection (5)- (a) if the provisional supervisor has failed to submit the report required by this section or has died- by the proposers; or (b) if it is impracticable or inappropriate for that supervisor to continue to act as such-by the proposers or that supervisor.

(5) On the hearing of an application made under subsection (4), the Court may make an order directing the provisional supervisor to be replaced as such by another authorised insolvency practitioner.

1388 Insolvency 2015 No.18 O7.(l) If ttre provisional supervisor appointed Provisional under section 625 is not the liquidator or administrator and supervisor to convene meetings has reported to the Court that the meetings referred to in ofcompany and section 626(2) should be convened, that supervisor shall, of its creditors.

unless the Court otherwise directs, convene those meetings to be held on the date, and at the time and place, proposed in the report.

(2) If the,provisional supervisor is the liquidator or administrator, that supervisor shall convene meetings of the company and cif the company's creditors to consider the proposal to be held on such date, and at such time and place, as that supervisor considers appropriate having regard to where the creditors carry on their businesses or reside.

(3) The persons to be summoned to a creditors' meeting convened under this section are all creditors of the company of whose claims and addresses the provisional supervisor is aware.

(4) The directors of the company may, not later than seven days before the dates on which the meetings are, or either of those meetings is, to be held, give notice to the provisional supervisor of any modifications of the proposal for which the directors intend to seek the approval at those meetings.

62E.

(1) The main purpose of a meeting convened Conduct of under section 627 is to decide whether to approve the meetings of company and its proposal or that proposal with modifications.

creditors.

(2) At the beginning of a creditors' meeting, the meeting shall elect one of their number to be chairperson of the meeting.

(3) At the first meeting of the creditors, the chairperson shall divide the meeting into three groups for voting purposes, with the first group comprising secured creditors (if any), the second group comprising preferential creditors (if any) and the third group comprising unsecured creditors.

(4) A modification to the directors' proposal may be approved only if the company consents to it.

(5) A modification to the directors' proposal may provide for the replacement of the provisional supervisor by another authorised insolvency practitioner who will act 1389 2015 Insolvency No.18 as the supervisor of the proposal if it takes effect as a voluntary arrangement.

(6) If the proposal or a modification to it affects the right of a secured creditor of the company to enforce the creditor's security, it may not be approved unless- (a) the creditor consents to it; or (b) if the creditor does not consent to it, the creditor- (i) would be in a position no worse than if the company was in liquidation; (ii) would receive no less from the assets to which the creditor's security relates, or from their proceeds of sale, than any other secured creditor having a security interest in those assets that has the same priority as the creditor's; and (iii) would be paid in full from those assets, or their proceeds of sale, before any payment from them or their proceeds is made to any other creditor whose security interest in them is ranked below that of the creditor, or who has no security interest in them.

(7) Subject to this section, the meetings of the company and of the creditors are to be conducted in accordance with the rules (if any) prescribed by the insolvency regulations.

(8) Either meeting may at any time resolve that it be adjourned, or further adjourned.

(9) As soon as practicable after the conclusion of a company meeting or a creditors' meeting, the chairperson of the meeting shall- (a) report the result of the meeting to the Cout; and (b) immediately after reporting to the Court-give notice of the result of the meeting to those persons who attended the meeting, and to those prsons of whom the chairperson is aware who were entitled to attend the meeting but did not do so.

1390 Insolvency 2015 No.18 629.(l) This section applies to the decisions taken at Approval of the meeting of the company and the meeting of the proposal for voluntary company's creditors held in accordance with section 628 to aurangement.

consider a directors' proposal (with or without modifications).

(2) The proposal (including any modifications) is approved if- (a) it is a approved- (i) by a majority the members of the company present (either in person or by proxy) at the meeting of the company; and (ii) by a majority (in number and value) of the members of each group of creditors present (either in person or by proxy) at the meeting of creditors; or (b) if, despite not being not approved by a majority of the members referred to in paragraph (a)(i), it is approved by a majority (in number and value) of the members of each of the groups of creditors referred to in paragraph (a)(ii).

(3) For the purposes only of deciding whether the requisite majority by value has voted in favour of a resolution to approve the proposal- (a) the chairperson of the meeting may- (i) admit or reject proofs of debt; and (ii) adjourn the meeting in- order to admit or reject proofs of debt; and (b) a person whose debt has been admitted is a creditor.

(4) At any time before the deadline for making an application under this subsection, any member of the company, or any creditor, who aftended or was entitled to attend the meetings may make an application to the Court for an order under subsection (7).

(5) The deadline for making an application under subsection (4) is- (a) the expiry of thirty days after the holding of the meetings of the company and its creditors (or if the meetings were held on different days, the later of the meetings); or 1391 20lS Insolvency No.lg (b) if the Court extends that period, the expiry of the extended period.

(6) Any member of the company, and any creditor, who attended or was entitled to attend the meetings is entitled to appear and be heard at the hearing of the application even if the member or creditor is not the applicant.

The right conferred by this subsection may be exercised by such a member or creditor irrespective of whether the member or creditor supports or has an interest in the implementation of the proposal.

(7) On the hearing of an application made under subsection (4), the Court may- (a) make an order approving the proposal (with or without the modifications (if any) put to the meetings in accordance with section 628); or (b) make such other order as it considers appropriate.

(8) The Court may make an order under subsection (7Xa) even if the proposal (or a modification to it)- (a) was not approved at the company meeting; or (b) was not approved at the creditors' meeting by a majority of the preferential creditors' group or the unsecured creditors' group, but do so only if the proposal (or the modification)- (i) has been approved by a majority of the secured creditors' group; (ii) does not discriminate among the members of the dissenting group or groups of creditors and ensures that they will be no worse off than they would have been if the company had been liquidated; and (iii) respects the priorities of preferential creditors over unsecured creditors.

630.

(1) A directors' proposal (with or without Approved modifications) takes effect as a voluntary arrangement by proposal to take effect as voluntary the company on the day after the date on which it is arrangement and approved by the Court by order made under section to be binding on company and its 629(7)(a) or on such later date as may be specified in the creditors.

order.

t392 Insolvency 2015 No.lE (2) On taking effect, a voluntary arrangement binds- (a) every memberof the company who- (i) was entitled to vote at the meeting of the company (whether present or represented at (iil the meeting or not); or would have been so entitled if the member had received notice of that meeting; and (b) every person (including a secured creditor and a preferential creditor) who - (i) wiu entitled to vote at the meeting of creditors (whether present or represented at the meeting or not); or (ii) would have been so entitled if the person had received notice of that meeting, as if the member or person were a party to the arrangement.

(3) On the approved proposal taking effect as a voluntary arrangement, the provisional supervisor becomes the supervisor of the arrangement unless that supervisor has been replaced in accordance with section 628(5).

(4) If, when a voluntary arangement ceases to have effect- (a) any arnount payable under the arrangement to a prson bound because of subsection (2Xb)(ii) has not been paid; and (b) the arrangement did not end prematurely, the company becomes, at that time, liable to pay to that person the amount payable under the arrangement.

(5) If the company is in liquidation or under administration, the Court may make either or both of the following orders: (a) an order staying all proceedings in the liquidation, or terminating or suspending the appointment of the administrator; (b) an order giving such directions with respect to the further conduct of the liquidation or the 1393 Insotvercy 2015 Ne.lt administration as it considers will further the implementation of the voluntary arrangement.

(6) However, the Court may not make an order under subsection (5Xa)- (a) at any time within thirty days after ttn first day on which a report required by section 628(9) has been made to the Court; or (b) at any time- (i) while an application uder section 631, or an appeal in respect of an order made under that section, is pending; (ii) while an appeal against an order madb under that section is pending; or (iii) during the period withiu which such an appeal rnay be made.

631.

(l) The following persons may makE aa Celt*in pcrsons application to the Court for au o,rder under this section: m*ych&nge decisioos relating to approved (a) a person who was entitled to vde at ttle meeting voluatary l.

of the compary or the rneeting of its creditors; arrmgementby nuking (b) a persor who would have been so entitled if the applicrtionto &e pe6on had had of the relevant meeting; Corrt.

I notice l.

(c) the provisional supervisor or, if the prc'poeal has I talcen effect as a voluntary arrangement, the ) supervisor of the arrangement; i (d) if the conpany is in lkpidation or is urder administratioa - the liquidator or a&rdnistrator.q (/> Such an application may be mads on eithr I both of the following grounds: (a) that a voluntary arra$gerrlent app,roved mdr section 629(2) desimentally affects the intqests of a creditor, npmber or contributory of ttre I cornPany; o) a material inegulrity has occtrred at or in relation toeither of tlre meetings.

I (3) An application u,rder subsection (I) may not be made- I 1394 Insolvency 2015 No.18 (a) after the end of the thirty days from and including the first day on which a report required by section 628(6) has been made to the Court; or (b) in the case of a person who was not given notice of the creditors' meeting-after the end of the thirty days from and including the day on which the person became aware that the meeting had taken place.

(4) However, an application made by a person referred to in subsection (2Xb) on the ground that the voluntary arrangement detrimentally affects the person's interests may be made after the arrangement has ceased to have effect, unless it has ended prematurely.

(5) If, on hearing an application made under subsection (1), the Court is satisfied as to either of the grounds referred to in subsection (2), it may make orders doing one or both of the following: (a) revoking or suspending- (i) any decision approving the voluntary arrangement in accordance with section 629(2); or (ii) in a case to which subsection (2)(b) applies- any decision taken by the meeting concerned; (b) directing the supervisor to convene- (i) further meetings to consider a revised proposal; or (ii) if subsection (2)(b) applies-a further company meeting, or a further creditors' meeting, to reconsider the original proposal.

(6) If, at any time after making an order under subsection (5)(b) directing meetings to be convened to consider a revised proposal, the Court is satisfied that the maker of the original proposal does not intend to submit a revised proposal, the Court shall, by further order- (a) revoke the order; and (b) any order revoking or suspending a decision approving the voluntary iurangement in accordance with section 629.

1395 2015 Insolvency No.18 (7) If the Court makes an order under subsection (5) or (6), it may make such ancillary orders as it considers appropriate and, in particular, orders with respect to action taken under the voluntary arrangement since it took effect.

(8) Except as provided by this section, a decision taken at a meeting held in accordance with section 628 is not invalidated by any irregularity occurring at or in relation to the meeting.

632.

(l) An officer of a company who- Offences involving false (a) makes a false representation for the purpose of representations obtaining the approval of the members or and fraudulent acts by company creditors of a company to a proposal for a officers.

voluntary arrangement; or (b) fraudulently does, or omits to do, any act for that purpose, commits an offence and on conviction is liable to a fine not exceeding two million shillings or to imprisonment for a term not exceeding five years, or to both (2) Subsection (1) applies to a proposal even if it is not approved by the members or creditors of the company concerned.

633.

(1) When a proposal takes effect as a voluntary Implementation of arrangement, the supervisor becomes responsible for approved voluntary implementing the a:rangement in the interests of the arrangement.

company and its creditors and monitoring compliance by the company with the terms of the arrangement.

(2) If, in relation to a voluntary arrangement that has effect under section 630, any of the company's creditors or any other person is dissatisfied with an act, omission or decision of the supervisor, the creditor or person may make an application to the Court for an order under subsection (3).

(3) On the hearing of an application made under subsection (1), the Court- (a) shall, if satisfied that the ground on which the application was made is substantiated, make- (i) an order quashing or modifying an act, omission or decision of the supervisor; or t396 Insolvency 20r5 No.18 (ii) an order giving the supervisor directions; but (b) if not so satisfied, shall make an order confirming that act, omission or decision, and in either case may make such ancillary orders as it considers appropriate.

(4) The Court may, on the application of the supervisor, make an order giving directions in relation to any particular matter arising under the voluntary arrangement.

(5) The supervisor has standing to apply to the Court for the liquidation of the company or for an administrator to be appointed in relation to the company.

(6) If, at any time the Court is satisfied that- (a) it would be beneficial to appoint a supervisor to replace an existing supervisor, to appoint an additional supervisor or to fill a vacancy; and (b) it would be inconvenient or or impracticable for such an appointment to be made without the assistance of the Court, the Court may make an order appointing a replacement or additional authorised insolvency practitionerr or aR authorised insolvency practitioner to fill the vacancy.

634.

(1) This section applies if- Prosecutbn of delinqucnt (a) a moratorium under has been obtained for a officors of company under this Division; or compaly.

(b) the approval of a voluntary arrangement in relation to a company has taken effect under section 630 or 666.

{2) If it appears to the supervisor that any past or present officer of the company has committed an sffence in connection with the moratorium or a voluntary arrangement for which the person is criminally liable, the supervisor shall immediately- (a) report the matter to the Director of Public Prosecutions; and (b) provide the Director of Public Prosecutions with- L397 Insolvency 2015 (i) No.lE such information relating to that matter; and (ii) such access to and facilities for inspecting and taking copies of documents under the control of the supervisor and relating to that matter concerned), as that Direct rcquires.

(3) On receiving a report made under subsection (2), the Director of Public hosecutions shall investigate the matter to which the report relates and such other matters relating to the affairs of the company as appear to require investigation, and for that purpose may exercise any of the powers conferred on inspectors appointed under the Companies Act,2015.

(4) For the purpose of an investigation by the Director of Public Prosecutions under subsection (3), a person has the same obligation to produce documents or give information, or otherwise assist the Director of Public Prosecutions, as the person would have in relation to an inspector appointed under the Companies Act, 2015.

(5) An answer given to a question put to a person in exercise of the powers conferred by subsection (3) may be used in evidence against the person.

However, in criminal proceedings in which that person is charged with an offence to which this subsection applies- (a) evidence relating to the answer rnay not be adduced; and (b) questions relating to it may not be asked, by or on behalf of the prosecution, unless evidence relating to it is adduced, or a question relating to it is asked, in the proceedings by or on behalf of the person charged.

(5) Subsection (5) applies to all offences other than an offence under section 108 or 114 of the Penal Code (which respectively relate to perjury and subornation of perjury and to false swearing).

(7) If the Director of hrblic Prosecutions begins criminal proceedings following a report under subsection (2) or an investigation under subsection (3), the supervisor, cap.63 and every officer and agent of the company (other than the defendant), shall give that Director such assistance in 1398 No.

L8 Insolvency 2015 connection with the prosecution as the supervisor, officer or agent is reasonably able to give.

(8) For the purposes of subsection (7)- (a) "agent" includes- (i) any banker or advocate of the company; and (ii) any person employed by the company.

as its auditor, and includes a former agent of the company; and (b) "officer" includes a former officer of the company.

(9) The Court may, on the application of the Director of Public Prosecutions, require any person referred to in subsection (7) to comply with that subsection if the person has failed to do so.

(10) The Director of Public Prosecutions may appoint an advocate to perform the functions, and exercise the powers, of that Director under this section.

(11) If the Director of Public Prosecutions makes such an appointment, the advocate who is appointed has the 'l same functions and powers as that Director has under this section.

I 635.

For the purposes of this Division, a voluntary When voluntary .l arrangement the approval of which has taken effect under arrangement comes to an end section 630(1) ends prematurely if, when it ceases to have prematurely.

effect, it has not been fully implemented in respect of all I persons bound by the arrangement because of section i 630(2).

Ii Division 2-Moratoria on debt payments when l company's directors propose voluntary arrangement lS ubdivision 7 - I ntrod.uctory provisions l 636.

(1) In this Division- Interpretation: Division 2.

"agreement" includes an agreement or undertaking effected by contract, deed or any other document intended to have effect in accordance with the law of Kenya or another jurisdiction; "beginning of the moratorium" has the meaning given by section 6a5(1); I 1399 2015 Insolvency No.18 "lodgement date" means the date on which the documents and statements referred to in section 644(l) are lodged with the Court; "proposal" means a proposal for a voluntary arrangement; "moratorium" means a moratorium that has taken effect under section 645 and has not ended; "moratorium committee" means a committee established under section 672; "person" includes partnership and any other unincorporated group of persons.

(2) For the purposes of this Division, a voluntary arrangement the approval of which has taken effect under section 673 ends prematurely if, when it ceases to have effect, it has not been fully implemented in respect of all persons bound by the iurangement because of section 666(2xbxii).

637.

This Division has effect with respect to- Application of (a) Division 2.

companies eligible for a moratorium; (b) the procedure for obtaining such a moratorium; (c) the effects of such a moratorium; and (d) the procedure applicable (instead of Division 1) in relation to the approval and implementation of a voluntary arrangement when such a moratorium is or has been in force.

638.

A company is eligible to obtain a moratorium if Eligible it- companies.

(a) complies with such requirements (if any) as may be prescribed by the insolvency regulations; and (b) is not declared to be an ineligible company by another provision of this Subdivision.

639.

The following companies are ineligible Banking and companies for the purposes of section 638: insurance companies (a) a company that holds a licence granted under ineligible to obtain section 5 of the Banking Act authorising it to moratorium.

carry on a banking business, a financial business Cap.488 or the business of a mortgage finance company; Cap.487 1400 lnsolvency 2015 No.18 (b) a company that is registered under section 19 of the Insurance Act.

640.

(1) The following companies are also ineligible Companies undcr aompanies for the purpose of section 638: :r'ri.

administration, etc.

inoligible to (a) a company that is under administration; obtain (b) moratorium.

a company that is in liquidation; (c) a company in respect of which a voluntary arrangement already has effect; (d) a company in respect of which a provisional liquidator is appointed; (e) a company in respect of which a moratorium has had effect at any time during the twelve months ending with the lodgement date and- (i) a voluntary iurangement was not in effect (ii) when the moratorium ended; or a voluntary arrangement that had effect (0 during that period ended prematurely; a company in respect of which an administrator appointed under section 541 held office during the twelve months immediately preceding the lodgement date; G) a company in respect of which a voluntary l1 arrangement had been in effect ended prematurely and, during the twelve months immediately preceding the lodgement date, an order under section 630(7Xa) has been made; (h) a company in respect of which an administrative receiver is appointed under the repealed Companies Act.

(2) Subsection (1)(b) does not apply to a company that, because of a liquidation order made after the lodgment date, is heated as in liquidation on that date 641.

(l) A company is also an ineligible company for Certain proi:ct the puposes of section 638 if, on the lodgement date, it is a companics project company of a project that is a public-private turcligible.

partnership project and includes step-in rights.

(2) In subsection (l), "public-private partnership project" means a project- 1401 20f5 Insolvency No.18 (a) the resources for which are provided patly by one or more public bodies and partly by one or more private persons; or (b) that is designed wholly or mainly for the purpose of assisting a public body to perform a function.

(3) For the purposes of this section, a company is a project company for a project if- (a) it holds propefty for the purpose of the project; (b) it has sole or or principal responsibility under an agreement for carrying out all or part of the project; (c) it is one of a number of companies that together carry out the project; (d) it has the purpose of supplying finance to enable the project to be carried out; or (e) it is the holding company of a company to which any of paragraphs (a) to (d) applies.

(4) However, a company is not a project company for a project if, although it performs a function to which paragraphs (a) to (d) of subsection (3) applies, or is a holding company to which any of those paragraphs apply, it also performs a function that is not- (a) within paragraphs (a) to (d) of that subsection; (b) related to a function within those paragraphs; or (c) related to the project.

(5) For the purposes of subsection (1), a project has step-in rights if a person who provides finance in connection with the project has a conditional entitlement under an agreement- (a) to assume sole or principal responsibility under an agreement for carrying out all or part of the project; or (b) to make arrangements for carrying out all or part of the project.

(6) In subsection (5), a reference to the provision of finance includes a reference to the provision of an indemnity.

t, 1402 Insolvency 2015 No.18 (7) For the purposes of this section, a company carries out all or part of a project whether or not it acts wholly or partly through agents.

(8) In this section- (a) "public body" means the Government, any State organ or government agency or any body constituted or established under an Act for a public purpose; and (b) "private person" means any person that is not a public body.

il2.(l) A company is also an ineligible company for Companies with the purposes of section 638 if, on the lodgement date, it has large outstanding liabilities a liability outstanding under an agreement of one billion ineligible.

shillings or more.

(2) If the liability in subsection (1) is a contingent liability under or because of a guarantee or an indemnity or security provided on behalf of another person, the amount of that liability is the full amount of the liability in relation to which the guarantee, indemnity or security is provided.

(3) In this section, a reference to a liability includes- (a) a present or future liability whether, in either case, it is certain or contingent; and (b) a reference to a liability to be paid wholly or partly in foreign currency (in which case the equivalent in Kenya shillings is to be calculated as at the time when the liability is incurred).

Subdivision 2 - Obtaining a moratorium 643.

(1) If the directors of an eligible company wish What steps to make a proposal for a voluntary arrangement, they shall company's directors have to take the required steps to obtain a moratorium for the take to obtain a company.

moratorium.

(2) If the directors of an eligible company wish to obtain a moratorium, they shall- (a) prepare- (i) a document setting out the terms of the proposal; and I 1403 Insolvency No.18 (i0 a statement of the company's financial position containing such pafiiculars of its creditors and of its debts and other liabilities and of its assets as may be prescribed by the insolvency regulations for the purposes of this section, and such other information as may be so prescribed; and (b) unless a provisional supervisor has already been appointed in respect of the proposal-appoint as its provisional supervisor an authorised insolvency practitioner who has consented to supervise it.

(3) After preparing the proposal and statement and, if appropriate, making the appointment, the directors shall submit the proposal and statement to the provisional supervisor for consideration and comment.

(4) If the provisional supervisor requires them to do so, the directors shall provide such other information necessary to enable that supervisor to comply with subsection (5).

(5) The provisional supervisor shall submit to the directors a statement indicating whether or not, in that supervisor's opinion- (a) the proposal has a reasonable prospect of being approved and implemented; (b) the company is likely to have sufficient funds available to it during the proposed moratorium to enable it to carry on its business; and (c) meetings of the company and its creditors should be convened with a view to considering and approving the proposal.

(6) In forming an opinion on the matters referred to in subsection (5), the provisional supervisor is entitled to rely on the information contained in the document and statement submitted under subsection (2), and provided in accordance with subsection (4), unless that supervisor has reason to doubt its accuracy.

(7) The reference in subsection (5Xb) to the company's business is to that business as the company proposes to carry it on during the proposed moratorium.

1404 Insolvency 2015 No.lE 64,(l) To obtain a moratorium, the directors of a What directots company shall lodge with the Court- have to do to obtain (a) the proposal and statement referred to in section moratodum.

6a3Q)@); (b) a statement to the effect that the company is eligible for a moratorium and the basis of that eligibility; (c) a statement from the provisional supervisor that that supervisor has consented to act as supervisor of the proposed arrangement if approved; (d) a statement from the provisional supervisor