Insolvency 2025

KENYA Law and Practice Contributed by: Noella Lubano, Paul Kamara, Kateline Mang’ich and Anne Cheloti, Oraro & Company Advocates

Supervisors Supervisors are appointed by the directors to oversee the implementation of CVAs. Once a proposed CVA is approved, the provisional supervisor who had been appointed by the directors of the company becomes the supervisor on approval by the creditors or mem - bers, or the CVA proposal may be modified such that the creditors propose the replacement of the provi - sional supervisor with another insolvency practitioner (Section 628 of the IA). During CVAs, the directors retain their managerial role but perform their duties under the supervisor’s supervision and can only dispose of the assets with the supervisor’s approval while considering the best interest of the company. The directors may obtain a moratorium on behalf of the company (Sections 643, 644, 656 and 657 of the IA). Supervisors must be insolvency practitioners, so can only be natural persons who have the requisite aca - demic qualifications and have been licensed by the Office of the Official Receiver. Bankruptcy Trustee A bankruptcy trustee is appointed during bankrupt - cy proceedings by creditors, the court or the official receiver. The appointment takes effect upon accept - ance or at the time stated in the deed of appointment (Section 59 of the IA). A trustee may be removed by the court or a resolution passed at the creditors’ meeting. When the Official Receiver is the trustee, they may be removed by the court, on the request of a creditor supported a quarter of the creditors. The Official Receiver The Official Receiver is a statutory office mandated to: • implement the Insolvency Act; • license and supervise insolvency practitioners; • oversee administration and liquidation; • manage the affairs of a bankrupt’s estate through a bankruptcy trustee; and • investigate the conduct of any offences under the Insolvency Act.

The Insolvency Act has also created the office of an administrative receiver (see above), who is also an insolvency practitioner, and whose mandate is to act as a receiver or manager of the company’s property, appointed by or on behalf of the holders of any deben - tures created before the coming into force of the Insol - vency Act (Section 690 of the IA). 2. Creditors 2.1 Types of Creditors See 2.2 Priority Claims in Restructuring and Insol- vency Proceedings . 2.2 Priority Claims in Restructuring and Insolvency Proceedings The Second Schedule of the Insolvency Act sets out the order of priority of claims for companies under liquidation and administration as follows. • First priority – the expenses of administration or liquidation and new money claims for a creditor’s moneys and indemnities issued to protect or pre - serve the company’s assets. • Second priority – wages and salaries payable to employees during the four months before the com - mencement of the liquidation, including: (a) any holiday pay payable to employees on the termination of their employment before, or because of, the commencement of the liquida - tion; (b) any compensation for redundancy owed to employees that accrues before, or because of, the commencement of the liquidation; (c) amounts deducted by the company from the wages or salaries of employees in order to satisfy other debts (including amounts payable to the Kenya Revenue Authority); (d) any reimbursement or payment provided for, or ordered by, the Employment and Labour Rela - tions Court; (e) amounts that are preferential claims under Section 175 (2) and (3) of the IA; and (f) all amounts that are by any other written law required to be paid together with all second priority claims.

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