Point in Time
Act No: CAP. 53
Act Title: INSOLVENCY
[ Date of assent: 11th September, 2015. ]
Arrangement of Sections
PART I – PRELIMINARY PROVISIONS
1.
Short title and commencement
(1)

This Act may be cited as the Insolvency Act.

(2)

The provisions of this Act shall come into operation on such date as the Cabinet Secretary may, by notice in the Gazette, appoint and different dates may be appointed for different provisions.

(3)

Notwithstanding subsection (2), any provision that has not been brought into force within nine months after the publication of this Act shall come into force on the expiry of that period.

2.
Interpretation
(1)

In this Act, unless the context otherwise requires—

"affairs" in relation to a natural person or company, includes a business carried on by the person or company and any dealings conducted in the course of the business;

"amount" means an amount of money;

"apply to" includes apply in relation to;

"associate"—

(a)

in relation to a company, means—

(i) its holding company or its subsidiary;
(ii) a subsidiary of its holding company;
(iii) a holding company of its subsidiary;
(iv) a person who controls the company (whether alone or with the person's associates or with other associates of the company);
(v) any other company in which a director of the company is also a director; or
(vi) a natural person who is employed by the company;
(b)

in relation to a partner of a partnership, means—

(i) any other partner of the partnership;
(ii) a member of the partner's family or of the family of another partner of the partnership;
(iii) a natural person who is employed by the partnership; or
(c)

in relation to a natural person, means—

(i) a member of the person's family;
(ii) a company controlled directly or indirectly, by the person whether alone or with associates;
(iii) an associate of the person's associates; or
(iv) any person (including a company) who employs the person or by whom the person is employed;

"authorised insolvency practitioner" means a person who holds an authorisation granted under section 9;

"bank" means a bank to which the Banking Act (Cap. 488) applies;

"bankrupt" means a debtor who has been adjudged bankrupt under Part III and has not been discharged from bankruptcy;

"the Bankruptcy Act" means—

(a)

the Bankruptcy Act (Cap. 53) repealed by this Act; and

(b)

the rules made under that Act;

"bankruptcy trustee", in relation to a bankrupt or a bankruptcy, means the trustee of the bankrupt's estate;

"business" includes trade and profession;

"business records", in relation to a bankrupt, includes accounting records, receipts, bills, invoices and any other documents relating to the bankrupt's business;

"company" means a company or foreign company registered under the Companies Act (Cap. 486), and includes—

(a)

a building society within the meaning of the Building Societies Act (Cap. 389);

(b)

a limited liability partnership within the meaning of the Limited Liability Partnerships Act (Cap. 30); and

(c)

a body (whether incorporated or not) of a class prescribed by the insolvency regulations for the purposes of this definition;

"conditional sale agreement" means an agreement for the sale of goods under which payment of the whole or a part of the purchase price is deferred and a security right in the goods is created or provided for in order to secure the payment of the whole or a part of the purchase price;

"connected with", in relation to a company, has the meaning given by subsection (4);

"control of" or "control over", in relation to documents or other property, includes having possession of, or custody over, the documents or property;

"correspondence" includes correspondence by electronic means;

"the Court" means the High Court, and if there is an insolvency division of that Court, means that division;

"creditor" includes a person entitled to enforce a final judgment or final order;

"credit purchase transaction" means a hire-purchase agreement, a conditional sale agreement, a chattel leasing agreement or a retention of title agreement;

"debt" means an obligation or liability of a person to pay money or money's worth to another person; and includes (except when the context otherwise provides)—

(a)

a liability under a written law;

(b)

a liability for a breach of trust;

(c)

a liability under a contract or bailment or in tort; and

(d)

a liability arising from an obligation to make restitution;

"debtor" means a person who owes a debt;

"document" means information recorded in any form; and in particular includes a summons, notice, order or other legal process and a register (whether in hard copy or electronic form);

"electronic form" in relation to a document or information, means the storage or keeping of the document or information in the form of data, text or images by means of guided or unguided electromagnetic energy, or both;

"execution process" means any of the following—

(a)

issuing or proceeding with any of the following orders or warrants under a judgment or order obtained against the debtor in any court in its civil jurisdictions—

(i) an order or warrant for the possession, seizure, or sale of any property;
(ii) an order of attachment;
(b)

obtaining a garnishee order in favour of a judgment creditor under the Civil Procedure Rules (Cap. 21, subleg);

(c)

obtaining an order that a judgment creditor may sue a sub-debtor under the Civil Procedures Rules;

(d)

having a charging order nisi made absolute under the Civil Procedure Rules;

(e)

beginning or continuing proceedings in any court for the appointment of a receiver of property, except an application for the appointment of a person as interim trustee under section 36;

(f)

exercising a power of re-entry under a lease, or a power terminating a lease;

(g)

seizing or selling property by levying distress for rent;

"execution process" means any of the following:

(a)

issuing or proceeding with any of the following orders or warrants under a judgment or order obtained against the debtor in any court in its civil jurisdictions—

(i) an order or warrant for the possession, seizure, or sale of any property;
(ii) an order of attachment;
(b)

obtaining a garnishee order in favour of a judgment creditor under the Civil Procedure Rules;

(c)

obtaining an order that a judgment creditor may sue a sub-debtor under the Civil Procedures Rules;

(d)

having a charging order nisi made absolute under the Civil Procedure Rules;

(e)

beginning or continuing proceedings in any court for the appointment of a receiver of property, except an application for the appointment of a person as interim trustee under section 36;

(f)

exercising a power of re-entry under a lease, or a power terminating a lease;

(g)

seizing or selling property by levying distress for rent;

"functions" includes duties and responsibilities;

"goods" includes all chattels personal other than things in action and money, and all emblements, industrial growing crops and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale;

"hire-purchase agreement" means a hire-purchase agreement as defined in section 2(1) of the Hire Purchase Act (Cap. 507);

"insolvency regulations" means regulations made under this Act and in force;

“Judicial enforcement officer" means a bailiff or other officer of a court who is charged with carrying out a process involving the execution or enforcement of an order or judgement of the court;

"landlord", in relation to a letting of premises, includes any person to whom rent or other money is payable in respect of the occupation or use of the premises;

"liquidation application", in relation to a company, means an application to the Court for a liquidation order in respect of the company;

"liquidation order", in relation to a company, means an order of the Court for the liquidation of the company by the Court;

"member", in relation to a company, includes a person who is not a member of a company but to whom shares in the company have been transferred, or transmitted by operation of law;

"notice" means notice in writing;

"officer", in relation to a company, means the chief executive officer, or any director, manager or secretary, of the company;

"partnership" means a partnership within the meaning of the Partnership Act;

"person" includes a partnership, an unincorporated association, a corporation, a co-operative society or an organization, the successors of a partnership, association, corporation, society or organization, and heirs, executors, liquidators of the succession, administrators or other legal representative of a person;

"powers" includes rights and authorities;

"preferential creditor" means a person to whom a preferential debt is owed;

"preferential debts", in relation to a natural person or a company, means the debts listed in the Second Schedule;

"property" includes money, goods, choses in action, land and every description of property, whether real or personal, legal or equitable, and whether located in Kenya or elsewhere, and includes obligations, easements and every description of estate, interest and profit, present or future, vested or contingent in, arising out of or incidental to property;

"prescribed bankruptcy level" has the meaning given by subsection (5);

"property" includes things in action;

"provable claim", in relation to a bankrupt, means a claim that is provable by a creditor in proceedings under Part III;

"purchaser", in relation to a credit purchase transaction, means the person to whom goods are disposed of under the transaction, and, if the rights of that person are transferred by assignment or by operation of law, includes the person for the time being entitled to those rights;

"records" means information stored in documents or in an electronic database or by electronic means;

"the Registrar" (except when used in reference to the Court) means the Registrar of Companies;

"register", "registered" and "registration", in relation to a notice or other document required or permitted to be lodged with, or sent or notified to, the Registrar under this Act, means respectively register, registered and registration in the Register of Companies in relation to the company to which the notice or other document relates;

"relative", in relation to a person, means—

(a)

the parents, spouse, child, brother, or sister of that person;

(b)

the parents, child, brother or sister of the spouse of that person; or

(c)

a nominee or trustee for any of the persons specified in paragraph (a) and (b);

"relevant court", in relation to a matter other than one that is specifically entrusted to the High Court by a provision of this Act, means the court exercising or having responsibility for exercising jurisdiction in respect of that matter;

"the repealed Companies Act" means—

(a)

the Companies Act repealed by the Companies Act (Cap. 486); and

(b)

the rules or regulations made under that Act;

"retention of title agreement" means an agreement for the sale of goods to a company, being an agreement that does not constitute a charge on the goods; but under which, if the seller is not paid and the company is wound up, the seller will have priority over all other creditors of the company with respect to the goods or any property representing the goods as long as it has satisfied the applicable requirements for third-party effectiveness under the Movable Property Security Rights Act (Cap. 499A);

"secured creditor" means—

(a)

a person holding a security on or against the property of the debtor or (any part of it) to secure a debt due or accruing due to the person from the debtor; or

(b)

a person whose claim is based on, or secured by, a negotiable instrument held as collateral security and on which the debtor is only indirectly or secondarily liable;

"security" means any mortgage, charge, lien or other security;

"security agreement" means an agreement under which property becomes subject to a security for the payment of an obligation;

"service provider" means any entity or person who supplies fuel, water, electricity, telecommunications, or such other services as may be prescribed;

"shares" include stocks;

"special resolution" means a resolution of creditors passed in accordance with this Act;

"terms" includes conditions;

"transfer" includes conveyance, assignment and surrender;

"under administration", in relation to a company, has the meaning given by section 521;

"unsecured creditor", in relation to a natural person or a company, means a creditor of the person or company who is not a secured creditor;

"written" or "in writing" includes respectively "written in electronic form" and "in electronic form".

(2)

For the purposes of the application of this Act to a debt, it does not matter—

(a)

whether the debt is present or future;

(b)

whether it is certain or contingent; or

(c)

whether its amount is fixed or liquidated, or is capable of being ascertained by fixed rules or as a matter of opinion.

(3)

For the purposes of this Act, a person is a member of the family of a natural person if the person is the parent, spouse, brother, sister, child, uncle, aunt, nephew, niece, stepfather, stepmother, stepchild, or adopted child of the person concerned and, in case of an adopted child, the child's adopted parents.

(4)

For the purposes of this Act, a person is connected with a company if the person—

(a)

is an officer of the company or an associate of such an officer; or

(b)

is an associate of the company.

(5)

For the purposes of this Act, the prescribed bankruptcy level is the amount for the time being specified in the Insolvency Regulations.

[Act No. 13 of 2017, Sch.]

3.
Objects and application of this Act
(1)

The objects of this Act are—

(a)

to establish and provide for the operation of a framework for the efficient and equitable administration of the estates of insolvent natural persons and unincorporated entities comprising natural persons, and the assets of insolvent companies and other bodies corporate, that maintains a fair balance between the interests of those persons, entities, companies and bodies and those of their creditors;

(b)

in the case of insolvent natural persons and unincorporated entities comprising natural persons, and insolvent companies and other bodies corporate whose financial position is redeemable—

(i) to enable those persons and entities to continue to operate as going concerns so that ultimately they may be able to meet their financial obligations to their creditors in full or at least to the satisfaction of those creditors; and
(ii) to achieve a better outcome for the creditors as a whole than would likely to be the case if those persons and entities were adjudged bankrupt;
(c)

in the case of insolvent companies and other bodies corporate whose financial position is redeemable—

(i) to enable those companies and bodies to continue to operate as going concerns so that ultimately they may be able to meet their financial obligations to their creditors in full or at least to the satisfaction of those creditors; and
(ii) to achieve a better outcome for the creditors as a whole than would likely to be the case if those companies and bodies were liquidated; and
(d)

in the case of insolvent natural persons and unincorporated entities comprising natural persons, and insolvent companies and other bodies corporate whose financial position is irredeemable—to provide an orderly system for adjudging those persons bankrupt and for the efficient and optimal administration and distribution of their estates for the benefit of their creditors;

(e)

in the case of insolvent companies and other bodies corporate whose financial position is irredeemable—to provide an orderly system for liquidating the affairs of those companies and bodies and for the efficient and optimal administration and distribution of their assets for the benefit of their creditors.

(2)

This Act applies to natural persons, partnerships, limited liability partnership, companies and other corporate bodies established by any written law.

PART II – INSOLVENCY PRACTITIONERS
4.
Circumstances in which person acts as insolvency practitioner
(1)

A person acts as an insolvency practitioner in relation to a natural person if the person acts—

(a)

as the bankruptcy trustee or interim trustee in respect of the person's property or as permanent or interim trustee in the sequestration of the person's estate;

(b)

as a trustee under a deed that is—

(i) a deed of composition made for the benefit of the person's creditors; or
(ii) a trust deed for the creditors of the person; or
(c)

as supervisor of a voluntary arrangement approved under Division I of Part IV.

(2)

A person acts as an insolvency practitioner in relation to a company if the person acts as—

(a)

the liquidator, provisional liquidator, administrator of the company;

(b)

a supervisor of a voluntary arrangement approved under Part VIII; or

(c)

a supervisor of a voluntary arrangement approved under Part IX.

(3)

A reference in this section to a natural person includes, except in so far as the context otherwise requires, a reference to a partnership other than a limited liability partnership.

5.
Consequences of acting without authorisation
(1)

A person who, not being the holder of an authorisation, purports to act as an insolvency practitioner in relation to a company or a natural person commits an offence and is on conviction liable to a fine not exceeding five million shillings.

(2)

This section does not apply to the Official Receiver.

6.
Qualifications for person to act as insolvency practitioners
(1)

Subject to subsection (2) and (3), a person is qualified to act as an insolvency practitioner only if the person—

(a)

satisfies the requirements of the insolvency regulations with respect to education, practical training and experience;

(b)

is a member of a professional body recognised under section 7; and

(c)

satisfies the requirements (if any) of the rules governing the body.

(2)

A natural person is disqualified from being or acting as an insolvency practitioner if the person—

(a)

has been adjudged bankrupt, or the person's estate has been sequestrated and, in either case, the person has not been discharged;

(b)

is subject to a disqualification order made under the law relating to companies; or

(c)

is unable to perform the functions of an insolvency practitioner because of physical or mental infirmity.

(3)

A body corporate is not eligible to be an insolvency practitioner, but this subsection does not extend to an employee of a body corporate.

(4)

A natural person who, during the two years immediately preceding the commencement of this Part, was carrying on any of the activities referred to in section 4(1) or (2) is, unless disqualified under subsection (2), taken to be qualified to be and to act as an insolvency practitioner on and after that commencement, but ceases to be so qualified unless the person has, within the twelve months after that commencement, complied with the requirements of subsection (1).

7.
Duty of Cabinet Secretary to declare certain bodies to be recognised as professional bodies for the purposes of this Act
(1)

The Cabinet Secretary shall, by notice published in the Gazette, declare one or more professional bodies to be recognised professional bodies for the purposes of this Act.

(2)

The Cabinet Secretary may declare a professional body to be a recognised professional body only if it—

(a)

regulates the practice of a profession; and

(b)

maintains and enforces rules authorizing its members to act as insolvency practitioners to ensure that members—

(i) are fit and proper persons to act as insolvency practitioners; and
(ii) meet acceptable requirements relating to education practical training and experience.
(3)

A reference to the members of a recognised professional body includes a reference to persons who are, whether members of that body or not, governed by its rules in the practice of the relevant profession.

(4)

The Cabinet Secretary may revoke a notice made under subsection (1) if it appears to the Cabinet Secretary that the professional body no longer meets the requirements of subsection (2).

(5)

A notice made by the Cabinet Secretary under this section takes effect from the date of the notice or such other date as is specified in it.

(6)

The Cabinet Secretary may, in revoking a notice made under subsection (1), exempt a specified member, or a specified class of members, of the professional body concerned from the effect of the revocation and to authorise the member, or the members of that class, to continue acting as an insolvency practitioner or as insolvency practitioner for such period as the Cabinet Secretary determines and notifies in writing to the member or members concerned.

(7)

In this section, "profession" means a profession involving carrying on any of the activities referred to in section 4(1) or (2).

8.
Application to act as insolvency practitioner
(1)

A person who wishes to act as an insolvency practitioner may apply to the Official Receiver for an authorisation to act as an insolvency practitioner for the purposes of this Act.

(2)

The Official Receiver shall refuse an application under subsection (1) that—

(a)

is not made in the manner prescribed by the insolvency regulations;

(b)

does not contain or be accompanied by such information as the Official Receiver may reasonably require for purposes of determining the application; or

(c)

does not comply with subsection (3); or

(d)

is not accompanied by the fee so prescribed.

(3)

The applicant shall include in, or attach to, the application evidence—

(a)

that the applicant is qualified to act as an insolvency practitioner; and

(b)

that the applicant—

(i) has a professional indemnity insurance policy or has provided security for the proper performance of the functions of an insolvency practitioner; and
(ii) that policy or security meets the requirements prescribed by the insolvency regulations with respect to acting as a practitioner; and
(c)

that the applicant is a fit and proper person to act as an insolvency practitioner.

(4)

The Official Receiver may direct that notice of the application be published in the Gazette or in such other publication as the Official Receiver specifies.

(5)

Information to be provided to the Official Receiver under this section is, if the Official Receiver so requires, to be in such form or verified in such manner as the Official Receiver may specify.

(6)

An application made under subsection (1) may be withdrawn at any time before it is granted or refused.

9.
Grant or refusal of authorisation
(1)

As soon as practicable after receiving an application made under section 8, the Official shall either grant or refuse the application.

(2)

The Official Receiver shall grant an application made under section 8 if satisfied that—

(a)

the application complies with the requirements of that section; and

(b)

that the applicant is qualified to act as an insolvency practitioner and is a fit and proper person to act as such.

(3)

The Official Receiver may not refuse an application for an authorisation without having given the applicant an opportunity to be heard.

(4)

On granting an authorisation under this section, the Official Receiver shall notify the applicant in writing of the authorisation and specify the date on which the authorisation is to take effect.

(5)

An authorisation granted under this section continues in force for such period, and subject to such reasonable conditions, as are specified in the authorisation.

10.
Power of Official Receiver to revoke authorisation
(1)

The Official Receiver may revoke an authorisation granted under subsection (1) if satisfied that the holder of the authorisation—

(a)

is no longer qualified to act as an insolvency practitioner;

(b)

is no longer a fit and proper person to act as an insolvency practitioner;

(c)

has been found guilty of an offence under this Act, or of an offence under any other Act involving fraud, dishonesty or breach of trust;

(d)

has contravened or failed to comply with, or is contravening or failing to comply with, a condition of the authorisation; or

(e)

in making the application for an authorisation, has provided the Official Receiver with false or misleading information.

(2)

An authorisation granted under this section may be revoked by the Official Receiver at the request, or with the consent, of the holder of the authorisation.

(3)

The Official Receiver may not revoke an authorisation (otherwise than at the request or with the consent of its holder) without having given its holder an opportunity to be heard.

(4)

A revocation of an authorisation does not take effect until the period within which an appeal within which the holder of the authorisation can appeal against the revocation has expired or, if within that period, the holder lodges such an appeal, until the appeal is finally determined or is withdrawn, whichever first occurs.

11.
Right to appeal against decisions of Official Receiver
(1)

A person whose application for an authorisation to act as an insolvency practitioner is refused may appeal to the Court against the refusal.

(2)

A person whose authorisation to act as insolvency practitioner is revoked otherwise than at the person's request or with the person's consent may appeal to the Court against the refusal.

(3)

Such an appeal may be entertained only if—

(a)

it is lodged with the Court within thirty days after the decision of the Official Receiver refusing the application or revoking the authorisation is notified to the applicant or holder of the authorisation, or within such extended period as the Court may allow; and

(b)

is in the form, and complies with any other requirements, prescribed by the insolvency regulations for the purposes of this section.

(4)

The Official Receiver is entitled to be served with a copy of the appeal and to appear at the hearing of the appeal as respondent.

(5)

On the hearing of an appeal lodged in accordance with this section, the Court shall, if it considers that the refusal of the appellant's application, or the revocation of the appellant's authorisation, was not warranted, make an order quashing the decision of the Official Receiver refusing the application, or revoking the authorisation, but otherwise, it shall make an order confirming the Official Receiver's decision.

(6)

The Court may make such ancillary or consequential orders as it considers appropriate, including an order as to payment of costs of the appeal proceedings.

PART III – BANKRUPTCY OF NATURAL PERSONS
Division 1 — Bankruptcy: introductory provisions
12.
Interpretation: Part III

In this Part—

"bankruptcy application" means an application for a debtor to be adjudged bankrupt;

"bankruptcy order", in relation to a debtor, means an order of the Court adjudging the debtor bankrupt;

"creditor's application" means a bankruptcy application made in accordance with section 17 by one or more creditors of a debtor;

"debtor" means a natural person who owes money to one or more creditors; and, if a trust, partnership or other unincorporated body owes money to a creditor, includes all of the trustees of the trust, all of the partners of the partnership and all of the members of the body;

"debtor's application” means a bankruptcy application made in accordance with section 32 by a debtor;

"statutory demand" means a demand for payment of a debt made as referred to in section 17(3)(a) or (4)(a).

13.
Nature of bankruptcy
(1)

Bankruptcy occurs when the Court makes an order in respect of a debtor adjudging the debtor bankrupt—

(a)

on the application of one or more creditors of the debtor made in accordance with section 17; or

(b)

on the application of the debtor made in accordance with section 32.

(2)

If a person is adjudged bankrupt—

(a)

the property of the person vests in the bankruptcy trustee or, if there is no bankruptcy trustee, the Official Receiver;

(b)

the person becomes restricted as to the business activities that the person can undertake; and

(c)

the Official Receiver is entitled to recover assets that the person has transferred within the two years immediately preceding the bankruptcy.

14.
Alternatives to bankruptcy

A debtor who is insolvent may as an alternative to bankruptcy—

(a)

enter into a voluntary arrangement in accordance with Division I of Part IV;

(b)

make a proposal to creditors in accordance with Division 2 of Part IV;

(c)

pay creditors in instalments under a summary instalment order under Division 3 of that Part; or

(d)

enter the no asset procedure in accordance with Division 4 of that Part.

15.
Who is entitled to make a bankruptcy application
(1)

A bankruptcy application may be made to the Court in accordance with the provisions of this Part—

(a)

by one of the person's creditors or jointly by two or more one of them;

(b)

by the debtor; or

(c)

by the supervisor of any person who is for the time being bound by a voluntary arrangement proposed by the debtor and approved under Division I of Part IV.

(2)

On the hearing of such an application, the Court may, subject to and in accordance with the provisions of this Part, make a bankruptcy order.

(3)

An application may be made by a person referred to in subsection (1)(a) or (b) only if the debtor—

(a)

is domiciled in Kenya;

(b)

is personally present in Kenya on the date on which the application is made; or

(c)

at any time during the three years immediately preceding that date—

(i) has been ordinarily resident, or has had a place of residence; or
(ii) has carried on business in Kenya.
(4)

In subsection (3)(c), the reference to a debtor carrying on business includes—

(a)

the carrying on of a business by a firm or partnership of which the debtor is a member; and

(b)

the carrying on of a business by an agent or manager for the debtor for such a firm or partnership.

16.
Proceedings on a bankruptcy application
(1)

A bankruptcy application may not be withdrawn without the approval of the Court.

(2)

The Court has a general power to dismiss a bankruptcy application or to stay proceedings on such an application on the ground that the Court is of the opinion that a requirement of this Part or the insolvency regulations has not been complied with in a material respect.

(3)

If the Court stays proceedings on a bankruptcy application, it may do so on such terms as it considers appropriate.

17.
Creditor may apply for bankruptcy order in respect of debtor
(1)

One or more creditors of a debtor may make an application to the Court for a bankruptcy order to be made in respect of the debtor in relation to a debt or debts owed by the debtor to the creditor or creditors.

(2)

Such an application may be made in relation to a debt or debts owed by the debtor only if, at the time the application is made—

(a)

the amount of the debt, or the aggregate amount of the debts, is equal to or exceeds the prescribed bankruptcy level;

(b)

the debt, or each of the debts, is for a liquidated amount payable to the applicant creditor, or one or more of the applicant creditors, either immediately or at some certain, future time, and is unsecured;

(c)

the debt, or each of the debts, is a debt that the debtor appears either to be unable to pay or to have no reasonable prospect of being able to pay; and

(d)

there is no outstanding application to set aside a statutory demand in respect of the debt or any of the debts.

(3)

For the purposes of subsection (2)(c), a debtor appears to be unable to pay a debt if, but only if, the debt is payable immediately and either—

(a)

the applicant creditor to whom the debt is owed has served on the debtor a demand requiring the debtor to pay the debt or to secure or compound for it to the satisfaction of the creditor, at least twenty-one days have elapsed since the demand was served, and the demand has been neither complied with nor set aside in accordance with the insolvency regulations; or

(b)

execution or other process issued in respect of the debt on a judgment or order of any court in favour of the applicant, or one or more of the applicants to whom the debt is owed, has been returned unsatisfied either wholly or in part.

(4)

For the purposes of subsection (2)(c), a debtor appears to have no reasonable prospect of being able to pay a debt if, but only if, the debt is not immediately payable and—

(a)

the applicant to whom it is owed has served on the debtor a demand requiring the debtor to establish to the satisfaction of the creditor that there is a reasonable prospect that the debtor will be able to pay the debt when it falls due;

(b)

at least twenty-one days have elapsed since the demand was served; and

(c)

the demand has been neither complied with nor set aside in accordance with the insolvency regulations.

(5)

This section is subject to sections 18 to 20.

(6)

An overstatement in a statutory demand of the amount owing by the debtor does not invalidate the demand unless—

(a)

the debtor notifies the creditor that the debtor disputes the validity of the demand because it overstates the amount owing; and

(b)

the debtor makes that notification within the period specified in the demand for the debtor to comply with it.

(7)

A debtor complies with a demand that overstates the amount owing by—

(a)

taking steps that would have complied with the demand had it stated the correct amount owing, such as by paying the creditor the correct amount owing plus costs; and

(b)

taking those steps within the period specified in the demand for the debtor to comply.

18.
When court can make bankruptcy order on application by secured creditor
(1)

A debt that is the debt, or one of the debts, in respect of which a creditor's application is made need not be unsecured if either—

(a)

the application contains a statement by the person having the right to enforce the security that the creditor is willing, in the event of a bankruptcy order being made, to give up the security for the benefit of all the bankrupt's creditors; or

(b)

the application is expressed not to be made in respect of the secured part of the debt and contains a statement by that person of the estimated value at the date of the application of the security for the secured part of the debt.

(2)

In a case to which subsection (1)(b) applies, the secured and unsecured parts of the debt are to be treated for the purposes of sections 17, 19 and 20 as separate debts.

19.
Expedited creditor's application

If a creditor's application is made wholly or partly in respect of a debt that is the subject of a statutory demand, the application may be made before the end of the twenty-one day period referred to in section 17 if—

(a)

there is a serious possibility that the debtor's property, or the value of any of that property, will be significantly reduced during that period; and

(b)

the application contains a statement to that effect.

20.
Proceedings on creditor's application
(1)

The Court may not make a bankruptcy order on a creditor's application unless it is satisfied that the debt, or one of the debts, in respect of which the application was made is either—

(a)

a debt which, having been payable at the date of the application or having since become payable, has been neither paid nor secured or compounded for; or

(b)

a debt that the debtor has no reasonable prospect of being able to pay when it falls due.

(2)

If the application contains a statement of the kind referred to in section 19, the Court may not make a bankruptcy order until at least twenty-one days have elapsed since the service of the relevant statutory demand.

(3)

The Court may dismiss the application if it is satisfied that the debtor is able to pay all of the debtor's debts or is satisfied—

(a)

that the debtor has made an offer to secure or compound for a debt in respect of which the application is made;

(b)

that the acceptance of that offer would have required the dismissal of the application; and

(c)

that the offer has been unreasonably refused.

(4)

In determining for the purposes of subsection (3) whether the debtor is able to pay all of the debtor's debts, the Court shall take into account the debtor's contingent and prospective liabilities.

(5)

In determining for the purposes of this section what constitutes a reasonable prospect that a debtor will be able to pay a debt when it falls due, the Court shall presume that the prospect given by the information known to the creditor when the creditor entered into the transaction resulting in the debt was a reasonable prospect.

(6)

Nothing in sections 17 to 19 prevents the Court from allowing a creditor's application to be amended by the omission of any creditor or debt and to be proceeded with as if action taken for the purposes of those sections had been taken only by or in relation to the remaining creditors or debts.

21.
Creditor's execution process not to be issued or continued
(1)

A creditor who makes an application for a bankruptcy order in respect of a debtor may not issue an execution process against the debtor in respect of the property of the debtor to recover a debt on which the application is based.

(2)

If the creditor has already issued the execution process, the creditor may not continue it.

(3)

The creditor may make an application to the relevant court for approval to issue or continue the execution process.

(4)

On the hearing of an application made under subsection (3), the relevant court may make an order permitting the applicant to begin or continue the execution process but only if it is satisfied after considering all representations made to it that the interests of the other creditors will not be detrimentally affected.

(5)

Any action taken in contravention of subsection (1) or (2) is void.

22.
Power of relevant court to stay execution processes by other creditors or allow them on terms
(1)

After a creditor's application has been made, the debtor or any creditor may apply to the relevant court for an order stopping the issue or continuance by any other creditor of an execution process against the debtor in respect of the property of the debtor.

(2)

On the hearing of an application under subsection (1), the Court may make an order—

(a)

stay the execution process on such terms as the Court considers appropriate; or

(b)

allowing the execution process to continue on such terms as the Court considers appropriate.

23.
Execution process issued by other court
(1)

This section applies if an execution process has been issued by a court other than the High Court.

(2)

If it is proved to the issuing court that an application for a bankruptcy order in respect of the debtor has been made to the High Court, that court may either—

(a)

stay the execution process on such terms as it considers appropriate; or

(b)

permit the execution process to continue on such terms as it considers appropriate.

24.
No restriction on execution process if bankruptcy application withdrawn or dismissed

The restrictions in sections 21 to 23 on issuing or continuing an execution process do not apply if an application is withdrawn or dismissed.

25.
When court may adjudge debtor bankrupt
(1)

The Court may make a bankruptcy order in respect of the debtor if the creditor has complied with section 7.

(2)

The Court may refuse to adjudge a debtor bankrupt if—

(a)

the applicant creditor has not satisfied the requirements specified in section 17;

(b)

the debtor is able to pay the debtor's debts; or

(c)

it is just and equitable that the Court should not make a bankruptcy order.

26.
When the Court may stay application

The Court may, at any time, stay an application by a creditor for bankruptcy on such terms, and for such period, as the Court considers appropriate.

27.
Orders if more than one application
(1)

If there is more than one bankruptcy application in respect of a debtor, and one application has been stayed by an order of the Court, the Court may, if it believes there is a good reason to do so, make a bankruptcy order in respect of the application that has not been stayed.

(2)

On making a bankruptcy order under subsection (1), the Court shall dismiss the application that has been stayed on such terms as it considers appropriate.

28.
Orders if there is more than one order

If an application made by a creditor for a bankruptcy order relates to more than one debtor, the Court may refuse to make such an order in respect of one or some of the debtors without affecting the application made in relation to the remaining debtor or debtors.

29.
Power of the Court to make order staying bankruptcy application, etc.
(1)

This section applies if a debtor—

(a)

has made a disposition of all, or substantially all, of the property of the debtor to a trustee for the benefit of the creditors of the debtor;

(b)

has made a proposal under Division I of Part IV; or

(c)

has applied for a summary instalment order under that Division.

(2)

The debtor, the bankruptcy trustee or any creditor may apply for an order under this section.

(3)

On the hearing of an application under this section, the Court may make any of the following orders—

(a)

an order staying the bankruptcy application;

(b)

an order staying any other bankruptcy application;

(c)

an order as to costs;

(d)

if it orders costs to be paid to the creditor who applied for the bankruptcy application—an order that the costs be paid out of the assets of the debtor.

(4)

This section does not limit the powers of the Court under section 39.

30.
Court may stay application while underlying debt is determined
(1)

This section applies if a debtor appears in opposition to a creditor's application and the debtor claims that the debtor—

(a)

does not owe a specified debt to the creditor; or

(b)

owes a specified debt to the creditor, but the debt is less than the prescribed bankruptcy level.

(2)

The Court may, instead of refusing the application, stay the application so that the issue of—

(a)

whether the debt is owed; or

(b)

how much of the debt is owed, can be resolved at trial.

(3)

As a condition of staying the application, the

Court may require the debtor to give security to the creditor for any debt that may be established as owing by the debtor to the creditor, and for the cost of establishing the debt.

31.
Court may allow one creditor to be substituted for another

In the case of a creditor's application, the Court may substitute another creditor for the creditor making the application if—

(a)

the applicant creditor has not proceeded with due diligence, or at the hearing of the application offers no evidence; and

(b)

the debtor owes the other creditor two hundred and fifty thousand shillings or more.

32.
When debtor may make application for bankruptcy order
(1)

A debtor may make an application to the Court for an order adjudging the debtor bankrupt only on the grounds that the debtor is unable to pay the debtor's debts.

(2)

The Court may decline to deal with such an application if it is not accompanied by a statement of the debtor's financial position containing—

(a)

such particulars of the debtor's creditors and of the debtor's debts and other liabilities and assets as may be prescribed by the insolvency regulations; and

(b)

such other information as may be so prescribed.

(3)

The Court may reject a statement of the debtor's financial position if of the opinion that it is incorrect or incomplete.

(4)

A debtor who makes an application under this section shall publish a notice of the application in—

(a)

a newspaper circulating within the region in which the debtor ordinarily resides; and

(b)

in such other publications (if any) as may prescribed by the insolvency regulations for purposes of this section.

(5)

The Court may decline to hear the application if subsection (4) has not been complied with to its satisfaction.

33.
Appointment of insolvency practitioner by the Court
(1)

Subject to section 34, on the hearing of a debtor's application, the Court may not make a bankruptcy order if it appears to the Court—

(a)

that if a bankruptcy order were made the total amount of the applicant's debts, so far as unsecured, would be less than the small bankruptcies level;

(b)

that if a bankruptcy order were made, the value of the bankrupt's estate would be equal to or more than the prescribed minimum value;

(c)

that, during the five years immediately preceding the debtor's application, the debtor has—

(i) neither been adjudged bankrupt; nor
(ii) made a composition with the debtor's creditors in satisfaction of the debtor's debts or a scheme of arrangement of the debtor's financial affairs; and
(d)

that it would be appropriate to appoint an authorised insolvency practitioner to prepare a report under section 34.

(2)

If, on the hearing of the application, it appears to the Court that it would be appropriate to make an appointment as referred to in subsection (1)(d), the Court shall appoint an authorised insolvency practitioner in relation to the debtor—

(a)

to prepare a report under section 34; or

(b)

subject to Division 1 of Part IV, to act in relation to any voluntary arrangement to which the report relates as supervisor for the purpose of supervising its implementation.

(3)

In this section—

(a)

"prescribed minimum value" means the amount for the time being specified in the insolvency regulations for the purposes of this section;

(b)

"small bankruptcies level" means the amount for the time being so specified for the purposes of this section.

34.
Action on report of insolvency practitioner
(1)

The insolvency practitioner appointed under section 33 shall—

(a)

inquire into the debtor's financial affairs; and

(b)

within such period as the Court may specify, submit a report to the Court stating whether the debtor is willing to make a proposal for a voluntary arrangement in accordance with Division 1 of Part IV.

(2)

If the insolvency practitioner proposes to state that the debtor is willing to make such a proposal, that practitioner shall also state—

(a)

whether, in his or her opinion, a meeting of the debtor's creditors should be convened to consider the proposal; and

(b)

if, in that practitioner's opinion such a meeting should be convened—the date on which, and time and place at which, the meeting should be held.

(3)

On considering a report submitted under this subsection (1), the Court may—

(a)

without any application, make an interim order under section 306, if it considers it appropriate to do so for the purposes of facilitating the consideration and implementation of the debtor's proposal; or

(b)

if it considers it would be inappropriate to make such an order—make a bankruptcy order in respect of the applicant.

(4)

An interim order made in accordance with subsection (3)(a) ceases to have effect at the end of such period as the Court may specify for the purpose of enabling the debtor's proposal to be considered by the debtor's creditors in accordance with the applicable provisions of Division I of Part IV.

(5)

If the insolvency practitioner has proposed in the report that a meeting of the debtor's creditors should be convened, the insolvency practitioner shall, unless the Court otherwise directs, convene such a meeting for the time, date and place proposed in the report.

(6)

Such a meeting is to be taken to have been convened under section 309 in which case subsections (2) and (3) of that section and sections 309 to 314 apply to the meeting.

35.
Joint application can be made by two or more debtors

Two or more debtors, who are partners in a business partnership, may make a joint application under section 32.

36.
Appointment of interim trustee of debtor's property on application of creditor
(1)

After a creditor's application has been made, the creditor or any other creditor of the debtor may apply to the Court for an order for the appointment of an authorised insolvency practitioner as interim trustee in respect of all or a specified part of the debtor’s property.

(2)

The Court may make such an order at any time before a bankruptcy order is made in respect of the debtor.

(3)

In making an order under subsection (1), the Court may authorise the interim trustee to do all or any of the following—

(a)

take control of any property of the debtor;

(b)

sell any perishable property or property of the debtor that is likely to fall rapidly in value;

(c)

control the affairs or property of the debtor as directed by the Court.

(4)

An order authorising the trustee to control a debtor's business may not extend beyond what, in the Court's opinion, is necessary to conserve the debtor's property.

(5)

The Official Receiver and any authorised insolvency practitioner are suitably qualified persons for the purpose of subsection (1).

(6)

In this section, "debtor's business" includes any business in which the debtor has a financial interest.

37.
Additional orders after appointment of interim trustee
(1)

After the appointment of an interim trustee under section 36, the Court may, on an application made under subsection (2), make additional orders under that section.

(2)

An application for the purpose of subsection (1) made by a creditor or the interim trustee or, with the approval of the Court, by any other person.

38.
Notice of appointment of interim trustee to be published
(1)

As soon as practicable after the appointment of an interim trustee, the trustee shall publish a notice of the appointment—

(a)

in one or more newspapers circulating in Kenya; and

(b)

in such other publication as may be prescribed by the insolvency regulations for the purposes of this section.

(2)

The appointment of the interim trustee does not take effect until subsection (1) has been complied with.

39.
Execution process not to be issued after notice of appointment of trustee is published
(1)

A creditor of the debtor may not issue an execution process under section 23 after notice of the appointment of the interim trustee has been published.

(2)

A creditor may not continue an execution process already issued before notice of the appointment of the interim trustee has been published.

(3)

A creditor or any other interested person may apply to the Court for an order allowing the issue or continuation of an execution process, and the Court may make an order on such terms as it considers appropriate.

(4)

Any action taken in contravention of subsection (1) or (2) is void.

40.
Effect of staying execution

If execution is stayed under section 39, sections 109, 110, 111, 112, 113, 114 and 116 apply as if the order staying execution were a bankruptcy order.

41.
Bankruptcy commences on making of bankruptcy order

A bankruptcy under this Act commences on the date and at the time when a bankruptcy order is made in respect of the debtor.

42.
Date and time of bankruptcy order to be recorded
(1)

On making a bankruptcy order, the Court shall record the date and time when the order was made.

(2)

If the debtor is adjudged bankrupt on the application of the debtor, the Official Receiver shall record on the application the date and time when the debtor made the application.

43.
Registrar of the Court to notify trustee of bankruptcy order

As soon as practicable after the Court has made a bankruptcy order in respect of a debtor, the Registrar of the Court shall forward a copy of the order to the Official Receiver.

44.
Official Receiver to nominate bankruptcy trustee
(1)

As soon as practicable after receiving a copy of a bankruptcy order, the Official Receiver shall nominate a qualified person to be bankruptcy trustee in respect of the debtor's property.

(2)

In this subsection (1), "qualified person" means the Official Receiver or an authorised insolvency practitioner.

45.
Presumption that act was done, or transaction was entered into or made, after bankruptcy

If a doubt arises as to whether an act was done, or a transaction entered into or made, before or after the time when a bankruptcy commenced, it is to be presumed, until the contrary is proved, that the act was done, or the transaction was entered into or made, after that time.

46.
Bankruptcy order to be binding on all persons

A bankruptcy order becomes binding on the bankrupt and all other persons—

(a)

on the expiry of the time within which an appeal may be lodged against the order; or

(b)

if an appeal is lodged in respect of the order within that period and the Court later confirms the order or the appeal is later withdrawn—on the confirmation of the order or the withdrawal of the appeal,

and the order can no longer be questioned on the ground that it was invalid or that a prerequisite for making it did not exist.

47.
Official Receiver to maintain public register of undischarged and discharged bankrupts
(1)

The Official Receiver shall establish and maintain a public register of undischarged and discharged bankrupts.

(2)

The Official Receiver shall maintain the register in accordance with Division 2 of Part XIl.

48.
What happens or is to happen on and after bankruptcy commences
(1)

When a bankruptcy order commences—

(a)

all proceedings to recover the bankrupt's debts are stayed; and

(b)

the property of the bankrupt (whether in or outside Kenya), and the powers that the bankrupt could have exercised in respect of that property for the bankrupt's own benefit, vest in the Official Receiver.

(2)

Despite subsection (1), the Court may, on the application by a creditor or other person interested in the bankruptcy, allow proceedings that had already begun before the bankruptcy commenced to continue on such terms as the Court considers appropriate.

(3)

Within thirty days after the date of the bankruptcy order, the Official Receiver shall, subject to subsection (4)—

(a)

publish a notice advertising the order—

(i) once in the Gazette; and
(ii) once in a newspaper widely circulating in the area in which the bankrupt resides; or
(b)

if the Court directs that the order be advertised in some other publication, publish such a notice in that other publication.

(4)

If the bankrupt has appealed against the order or has applied for its annulment, the Court may order the Official Receiver not to advertise the bankruptcy order, but only if it is satisfied that there are compelling reasons for doing so.

(5)

Subsection (1) is subject to section 106.

49.
Official Receiver to serve notice on bankrupt requiring the bankrupt to lodge statement of the bankrupt's financial position
(1)

Within thirty days after receiving notice of a bankruptcy order, the Official Receiver shall serve on the bankrupt a notice—

(a)

stating that a bankruptcy order has been made in respect of the bankrupt;

(b)

requiring the bankrupt to lodge with the Official Receiver a statement setting out the bankrupt's financial position; and

(c)

specifying a deadline for lodging the statement with the Official Receiver.

(2)

The Official Receiver shall serve the notice at the address of the bankrupt given in the bankruptcy application or at the bankrupt's address last known to the Official Receiver.

(3)

This section does not apply if the bankrupt has already lodged a statement under section 32.

50.
Bankrupt to lodge statement of financial position with bankruptcy trustee
(1)

Within fourteen days after being served with the notice in accordance with section 49 (or within such extended period not exceeding sixty days as the Official Receiver may allow), the bankrupt shall lodge with the Official Receiver a statement of the bankrupt's financial position setting out—

(a)

particulars of the bankrupt's assets;

(b)

the bankrupt's debts and liabilities;

(c)

the names, residences and occupations of the bankrupt's creditors;

(d)

the securities held by the bankrupt's creditors;

(e)

the dates when the securities were given; and

(f)

such other information as may be prescribed by the insolvency regulations or as the bankruptcy trustee may reasonably require.

(2)

At any time after lodging with the bankruptcy trustee a statement of the bankrupt's financial position, the bankrupt may lodge additional or amended statements or answers with the bankruptcy trustee.

(3)

A bankrupt who fails to comply with a requirement of subsection (1) commits an offence and on conviction is liable to a fine not exceeding one million shillings or to imprisonment for a term not exceeding two years, or to both.

(4)

If, after being convicted of an offence under subsection (2), a bankrupt, without reasonable excuse, continues to fail to comply with the relevant requirement, the bankrupt commits a further offence on each day during which the failure continues and on conviction is liable to a fine not exceeding one hundred thousand shillings for each such offence.

51.
Creditors entitled to inspect and take copies of statement of bankrupt's financial position
(1)

A person who in writing claims to be a creditor of the bankrupt is entitled, at all reasonable times (either personally or through an agent—

(a)

to inspect the statement of the bankrupt's financial position; and

(b)

to take a copy it or of part of it.

(2)

A person who falsely claims to be a creditor is in contempt of the Court.

52.
Official Receiver to convene first meeting of creditors
(1)

The Official Receiver shall, subject to subsection (5), convene the first meeting of the bankrupt's creditors within the prescribed period, unless the Official Receiver decides, in accordance with section 53, not to hold the meeting.

(2)

The Official Receiver shall convene the meeting by giving notice of the time, date and place of the meeting to—

(a)

the bankrupt;

(b)

each creditor named in the statement of the bankrupt's financial position; and

(c)

any other creditors known to the bankruptcy trustee,

a notice advertising the time, date and place of the meeting.

(3)

The Official Receiver shall publish a notice advertising the time, date and place of the meeting—

(a)

in one or more newspapers circulating generally in Kenya; and

(b)

in such other publications as the Official Receiver considers appropriate.

(4)

For the purpose of subsection (1), the prescribed period is—

(a)

thirty days after the statement of the bankrupt's financial position is lodged Receiver; or

(b)

if the bankrupt is late in lodging the statement or fails to lodge a statement at all, thirty days after the date on which the bankruptcy order was made.

(5)

The Official Receiver may delay convening the first meeting of creditors for a period not exceeding fourteen days if the Official Receiver considers that there are special circumstances justifying the delay.

53.
Circumstances in which Official Receiver may decide not to convene first meeting of creditors
(1)

The Official Receiver may decide not to convene a first creditors' meeting if the Official Receiver—

(a)

has sent to each creditor named in the statement of the bankrupt's financial position, and to any other creditor known to the Official Receiver, a notice that complies with section 54; and

(b)

has not, within fourteen days after sending the notice, received from a creditor a request to convene such a meeting.

(2)

In deciding whether the meeting should or should be convened, the Official Receiver shall have regard to—

(a)

the bankrupt's assets and liabilities;

(b)

the likely result of the bankruptcy; and

(c)

any other relevant matters.

(3)

Within seven days after deciding not to convene a first meeting of creditors, the Official Receiver shall send to each creditor named in the statement of the bankrupt's financial position, and to any other creditor known to the Official Receiver, a notice stating—

(a)

the Official Receiver's view that a first creditors' meeting need not be convened;

(b)

the reasons for not convening the meeting; and

(c)

that the Official Receiver will convene a meeting only if the Official Receiver receives from a creditor, within fourteen days after sending the notice, a request to convene such a meeting.

54.
Documents to be sent with notice of meeting
(1)

The Official Receiver shall send the following documents with the notice of the first meeting of creditors—

(a)

a summary of the bankrupt's statement of assets and liabilities;

(b)

extracts from, or a summary of, the bankrupt's explanation of the causes of the bankruptcy; and

(c)

any comments on the bankruptcy that the Official Receiver chooses to make.

(2)

Subsection (1) does not apply if the Official Receiver has not received the statement of the bankrupt's financial position when the notice is sent.

(3)

A failure in sending or receiving the documents in subsection (1) does not affect the validity of the proceedings at the meeting.

55.
Power of creditors to requisition meeting
(1)

If, in the case of a bankruptcy, the Official Receiver has not yet convened a first meeting of creditors, or has decided not to convene such a meeting, any creditor of the bankrupt may request the Official Receiver to convene such a meeting.

(2)

As soon as practicable after receiving a request under subsection (1), the Official Receiver shall convene a first meeting of creditors if the request appears to the Official Receiver to be made with the concurrence of not less than one-quarter in value of the bankrupt's creditors (including the creditor making the request).

56.
Execution process not to be begin or continue after bankruptcy order advertised
(1)

A creditor may not begin or continue an execution process in respect of the bankrupt's property or person for the recovery of a debt provable in the bankruptcy, after the Official Receiver—

(a)

has published an advertisement notifying the bankruptcy; or

(b)

has given notice of the bankruptcy to the creditor.

(2)

After the notice of the bankruptcy notice has been advertised, or after being given notice of the bankruptcy by the Official Receiver, a creditor may not seize or sell any property by means of distress for rent owed by the bankrupt.

(3)

If the distress procedure has already begun, such a creditor may continue with the procedure only with the approval of the Court and subject to such conditions as the Court may specify.

57.
Effect of bankrupt's death after bankruptcy order

If a bankrupt dies after being adjudged bankrupt, the bankruptcy continues in all respects as if the bankrupt were still alive.

58.
Creditors' role at creditors' meetings

The role of the creditors in the bankruptcy primarily—

(a)

to attend meetings of the creditors;

(b)

to submit proofs of the debts of the bankrupt; and

(c)

to examine the bankrupt at those meetings.

59.
Power to appoint bankruptcy trustee
(1)

The power to appoint a person as a bankruptcy trustee in respect of a bankrupt's estate, or to fill a vacancy in such an appointment, is exercisable—

(a)

except as provided by paragraph (b) or (c), by a creditors' meeting;

(b)

under section 60 or 61, by the Official Receiver;

(c)

under section 62, by the Court.

(2)

A power to appoint a person as bankruptcy trustee includes power to appoint two or more persons as joint bankruptcy trustees, but such an appointment is not effective unless it makes provision for the circumstances in which the trustees are required to act together and the circumstances in which one or more of them may act on behalf of the others.

(3)

The appointment of a person as bankruptcy trustee takes effect only if the person accepts the appointment.

(4)

The appointment of a person as a bankruptcy trustee takes effect at the time specified in the document by which the person is appointed.

(5)

This section does not affect the provisions of this Part under which the Official Receiver is, in specified circumstances, to be, or required to act as, the bankruptcy trustee in respect of a bankrupt's estate.

60.
Consequences of failure of creditors' meeting to appoint bankruptcy trustee
(1)

If a meeting convened under section 52 or 55 is held but no one is appointed as bankruptcy trustee, the Official Receiver shall decide whether or not there is a need to make such an appointment.

(2)

If the Official Receiver decides there is a need to make such an appointment, the Official Receiver shall make an appointment accordingly.

(3)

If the Official Receiver decides that there is no need to make such an appointment, the Official Receiver shall notify the decision to the Court.

(4)

On giving notice of the decision to the Court in accordance with subsection (3), the Official Receiver becomes bankruptcy trustee in respect of the bankrupt's estate.

61.
Power of Official Receiver acting as bankruptcy trustee to appoint another person to act instead
(1)

The Official Receiver may, at any time while acting as bankruptcy trustee in respect of a bankrupt's estate under a provision of this Division (other than section 62), appoint another qualified person to act as the bankruptcy trustee instead.

(2)

Immediately after making such an appointment, the Official Receiver shall notify the appointment to the Court.

(3)

The person appointed shall, as soon as practicable (and not later than seven days) after being appointed—

(a)

give notice of the appointment to each of the bankrupt's creditors; or

(b)

if, on application made to the Court, the Court so allows, advertise the appointment in accordance with the directions of the Court.

(4)

In the notice or advertisement, the person appointed shall state—

(a)

whether the person proposes to convene a general meeting of the bankrupt's creditors for the purpose of establishing a creditor's committee under section 100; and

(b)

if the person does not propose to convene such a meeting, that the creditors are entitled under this Division to require one to be convened.

62.
Special case in which the Court may appoint bankruptcy trustee
(1)

If a bankruptcy order is made when there is a supervisor of a summary instalment order approved in relation to the bankrupt under Division 2 of Part IV, the Court may, if it considers it appropriate to do so on making the order, appoint the supervisor of the order as bankruptcy trustee in respect of the bankrupt's estate.

(2)

If an appointment is made under subsection (1), the Official Receiver is not required to decide under section 60(1) whether or not to convene a creditors' meeting.

(3)

Section 61(4) and (5) apply to a bankruptcy trustee appointed under this section.

63.
Powers of bankruptcy trustee
(1)

A bankruptcy trustee may—

(a)

with the approval of the creditor's committee, exercise of any of the powers specified in Part 1 of the First Schedule; and

(b)

without that approval, exercise any of the general powers specified in Part 2 of that Schedule.

(2)

With the approval of the creditors' committee or the Court, a bankruptcy trustee may appoint the bankrupt—

(a)

to superintend the management of the bankrupt's estate or any part of it;

(b)

to carry on the bankrupt's business (if any) for the benefit of the bankrupt's creditors; or

(c)

in any other respect to assist in administering the estate in such manner and on such terms as the bankruptcy trustee may direct.

(3)

An approval given for the purposes of subsection (1)(a) or (2) is required to be a specific one and to relate to a particular exercise of the relevant power.

(4)

A person dealing with the bankruptcy trustee in good faith and for value is not required to ascertain whether an approval required by subsection (1)(a) or (2) has been given.

(5)

If a bankruptcy trustee has done anything without the approval required by subsection (1)(a) or (2), the Court or the creditor's committee (if any) may, for the purpose of enabling the bankruptcy trustee to meet the bankruptcy trustee's expenses out of the bankrupt's estate, ratify what that trustee has done.

(6)

Part 3 of the First Schedule has effect with respect to the things that the bankruptcy trustee is able to do for the purposes of, or in connection with, the exercise of any of the bankruptcy trustee's powers under this Act.

(7)

If, in exercising a power conferred by this Act, a bankruptcy trustee who is not the Official Receiver—

(a)

disposes of property comprised in the bankrupt's estate to an associate of the bankrupt; or

(b)

employs an advocate,

the bankruptcy trustee shall, if there is a creditor's committee, give notice to the committee of that exercise of that power.

(8)

A bankruptcy trustee may use his or her discretion in administering a bankrupt's property, but, in doing so, is required to have regard to the resolutions passed by the creditors at creditors' meetings.

64.
Bankruptcy trustee not to sell bankrupt's property before first creditors' meeting
(1)

A bankruptcy trustee may sell property of the bankrupt before the first meeting of creditors only if—

(a)

it is perishable or is likely to rapidly diminish in value;

(b)

in that trustee's opinion, its sale could be prejudiced by delay; or

(c)

expenses would, in that trustee's opinion, be incurred by the delay and, before sale, the bankruptcy trustee has consulted the creditors.

(2)

The bankruptcy trustee shall ensure that the proceeds of the sale of a bankrupt's property in accordance with subsection (1) are in every case invested in accordance with section 66.

65.
Title of purchaser from bankruptcy trustee

The title of a purchaser of the bankrupt's property from a bankruptcy trustee under a document that is made in the exercise of the bankruptcy trustee's power of sale in the First Schedule may not be questioned except on account of fraud.

66.
Bankruptcy trustee to bank money and power to invest surplus
(1)

A bankruptcy trustee shall establish and maintain a bank account in respect of each bankrupt estate administered by that trustee and shall pay into the relevant account all money that that trustee receives in that capacity.

(2)

If money held by a bankruptcy trustee in respect of a bankrupt's estate is not immediately required to be paid in connection with the administration of the estate, the bankruptcy trustee may invest the money in an investment of a kind prescribed by the insolvency regulations for the purposes of this section.

(3)

A bankruptcy trustee who invests money in accordance with subsection (2) shall credit to the bankrupt's estate the interest, dividends or other money that accrues in respect of the investment.

67.
Bankruptcy trustee may assign right to sue under this Act
(1)

A bankruptcy trustee may, if the Court has first approved it, assign a right to sue that is conferred on the bankruptcy trustee by this Act.

(2)

An application for such an approval may—

(a)

be made only by the bankruptcy trustee or the person to whom it is proposed to assign the right to sue; and

(b)

be opposed only by a person who is a defendant to the bankruptcy trustee's action, if already begun, or a proposed defendant.

68.
Proceedings by bankruptcy trustee when bankrupt is partner in business partnership
(1)

If a member of a business partnership is adjudged bankrupt, the Court may authorise the bankruptcy trustee to bring proceedings in the names of the bankruptcy trustee and the bankrupt's partner.

(2)

The bankruptcy trustee shall serve notice of the application on the partner for authority to bring the proceedings, and the partner may oppose the application.

(3)

The partner may apply to the Court for a direction that—

(a)

the partner is to be paid the partner's proper share of the proceeds of the proceedings; or

(b)

the partner is to be indemnified by the bankruptcy trustee against any costs incurred in the proceedings on the condition that the partner does not claim any benefit from them.

(4)

Any purported release by the partner of the debt or demand to which the proceedings relate is void.

69.
Discharge or transfer of indenture of apprenticeship or articles of agreement on bankruptcy of employer
(1)

If a person is apprenticed or is an articled clerk to an employer who is adjudged bankrupt, either of them may give notice to the bankruptcy trustee or the Official Receiver requesting that the indenture of apprenticeship or articles of agreement be discharged.

(2)

On receiving a notice under subsection (1), the bankruptcy trustee or Official Receiver shall discharge the indenture of apprenticeship or articles of agreement, but only if satisfied that it would be in the interests of the apprentice or clerk to do so.

(3)

If money has been paid to the bankrupt by or on behalf of the apprentice or clerk as a fee, the bankruptcy trustee may, on the application of the apprentice or clerk, or of the agent of the apprentice or clerk, pay from the bankrupt's estate such amount as the trustee considers reasonable to or for the use of the apprentice or clerk.

(4)

In deciding whether to make a payment under subsection (3), the bankruptcy trustee shall take into consideration—

(a)

the amount paid by or on behalf of the apprentice;

(b)

the time during which the apprentice or clerk served with the bankrupt under the indenture or articles before the commencement of the bankruptcy; and

(c)

any other relevant circumstance.

(5)

On the application of any apprentice or articled clerk to the bankrupt, or an agent of the apprentice or articled clerk, the bankruptcy trustee or Official Receiver may, instead of acting under subsection (2), transfer the indenture of apprenticeship or articles of agreement to some other person.

(6)

Subsection (5) is subject to section 12 of the Industrial Training Act (Cap. 237).

(7)

Any person dissatisfied with a decision of the bankruptcy trustee under subsection (3) may apply to the Court for an order quashing or varying the decision.

(8)

On the hearing of an application made under subsection (7), the Court may make the order sought by the applicant or such other order as it considers appropriate.

70.
Bankruptcy trustee may apply for directions by the Court
(1)

A bankruptcy trustee may apply to the Court for directions on any question concerning the operation of this Part.

(2)

A bankruptcy trustee who acts under a direction of the Court discharges the bankruptcy trustee's duty in relation to the matter for which the direction was sought, and it does not matter that the direction is later invalidated, overruled, or set aside or otherwise becomes ineffective.

(3)

However, the bankruptcy trustee is not protected by subsection (2) if, in obtaining or following the Court's direction, the bankruptcy trustee was guilty of—

(a)

fraud; or

(b)

deliberate concealment or misrepresentation.

71.
Application to the Court to reverse or modify bankruptcy trustee's decision
(1)

A person (including the bankrupt or a creditor) whose interests, monetary or otherwise, are detrimentally affected by an act or decision to which this section applies may apply to the Court to reverse or modify the act or decision.

(2)

This section applies to—

(a)

an act or decision of the bankruptcy trustee; or

(b)

a decision of the Court in carrying out an examination under section 170.

(3)

The application may be entertained only if is made—

(a)

within twenty-one days after the act or decision; or

(b)

within such extended period as the Court allows.

(4)

On the hearing on an application made under subsection (1), the Court shall—

(a)

confirm the bankruptcy trustee's act or decision, with or without such modifications as it considers appropriate; or

(b)

if it is of the opinion that the act or decision was unfair or unreasonable, quash it.

72.
Bankruptcy trustee to keep proper accounting records
(1)

A bankruptcy trustee shall—

(a)

keep proper accounting records for each bankruptcy in the form and manner prescribed by the insolvency regulations; and

(b)

if required by the Court to do so, verify those records by statutory declaration.

(2)

A creditor or other person who has an interest in a particular bankruptcy is entitled to inspect the bankruptcy trustee's accounting records relating to the particular bankruptcy.

(3)

After the end of three years from the discharge of a bankrupt, the bankruptcy trustee may dispose of the accounting records deposited with the bankruptcy trustee for the purposes of the bankruptcy by—

(a)

delivering them to the bankrupt or the bankrupt's personal representative, if requested; or

(b)

destroying or otherwise disposing of them.

73.
Bankruptcy trustee’s final statement of receipts and payments
(1)

The bankruptcy trustee shall prepare a final statement of receipts and payments that complies with subsection (2)—

(a)

as soon as practicable after the distribution of the final dividend has been determined; or

(b)

when the whole of the bankrupt's property has been realised, if there are insufficient assets to pay all the proofs of debt.

(2)

A final statement of receipts and payments complies with this subsection if it—

(a)

shows in detail the receipts and payments in respect of the bankrupt's estate; and

(b)

can be inspected without fee by any creditor or other person who has an interest in it.

(3)

The bankruptcy trustee shall publish the final statement of receipts and payments in the prescribed form, and advertise in the prescribed manner that it has been published.

74.
Audit of bankruptcy trustee's accounts
(1)

If, in relation to a bankruptcy, the Official Receiver is not the bankruptcy trustee, the Official Receiver may from time to time audit—

(a)

the bankruptcy trustee's accounting records for any particular bankruptcy;

(b)

any statement of accounts and statement of financial position prepared by the bankruptcy trustee under section 73; and

(c)

the account (if any) maintained by the bankruptcy trustee for the purposes of this Act.

(2)

If, in relation to a bankruptcy, the Official Receiver is the bankruptcy trustee, the Auditor-General may from time to time audit the records, statements and account referred to in subsection (1)(a) to (b).

75.
Removal of bankruptcy trustee and vacation of office
(1)

Except as otherwise provided by this section, a bankruptcy trustee appointed in respect of a bankrupt’s estate may be removed from office only by—

(a)

an order of the Court; or

(b)

a creditor's meeting convened specially for that purpose in accordance with the insolvency regulations.

(2)

If the Official Receiver is the bankruptcy trustee, or the bankruptcy trustee is appointed by the official Receiver or by the Court (otherwise than under section 62), a creditors meeting may be convened for the purpose of replacing the bankruptcy trustee, but only if—

(a)

the Official Receiver or that trustee considers it appropriate to do so;

(b)

the Court so directs; or

(c)

the meeting is requested by one of the bankrupt’s creditors with the concurrence of not less than one-quarter, in value, of the creditors (including the creditor making the request).

(3)

A bankruptcy trustee who is not also the Official Receiver vacates office on ceasing to be authorised as an insolvency practitioner.

(4)

A bankruptcy trustee who is not also the Official Receiver may resign office by giving to the Court not less than thirty days' notice of the resignation.

(5)

A bankruptcy trustee vacates office—

(a)

on giving notice to the Court that a final meeting has been held in accordance with section 253 and of the decision (if any) of that meeting; or

(b)

if the relevant bankruptcy order is annulled, on the annulment of the order.

76.
When Official Receiver is released from obligations as bankruptcy trustee
(1)

If a person has been appointed by the Court to replace the Official Receiver on his or her ceasing to hold office as bankruptcy trustee in respect of a bankrupt's estate, the Official Receiver is released from such time as the Court orders.

(2)

If a person has been appointed by a general meeting of a bankrupt’s creditors to replace the Official Receiver on his or her ceasing to hold office as bankruptcy trustee in respect of the bankrupt’s estate, the Official Receiver is released from office from the time at which the Official Receiver gives notice to the Court that another person has been appointed as a replacement.

(3)

If the Official Receiver, while acting as bankruptcy trustee, gives notice to the Cabinet Secretary that the administration of the bankrupt's estate is for practical purposes complete, the Official Receiver's release takes effect from such time as the Cabinet Secretary determines in writing.

(4)

On being released under this section, the Official Receiver is, from the time specified in accordance with this section, discharged from all liability both in respect of acts or omissions occurring in the course of, or in relation to, administering the estate of the bankrupt concerned.

77.
When bankruptcy trustee, not being the Official Receiver, is released from obligation
(1)

This section applies when a person other than the Official Receiver ceases hold office as a bankruptcy trustee.

(2)

If the person has been removed from office by a meeting of the bankrupt’s creditors that has not resolved against the person's release or who has died, the person is released from the time at which a notice is given to the Court in accordance with the insolvency regulations that the person has ceased to hold office.

(3)

If the person has been removed from office—

(a)

by a general meeting of the bankrupt's creditors that has resolved against the bankrupt's release;

(b)

by the Court, the person is released from such time as the Official Receiver determines, on an application made by that person.

(4)

If the person has vacated office under section 75(3), the person is released from such time as the Official Receiver determines, on an application made by that person.

(5)

If the person has resigned office under section 75(4), the person is released from such time as may be determined in accordance with the insolvency regulations.

(6)

If the person has vacated office under section 75(5)(a), the person is released—

(a)

if the final meeting referred to in that subsection has resolved against that person's release, such time as the Official Receiver determines, on an application made by that person; but

(b)

if that meeting has not so resolved, the time at which the person vacated office.

(7)

When a bankruptcy order is annulled, the person is released from such time as the Court determines.

(8)

On being released under this section, a bankruptcy trustee is, from the time specified in accordance with this section, discharged from all liability both in respect of acts or omissions occurring in the course of, or in relation to, administering the estate of the bankrupt concerned.

(7)

Nothing in this section prevents the Court from exercising its powers under section 74 in relation to a person who has been released under this section.

78.
Vacancy in office of bankruptcy trustee
(1)

This section applies to a vacancy in the office of bankruptcy trustee that has arisen because—

(a)

the appointment of a person as bankruptcy trustee has failed to take effect; or

(b)

when such an appointment has taken effect, the person appointed has died, resigned or otherwise ceased to hold the office.

(2)

When this section applies to a vacancy, the Official Receiver holds office as bankruptcy trustee until the vacancy is filled.

(3)

The Official Receiver may at any time convene a creditors' meeting for the purpose of filling such a vacancy.

(4)

If the Official Receiver has not convened, and does not propose to convene, a creditors' meeting for the purpose of filling such a vacancy, any creditor of the bankrupt may request the Official Receiver to convene such a meeting.

(5)

If such a request appears to the Official Receiver to be made with the concurrence of not less than one-quarter in value of the bankrupt's creditors (including the creditor making the request), the Official Receiver shall convene the requested meeting.

(6)

A reference in this section to a vacancy includes a case in which it is necessary, in relation to particular property that is or may be included in a bankrupt's estate, to revive the trusteeship of the estate after the holding of a final meeting convened under section 253 or after the Official Receiver has given notice under section 76(2) or 77(2).

79.
General control of bankrupt trustee by the Court
(1)

If, in relation to the bankruptcy trustee in respect of a bankrupt's estate, a person (including the bankrupt or a creditor of the bankrupt) is dissatisfied with any act, omission to act or decision of that trustee, the person may apply to the Court for an order under subsection (2).

(2)

On the hearing of such an application, the Court may—

(a)

confirm, reverse or modify the act, omission or decision concerned; or

(b)

give the bankruptcy trustee directions; or

(c)

make such other order as it considers appropriate.

(3)

The Court may, on the application of a bankruptcy trustee, give directions in respect of the bankrupt's estate in relation to any particular matter arising under the bankruptcy.

80.
Liability of bankruptcy trustee for misapplication of money, etc.
(1)

Any of the following persons make an application to the Court for an order under this section relating to a bankruptcy trustee's administration of a bankrupt's estate—

(a)

the Official Receiver;

(b)

the Attorney-General;

(c)

a creditor of the bankrupt;

(d)

the bankrupt (whether or not there is, or is likely to be, a surplus available at the end of the bankruptcy).

(2)

Approval of the Court is required for the making of such an application if it is to be made by the bankrupt or if it is to be made after the bankruptcy trustee has been released in accordance with section 77.

(3)

If, on hearing an application made under subsection (1), the Court is satisfied that the bankruptcy trustee in respect of a bankrupt’s estate has misapplied or retained, or become accountable for money or other property comprising the estate; the Court shall make either or both of the following orders—

(a)

an order directing the bankruptcy trustee, for the benefit of the bankrupt’s estate, to repay, restore or account for the relevant money or other property, together with interest at such rate as the Court considers appropriate;

(b)

an order directing the bankruptcy trustee to be disqualified from acting as such for such period as may be specified in the order.

(4)

If, on hearing an application made under subsection (1), the Court is satisfied that the bankrupt's estate has sustained a loss as a result of misfeasance or a breach of fiduciary or other duty by the bankruptcy trustee in performing that trustee's functions, the Court shall make either or both of the following orders:

81.
Kinds of creditors' meetings

There are two kinds of creditors' meetings—

(a)

the first meeting of creditors; and

(b)

subsequent creditors' meetings.

82.
Subsequent meetings of creditors
(1)

The bankruptcy trustee may at any time convene a meeting of creditors after the first meeting of creditors.

(2)

The bankruptcy trustee shall convene such a meeting if—

(a)

requested to do so by a creditor of the bankrupt; and

(b)

the request is made with the concurrence of not less than one-quarter in number and value of the creditors who have proved their debts.

(3)

The bankruptcy trustee shall convene the meeting by giving notice of the time, date and place of the meeting to—

(a)

the bankrupt; and

(b)

each creditor named in the statement of the bankrupt's financial position; and

(c)

any other creditors known to the bankruptcy trustee.

(4)

The bankruptcy trustee shall advertise the time, date and place of the meeting in the manner prescribed by the insolvency regulations for the purpose of this section.

(5)

Nothing in this section limits the general effect of section 63(5) or Part 3 of the First Schedule.

83.
Meeting and resolution not defective for lack of notice

A meeting of creditors convened by notice to creditors, and a resolution passed at the meeting, is valid even if some creditors may not have received the notice, unless the Court orders otherwise.

84.
Appointment of Chairperson to conduct creditor’s' meetings
(1)

The Chairperson of a creditors' meeting is the bankruptcy trustee or a person appointed by the bankruptcy trustee to be the Chairperson.

(2)

However, if neither the bankruptcy trustee nor the person (if any) appointed by the bankruptcy trustee to be the Chairperson attends the meeting, the creditors may appoint one of them to act as Chairperson for the purpose of the meeting, but only if that person is entitled to vote at the meeting.

(3)

A person appointed by the bankruptcy trustee or elected by the creditors to act as Chairperson may administer any oath that the bankruptcy trustee could have administered if the bankruptcy trustee had attended the meeting.

85.
Power of Chairperson to adjourn creditors' meeting

The Chairperson of a creditors' meeting may adjourn the meeting from time to time and place to place.

86.
Bankruptcy trustee to report to creditors' meeting

If the bankruptcy trustee attends a creditors' meeting or an adjournment of the meeting, the bankruptcy trustee shall—

(a)

report on the administration of the bankrupt's estate;

(b)

give any creditor any further information that the creditor may properly require; and

(c)

on being reasonably required to do so, produce for the meeting or its adjournment all documents in the bankruptcy trustee's possession that relate to the bankrupt's property.

87.
Who can attend creditors' meeting
(1)

A person may attend a creditors' meeting—

(a)

by being physically present at the time, date and place appointed for the meeting; or

(b)

if the bankruptcy trustee makes it available, by means of an audio or audio-visual link, so that all those participating in the meeting can hear and be heard by each other.

(2)

A creditor may also attend—

(a)

by voting by postal or electronic vote under section 94; or

(b)

by proxy on any resolution to be put to the meeting.

88.
Bankrupt may be required to attend creditors' meeting and be questioned
(1)

The bankrupt shall, if required by the bankruptcy trustee, attend all creditors' meetings by being physically present or present by an audio or audio-visual link.

(2)

The following persons may question the bankrupt about the bankrupt's property, conduct or dealings—

(a)

the bankruptcy trustee;

(b)

the Chairperson of the meeting;

(c)

a creditor or a representative of a creditor.

(3)

The Chairperson of the meeting may allow only questions that relate to the bankrupt's property, conduct or dealings.

(4)

The questioning may be on oath.

(5)

The bankrupt shall sign a statement of the bankrupt's evidence given under the questioning, if required to do so by the bankruptcy trustee or the Chairperson of the meeting.

(6)

A bankrupt who, without reasonable excuse, fails to comply with subsection (5) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings.

89.
Attendance at creditors' meeting by non-creditors

A person who is not a creditor of the bankrupt may attend a creditors' meeting with the consent of—

(a)

the bankruptcy trustee; or

(b)

the creditors attending the meeting, voting by ordinary resolution.

90.
Minutes and record of creditors' meeting
(1)

The bankruptcy trustee shall ensure that minutes are kept of each creditors' meeting.

(2)

The minutes are invalid unless signed by the bankruptcy trustee or the Chairperson of the meeting.

(3)

The bankruptcy trustee may record the meeting, but only with the consent of each person attending the meeting.

91.
Number of persons required for creditors' meeting to be valid
(1)

A creditors' meeting is not valid unless at least the following persons attend—

(a)

the bankruptcy trustee or a person who represents the bankruptcy trustee;

(b)

a creditor or a person who represents a creditor.

(2)

The meeting lapses if those persons do not attend, in which case the bankruptcy trustee may convene another creditors' meeting.

92.
Who can represent creditors and bankrupt at creditors' meeting
(1)

Any of the following persons may represent a creditor at a creditors' meeting—

(a)

an advocate;

(b)

a certified public accountant;

(c)

a person who keeps the creditor's or bankrupt's accounting records;

(d)

in the case of a creditor, a person who is the creditor's authorised agent under a power of attorney;

(e)

a person who satisfies the bankruptcy trustee that the person represents the creditor or bankrupt;

(f)

in the case of a partnership, a partner.

(2)

If the bankrupt attends a creditors' meeting, any of the following persons may represent the bankrupt—

(a)

an advocate;

(b)

a certified public accountant;

(c)

a person who keeps the creditor's or bankrupt's accounting records;

(d)

a person who satisfies the bankruptcy trustee that the person represents the creditor or bankrupt;

(e)

in the case of a partnership, a partner.

(3)

In addition to the persons listed in subsection (1), a creditor may be represented—

(a)

in the case of the State, by any officer of the appropriate government department or agency;

(b)

in the case of a public body,by an officer of that body;

(c)

in the case of a company, by a director, or its chief executive or secretary or by a person authorised in writing by one of those persons.

93.
Passing of resolutions at creditors' meetings
(1)

At a creditors' meeting—

(a)

an ordinary resolution is passed if a majority in number and value of the creditors, or their proxies, who attend and who vote on the resolution vote in favour of it; and

(b)

a special resolution is passed if three-quarters in number and value of the creditors or their proxies who attend and who vote on the resolution vote in favour of it.

(2)

For the purposes only of deciding whether the requisite majority by value has voted in favour of a resolution, the following provisions apply—

(a)

the bankruptcy trustee may admit or reject proofs of debt;

(b)

the Chairperson of the meeting may adjourn the meeting in order to admit or reject proofs of debt;

(c)

a person whose debt has been admitted is a creditor.

(3)

If a bankruptcy trustee or creditor alleges that a resolution of the creditors—

(a)

conflicts with this or any other Act or any rule of law; or

(b)

is unfair,

the bankruptcy trustee or creditor may apply to the Court for an order under subsection (4).

(4)

If, on the hearing of an application made under subsection (3), the Court finds that the allegation is substantiated, it may make such order, and give such directions, as it considers appropriate to address the conflict or unfairness.

(5)

This section is subject to section 311.

94.
What votes can be counted for passing of resolutions at creditors' meeting
(1)

A creditor who is entitled to vote at a creditors' meeting may vote on a resolution to be put to the meeting—

(a)

by postal vote; or