HCCOMM IN E024 OF 2024 REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT NAIROBI COMMERCIAL AND TAX DIVISION HCCOMM IN E024 OF 2024 LAWI GITONGA IMATHIU……...…………………………… PETITIONER VERSUS ELIJAH KITINGA………………………………………….1ST RESPONDENT EDWIN KIMATHI………...……………………………..2ND RESPONDENT ISAIAH KOECH…………………………………………..3TH RESPONDENT KEN MWITI………………………………………………4TH RESPONDENT EMILY NJOROGE…….….………………………………5TH RESPONDENT Page 1 of 8
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HCCOMM IN E024 OF 2024 ROSE OSIEMO………..…………………………………6TH RESPONDENT PATRICK OWUOR………………………………………7TH RESPONDENT JAMES MAILU……………………………………………8TH RESPONDENT TIMOTHY MWENDA………….………………………9TH RESPONDENT MIKE MITHEU………….………………………………10TH RESPONDENT JACKIE MUNYI…………………………………………11TH RESPONDENT NAOMI MWANGI……….………………………………12TH RESPONDENT ROSE WAHOME…………………………………………13TH RESPONDENT ESTHER MBOCHE………………….…………………….14TH RESPONDENT Page 2 of 8
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HCCOMM IN E024 OF 2024 RUTH KARANJA…………………………………………15TH RESPONDENT FRANCIS OBUOSI……………….………………………16TH RESPONDENT PHILIP GICHANGI…………………..……………….…17TH RESPONDENT RICHARD MULI…………………………………………18TH RESPONDENT CAROL MAKUMI………………………………….……19TH RESPONDENT FREDRICK GITONGA….………………………………20TH RESPONDENT JUDGMENT 1. Financial ruin is a harsh reality for many in the commercial world. 2. The law, however, offers a lifeline. It provides a fresh start for the honest but unfortunate debtor. Page 3 of 8
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HCCOMM IN E024 OF 2024 3. Before the Court is an undefended Debtor's Petition. It is dated 19th August, 2024. The Petitioner seeks the ultimate shield of the insolvency regime: a bankruptcy order. Background Facts 4. The Petitioner is a businessman. He operates in the construction industry. 5. On 9th March, 2015, he secured a loan from ABC Bank Limited. The principal sum was Kenya Shillings 26,000,000.00. The purpose of the facility was to partly finance the purchase of land in Kabete. 6. On 1st February, 2017, the Petitioner entered into a property development agreement. His partner was Rockworld Engineering and Construction Company Limited. The commercial objective was to service the bank loan and develop the property. 7. Rockworld Engineering and Construction Company Limited unexpectedly withdrew from the agreement. This withdrawal severely crippled the Petitioner financially, Page 4 of 8
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HCCOMM IN E024 OF 2024 leaving him solely responsible for the project after investing his life savings. 8. The Petitioner subsequently defaulted on the ABC Bank loan. The Bank exercised its statutory power of sale. The charged property, LR No. Kabete/Kibichiku/3045, was auctioned on 5th August, 2021 by Muga Auctioneers and General Merchants. 9. The sale did not extinguish the debt. The outstanding liabilities ballooned due to accrued interest. 10. The Petitioner was left destitute. He has no formal employment and lacks a source of income. He presently survives on the goodwill of family and friends. 11. He is now indebted to twenty unsecured creditors. The aggregate debt stands at Kenya Shillings 26,001,600.00. His assets are nil. Orders Sought 12. The Petitioner approaches this Court seeking two primary orders: 1. First, that he be adjudged bankrupt. Page 5 of 8
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HCCOMM IN E024 OF 2024 2. Second, that a Bankruptcy Trustee be appointed in respect of his estate. Issues for Determination 13. This Petition is undefended. Neither the listed creditors nor the Official Receiver have filed any objection despite due service. 14. There is only one issue for determination: (a) Whether the Debtor ought to be adjudged bankrupt. Analysis 15. The jurisdiction to adjudge a debtor bankrupt is anchored in statute. Section 32(1) of the Insolvency Act, 2015 governs this Petition. It provides that a debtor may apply for a bankruptcy order solely on the ground of an inability to pay their debts. Page 6 of 8
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HCCOMM IN E024 OF 2024 16. The burden of proof lies squarely with the Petitioner. He must demonstrate good faith. He must make full and frank disclosure of his financial affairs. 17. This Court is guided by the holding of Prof. Ngugi, J. (as he then was) in In (Debtor/Applicant) learned Re James Maina Kabatha [2020] KEHC 2685 (KLR). Judge aptly summarized the twin The goals of individual bankruptcy law. The first is to protect creditors and ensure optimal payment. The second is to provide shelter and a "fresh start" to an overburdened debtor. 18. To achieve this fresh start, the debtor must cross a double threshold. He must demonstrate absolute good faith. He must fully disclose his financial information. 19. Has the Petitioner met this threshold? The evidence on record confirms he has. 20. The Petitioner filed a Statement of Affairs on 19th August, 2024. It complies with Section 32(2) of the Insolvency Act. The statement confirms he holds no assets. His liabilities total Kenya Shillings 26,001,600.00. Page 7 of 8
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HCCOMM IN E024 OF 2024 21. Procedural mandates have also been met. A Certificate of Compliance was issued by the Official Receiver on 28th August, 2024. The Petitioner published a notice of the petition in the Standard newspaper on 3rd March, 2025. This aligns precisely with the dictates of Section 32(4) of the Act. 22. The Official Receiver was electronically served on 15th September, 2025. The hearing proceeded on 2nd October, 2025. The creditors did not appear. They filed no objections. 23. In Re Jitesh Dhirajal [2021] KEHC 12770 (KLR), Malde Majanja, (A J. debtor) restated a fundamental principle. Where a debtor makes sufficient disclosure and demonstrates a genuine inability to pay, the bankruptcy order must issue. 24. Similarly, In Re the matter of Daniel Mathenge Ruthi [2010] KEHC 207 (KLR), the Court readily adjudged the debtor bankrupt where he lacked any means to liquidate his debts. Page 8 of 8
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HCCOMM IN E024 OF 2024 25. The present case sits squarely within these precedents. The Petitioner's insolvency is not a product of fraud. It stems from a failed commercial venture and a withdrawn partner. He is genuinely incapable of meeting his financial obligations. 26. There is no compelling reason to deny the Petitioner the protection of the law. The legal requirements are fully satisfied. The bankruptcy order is merited. 27. The Petition dated 19th August, 2024 is HEREBY allowed in the following terms: 1. LAWI GITONGA IMATHIU is HEREBY adjudged bankrupt. 2. A Bankruptcy Order is HEREBY made in respect of his estate. 3. The Official Receiver is HEREBY appointed as the Bankruptcy Trustee in respect of the Debtor's estate. 4. The Petitioner is hereby directed to extract and serve this Order upon the Official Receiver Page 9 of 8
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HCCOMM IN E024 OF 2024 within Fourteen (14) days from the date of this Judgment. 5. The costs of this Petition shall be borne out of the Debtor's estate. 28. It is so ordered. DATED, SIGNED AND DELIVERED AT MILIMANI THIS 16TH DAY OF JULY, 2026 NJOROGE BENJAMIN K. JUDGE In the presence of: Mr. Otieno for the Petitioner. N/A for the Respondents. Mr. John Paul - Court Assistant. Page 10 of 8
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