Insolvency Law

An IVA becomes binding through the statutory approval process, not simply because a debtor circulates a repayment proposal. Creditors should test the proposal, voting entitlement and supervisor’s plan before deciding.

An expedited IVA can shorten the approval process, but it does not relax the debtor’s or supervisor’s duties of candour. Eligibility, disclosure and notices must be checked before relying on the route.

A summary instalment order can provide a supervised repayment route for a debtor with sustainable disposable income. The order must be built on a realistic budget and followed through the statutory process.

The no-asset procedure is a statutory debt-relief option for a qualifying debtor without realisable assets or repayment capacity. Entry requires complete disclosure, and creditors should read the admission notice carefully.

When a deceased person’s debts exceed the estate, personal representatives should not distribute assets as an ordinary succession estate. Insolvency administration may be needed to protect creditors, beneficiaries and the representative.

Company insolvency is not established by one unpaid invoice. Directors should test current cash flow, liabilities, asset values and statutory indicators using reliable financial information before the position worsens.

A company statutory demand is not a liquidation order, but it can be evidence of inability to pay debts. A company served with one should verify the debt, service, security and dispute position immediately.

A contributory is a person liable to contribute to a company’s assets in liquidation. That is primarily a member-based concept and should not be confused with a director’s separate liability for guarantees, misconduct or breaches of duty.

Kenyan liquidation routes serve different facts. A solvent company may use members’ voluntary liquidation; an insolvent company may require a creditors’ voluntary route or a court order. The label must match the financial and legal position.

Members’ voluntary liquidation is the statutory route for closing a company that can pay its debts in full. The declaration of solvency must be based on current evidence, not a hopeful estimate.

Creditors’ voluntary liquidation is an insolvent company’s voluntary collective process. Directors must provide reliable financial information; creditors should test claims, voting and the liquidator’s appointment.

A Court-liquidation petition is not an ordinary debt-collection tactic. The petitioner must have standing, establish a statutory ground and follow the procedural rules; a genuinely disputed debt or viable alternative remedy can be decisive.