KENYA Law and Practice Contributed by: Noella Lubano, Paul Kamara, Kateline Mang’ich and Anne Cheloti, Oraro & Company Advocates
CVA Supervisor/Provisional CVA Supervisor The provisional CVA supervisor oversees the proce - dure by which a CVA proposal is created and voted upon. The supervisor must prepare a report to the court on the feasibility of the proposed CVA, then con - vene a creditors’ meeting, where a vote shall be made on whether the CVA should be accepted. The super - visor may challenge approved CVAs by making an application to the court if the CVA detrimentally affects the interests of a creditor, member or contributory, or where a material irregularity occurred at/in relation to the creditors’ meeting. Once a CVA proposal is voted for by a majority of the creditors, it is approved by the court and takes effect. The provisional CVA supervisor becomes the CVA supervisor, with the duty to: • implement the CVA; • make applications challenging decisions related to the CVA where it detrimentally affects the interests of a creditor, member or contributory, or where a meeting irregularity occurred at/in relation to the creditors’ meeting; • apply to court for directions relating to the CVA; and • report the conduct of delinquent directors to the relevant authorities (Sections 631, 633, 633 (4), 633 (5) and 634 of the IA). Supervisors also aid in implementing voluntary arrangements entered into in relation to bankruptcy • fail to appear before the Official Receiver within seven days of receiving a notice from the Official Receiver, requesting certain information and docu - ments of a bankrupt’s estate (Section 330 (2) of the IA); or • fail to send a notice of summary instalment order to the creditors of a bankrupt entity (Section 336 (2) of the IA). Liquidator/Provisional Liquidator The general duties and powers of a liquidator under the Insolvency Act include the power to: proceedings (Part IV, Division 1 of the IA). A supervisor may be held liable if they:
• sell the company’s property by public auction or private treaty; • do all acts and execute in the company’s name; • prove and claim in an insolvency on behalf of the company; and • appoint an agent. Once an agent is appointed, the directors of a com - pany cease to perform their duties and manage the company. However, a liquidator also has other powers, including the power to: • convene a creditors’ meeting; • bring/defend any action on behalf of the company and carry on the business of the company, which is exercisable without approval in voluntary liquida - tion or with the approval of the court; and • settle a list of contributories, make calls, convene general meetings of the company and pay the company’s debts, especially in instances where a company is under voluntary liquidation. A liquidator may be held personally and criminally liable if the following occurs, without reasonable jus - tification: • they fail to publish a notice of the liquidation of the company in the Kenya Gazette and two newspa - pers, and on the company’s website (Sections 394 and 417 of the IA); • they fail to convene a general meeting of the company, should the liquidation period exceed 12 months (Sections 401, 413 and 489 of the IA); • they fail to convene the final general meeting once the liquidation of the company’s affairs is complete, or lodge a copy of the returns and accounts with the Registrar of Companies within seven days of the final general meeting (Sections 402 and 414 of the IA); • they form the opinion that a company that has been voluntarily liquidated is unable to repay its debts and fail to convene a meeting of the credi - tors, or to send out to the creditors and publish notices of said meeting, or to prepare a statement of the company’s affairs (Section 404 of the IA);
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