Mohamed Hadi Abdi v Gulf African Bank Kenya Limited

3. The Petition was opposed by Gulf African Bank Kenya Limited through a Replying Affidavit sworn on 14th February 2023 by Lawi Sato, a Senior Legal Officer of the Bank. 4. The background of the case is that in 2018, Sidra Trading Limited, a company associated with the Petitioner, obtained a financing facility from the Respondent in the sum of Kshs. 18,000,000.00. The Petitioner executed guarantees in favour of the Respondent. Following default in repayment, the Respondent instituted Nairobi HCCC No. E221 of 2019 against the company, the Petitioner, and other guarantors. 5. Judgment was entered in favour of the Respondent, and the decretal amount together with interest and costs rose to approximately Kshs. 30,973,956.60. Execution proceedings ensued, and warrants of arrest were issued against the Petitioner. The Petitioner made several proposals to settle the debt and paid an aggregate sum of Kshs. 760,000.00, but was unable to raise further funds. 6. Faced with imminent committal to civil jail and asserting that he lacked the means to satisfy the decree, the Petitioner instituted the present bankruptcy proceedings. The Parties’ Cases

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7. The Petitioner contended that he is insolvent within the meaning of the Insolvency Act. He stated that the business venture for which the financing was obtained failed. That the goods imported for sale were never successfully released, consequently, business ceased operations, and that he has no substantial income or assets capable of satisfying the decretal debt. 8. He further stated that he survives on approximately Kshs. 40,000.00 per month earned through casual delivery work, that he has substantial family obligations and that the debt owed to the Respondent far exceeds his means. He maintains that he has made full disclosure of his financial affairs and has complied with all statutory requirements for presentation of the Petition. 9. The Respondent opposed the Petition principally on the grounds that the Petitioner has not been candid with the Court. It argued that the Petitioner previously proposed payment plans under which he undertook to settle over Kshs. 21 million within a relatively short period and therefore cannot now claim inability to pay. 10. The Respondent further contends that the Petitioner failed to adequately disclose his financial affairs, including matters relating to Sidra Trading Limited and other alleged business interests.

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Analysis and Determination 11. I have carefully considered the application and the submissions on record. The sole issue for determination is whether the Petitioner has complied with the requirements of section 32 for the grant of the bankruptcy order sought. 12. Under Section 32(1) of the Insolvency Act, 2015, a debtor is entitled to apply to be adjudged bankrupt on the grounds that he or she is unable to pay his or her debts. The provision provides as follows: “A debtor may make an application to the court for an order adjudging the debtor bankrupt only on the grounds that the debtor is unable to pay the debtor's debts.” 13. Further, the provisions of Section 32(2) of the Insolvency Act outline the requirements that must be met by the petitioner as follows: 14. “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

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(b) such other information as may be so prescribed.” 15. In the present case, the Respondent's principal attack on the Petition is that the Petitioner is guilty of material nondisclosure. I have carefully considered the evidence placed before the Court. While there are aspects of the Petitioner's financial affairs that might have been presented with greater detail, the evidence does not establish deliberate concealment of assets or income. 16. During cross-examination, the Petitioner acknowledged being the sole director and shareholder of Sidra Trading Limited. He explained the circumstances under which the financed business failed, the collapse of the restaurant venture and the cessation of the company’s operations. He further produced additional documentation, including company records and bank statements, in response to issues raised during the hearing. 17. The Court has also considered the Statement of Affairs. It discloses minimal personal assets and no significant realizable property capable of satisfying the judgment debt. The Respondent did not place before the Court credible evidence demonstrating the existence of undisclosed assets from which the debt could realistically be recovered.

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18. I am likewise not persuaded by the Respondent’s argument founded on the Petitioner's previous settlement proposals. A debtor’s attempt to negotiate settlement of a debt is not a bar to the institution of insolvency proceedings. The fact that the Petitioner hoped to raise funds at an earlier stage does not constitute proof that he presently possesses the means to discharge a debt exceeding Kshs. 30 million. 19. The Court is mindful that bankruptcy proceedings are not intended to provide a refuge for dishonest debtors. As observed in In re James Maina Kabatha (Debtor/Applicant) [2020] eKLR, a petitioner seeking the protection of bankruptcy law must demonstrate both good faith and full disclosure of his financial affairs 20. Similarly, Mwananchi in Momanyi Credit v Kountable Limited & Trading another Limited; (Creditor) [2025] KEHC 4667 (KLR), P. Mulwa J, stated as follows on the purpose of bankruptcy proceedings: “The purpose of bankruptcy proceedings is to protect the debtor from undue pressure from creditors, preserve fairness among the creditors, and discharge the debtor from his liabilities and enable him to start afresh (See Osman v First Community Bank & 2 others (Insolvency Petition E037 of 2020) [2022] KEHC 13825 (KLR).”

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21. In the present case, the evidence before the Court shows that despite repeated attempts, the Petitioner only managed to raise Kshs. 760,000.00 towards settlement of the decree. The debt has continued to accrue interest and remains substantially beyond his demonstrated means. 22. The Court is therefore satisfied that the Petitioner has established, on a balance of probabilities, that he is unable to pay his debts as they fall due and that he has substantially complied with the disclosure obligations imposed by the Insolvency Act. 23. The upshot of the foregoing is that the Petition is merited. I therefore make the following orders: i. A Bankruptcy Order is hereby issued against Mohamed Hadi Abdi. ii. The Official Receiver shall act as trustee of the bankrupt estate unless and until another trustee is appointed in accordance with the Insolvency Act. iii. The Petitioner shall cooperate fully with the Official Receiver and shall furnish any further information regarding his assets, liabilities and financial affairs as may be required. iv. Each party shall bear its own costs of the Petition. 24. It is so ordered.

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DATED, SIGNED, AND DELIVERED AT NAIROBI THIS 18TH DAY OF JUNE 2026 HON. MR. JUSTICE MOSES ADO Judge of the High Court In the Presence of: Moses C/A Ms. Kamau h/b for Mwangi………………for the Petitioner N/A……………for the Respondent

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