KENYA Law and Practice Contributed by: Noella Lubano, Paul Kamara, Kateline Mang’ich and Anne Cheloti, Oraro & Company Advocates
• investigating the conduct of any person or com - pany subject to the IA; • making applications to court for liquidation in respect of a company that is in voluntary liquida - tion; • acting as a provisional liquidator in respect of a company upon appointment by the court; and • acting as a liquidator, and in this capacity con - vening creditors’ meetings and appointing other persons to act as liquidator. Section 705 of the IA excludes the Official Receiver from any liability arising out of civil proceedings in the exercise of their powers and functions, if done in good faith and in accordance with the law. Administrator The duties of an administrator follows from the objec - tives of the administration (see 1.2 Types of Insol- vency ). In performing these duties, the administrator is an agent of the company and therefore owes a fiduci - ary duty to the company (Section 586 of the IA). Fur - thermore, administrators are officers of the court as they perform their duties under its supervision, unlike receivers who are not officers of the court as they are appointed under debentures and are rarely supervised by courts (see I & M Bank Limited v ABC Bank Limited & another [2021] KEHC 12977 (KLR)). The Fourth Schedule of the Insolvency Act sets out the powers of an administrator, which include: • taking possession of, selling or otherwise dispos - ing of the company’s property; • borrowing money and offering security for the ben - eficial realisation of the company’s property; • carrying on the business of the company; • appointing a professional to assist in the adminis - tration; • bringing/defending legal proceedings on behalf of the company; • making payments incidental to or necessary for the administration; • ranking and claiming in insolvency of any person indebted to the company; and
• establishing/transferring subsidiaries of the compa - ny (see Mark Properties Limited v Coulson Harney LLP Advocates; Le Mac Management Company Limited & another (Applicants) [2021] KEHC 13272 (KLR)). An administrator may be personally and criminally liable if the following occurs, without reasonable jus - tification: • they fail to send a notice of their appointment to the company, publish a notice of this appointment, request the company’s statement of affairs, or reg - ister their notice of appointment at the Registrar of Companies within seven days of such appointment (Section 563 of the IA); • they fail to prepare a statement setting out the proposal to achieve the aims of the administration within 60 days of the company being placed under administration (Section 566 of the IA); • they fail to convene the initial or subsequent credi - tors’ meeting, even when requested to do so by the creditors or the court, when exceptions for convening the meeting have not been met (Sec - tions 569, 571 and 573 of the IA); • they fail to report the outcome of the initial credi - tors’ meeting to the court and lodge a copy of the report with the Registrar of Companies (Section 570 (3), (4) and (5) of the IA); • they distribute the assets of the company to an unsecured creditor, without the approval of the court (Section 582 (4) of the IA); • they fail to lodge a copy of a court order allowing them to sell charged assets or credits subject to a credit purchase agreement, with the Registrar of Companies, within 14 days of such order being made (Sections 588 (6) and 589 (5) of the IA); • they fail to lodge a notice of the extension of their term as administrator with the Registrar of Com - panies within reasonable time (Section 594 (9) and (10) of the IA); or • upon lodging a notice of the termination of the administration with the court, they fail to lodge said notice with the Registrar of Companies within seven days (Section 596 (6) of the IA).
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