Jaisham & 2 others v Amanda Apartments & 2 others

IP NO.E026 OF 2025 dismissed the application in a Ruling delivered on 26 th February 2025. 3. The Petitioner averred that the Company is financially insolvent, unable to meet its obligations or operate as a going concern. It is saddled with the debt amounting to Kshs. 36,337,069.45 as at the date of the statutory demand. This has increased to Kshs. 37,218,714.28 as at 3 rd April, 2025, inclusive of interest at 14% per annum. In the circumstances, the Petitioner contended that the Company is unable to pay its debts. It urges the Court to order its liquidation pursuant to Sections 424(e) and 425(1)(b) of the Insolvency Act. 4. The Petitioner prayed as follows; a) THAT this Honourable Court be pleased to issue an order for the Liquidation of AMANDA APARTMENTS LIMITED; b) THAT the Costs of this Petition be in the cause; c) THAT any such orders as may be necessary, as the Court deems just in the premises. Issues for determination Page 2 of 8

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IP NO.E026 OF 2025 5. The Court has considered the Petitioner’s Petition as well as the written submissions. The Court frames the sole issue for determination as follows; a) Whether the Court should issue an order for the Liquidation of AMANDA APARTMENTS LIMITED. Analysis 6. The Creditor averred that the Debtor is indebted in the sum of Kshs. 37,218,714.28. This is in respect of materials supplied to the Debtor for its operations, the amount of which remains outstanding and unpaid. Despite numerous demands issued to the Debtor to settle the said debt, the Debtor has failed, neglected, and/or refused to make payment. Consequently, the Creditor has been compelled to institute the present proceedings for the liquidation of the company, the Debtor having demonstrated its inability to settle its debts. 7. It is notable that the existence of the debt was not disputed. The Creditor issued a Statutory Demand upon the Company, which in turn filed an application seeking to set it aside. Page 3 of 8

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IP NO.E026 OF 2025 However, the Court dismissed the application, finding that the debt remains outstanding to date. The Petition was subsequently served on the Company, but despite proper service, no response was filed, and the matter remains unopposed. 8. Section 424 (1) (e) & (g) of the Insolvency Act states that: A Company may be liquidated by the Court if: e. The Company is unable to pay its debts; g. the Court is of the opinion that it is just and equitable that the company should be liquidated. 9. Section 425(1) (b) of the Insolvency Act states as follows; 425. Applications to the Court for liquidation of companies (1) An application to the Court for the liquidation of a company may be made any or all of the following — (a) the company or its directors; (b) a creditor or creditors (including any contingent or prospective creditor or creditors); Page 4 of 8

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IP NO.E026 OF 2025 (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 10. When can a company be said to be unable to pay its debts? The Court refers to Section 384 (1) (a) of the Insolvency Act which states as follows; 384. The circumstances in which a company is unable to pay its debts (1) For the purposes of this Part, a company is unable to pay its debts— (a) if a creditor (by assignment or otherwise) to 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 Page 5 of 8

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IP NO.E026 OF 2025 debt or to secure or compound for it to the reasonable satisfaction of the creditor; 11. The Court of Appeal in the case of Prideinn Hotels & Investments Limited v Tropicana Hotels Limited [2018] KECA 651 (KLR) held as follows“This was clearly the case herein since the appellant did not make any payments after being served with a notice of demand by the respondent. Hence the respondent was entitled to bring a petition for liquidation of the appellant on the ground of its inability to pay its debt. Equally, I find no fault on the part of the learned Judge for issuing the liquidation order. There is no requirement under the Insolvency Act or the Companies Act, which stipulates that liquidation of a company should be as a last resort. Liquidation is one of the options under the Insolvency Act which a creditor such as the respondent in the case, could pursue to secure payment of a debt, especially a debt that remains unpaid for several years and in respect of which the appellant has been given adequate time, opportunity and indulgence.” Page 6 of 8

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IP NO.E026 OF 2025 12. In light of the above, it is the Court’s finding that there is sufficient proof to the effect that the Respondent is unable to pay its debts. Thus, the legal threshold for liquidation of the Respondent company has been met. 13. The Petition is therefore merited and is allowed. 14. As to costs the same lie at the discretion of this Court and follow the event. The Petitioner’s prayer that the costs be in the cause is justified in the circumstances. Determination 15. The Petition dated 2nd April, 2025 is allowed and Judgement is HEREBY entered for the Petitioner as against the Respondent as follows; a) THAT an order is HEREBY issued for the Liquidation of AMANDA APARTMENTS LIMITED; b) THAT the Costs of this Petition be in the cause; c) THAT the Official Receiver is HEREBY appointed as Liquidator of the Respondent. Accordingly, the Official Receiver shall be served with this Orders Page 7 of 8

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IP NO.E026 OF 2025 within Fourteen (14) days from the date of this Order. 16. It is so ordered. 17. This file is HEREBY marked as closed. DATED, SIGNED AND DELIVERED AT MILIMANI THIS 02ND DAY OF JUNE, 2026. NJOROGE BENJAMIN K. JUDGE In the presence of: Mr. Janjo David for the Petitioner. N/A for the Respondent. Mr. John Paul - Court Assistant. Page 8 of 8

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