Automated Summary
Key Facts
Nakumatt Holdings Limited was placed under administration in 2018 with Peter Obondo Kahi as administrator. By February 2021, the administrator had raised Kshs. 5.2 billion, distributing over Kshs. 3.5 billion to creditors including Kshs. 766.6 million to landlords. Despite the company having no distributable assets, the court extended the administration order to manage outstanding debts and cases, disapplying sections 600(1) and 600(6) of the Insolvency Act.
Issues
- The Court considered the administrator's request to disapply section 600(1) of the Insolvency Act, which mandates lodging a notice when a company under administration has no property for creditors. Despite the administrator's belief that no property exists for distribution, the Court ruled to disapply this requirement to allow continued administration.
- The Court evaluated the need to extend the administration order for Nakumatt Holdings Limited to enable the administrator to address remaining debts and legal matters. The extension aimed to prevent liquidation while pursuing actions potentially beneficial to the company and creditors.
Holdings
- The court further disapproved subsection 600(6) of the Act and extended the Administration Order to enable the administrator to address unresolved debts and cases. This action ensures the company remains under administration to manage affairs for creditor benefit.
- The court disapproved subsection 600(1) of the Insolvency Act, 2015, permitting the administrator to continue managing Nakumatt Holdings Limited despite the belief that no property is available for creditor distribution. This decision was based on the administrator's report highlighting ongoing matters requiring management for the company's benefit.
Remedies
- The Court disapplied subsection 1 of section 600 of the Insolvency Act, which requires administrators to lodge notices when a company has no distributable property. This was granted to allow the administrator to continue managing the company despite this belief.
- The Court further disapplied section 600(6) of the Act, enabling the administrator to bypass procedural requirements and focus on managing outstanding debts and cases for the company's benefit.
- The Administration Order was extended to allow the administrator to continue executing tasks outlined in the Report, including managing debts and cases, rather than liquidating the company.
Tax Issue Category
Other
Legal Principles
The court exercised its discretion under Section 600(2) of the Insolvency Act, 2015, to disapply subsection 600(1) which mandates lodging a notice when a company has no distributable property. This allowed the administrator to continue managing the company's affairs despite the absence of assets for creditor distribution, prioritizing ongoing debt management and case resolution.
Cited Statute
Insolvency Act No. 18 of 2015
Judge Name
A. Mabea
Passage Text
- "(1) On forming the belief that a company that is under administration has no property that might allow a distribution to its creditors, the administrator shall lodge 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".
- I am satisfied that this is a fit case to disapply sub-section 1 of section 600 of the Act. Further, I disapply section 600(6) of the Act. The Administration Order is hereby extended to enable the Administrator to carry out the matters set out in his Report. The Court therefore adopts the Report of the Administrator.