Section 625 of Insolvency Act CAP 53: Proposal for voluntary arrangement
(1) The directors of a company may make a proposal under this Division to the company and to its creditors for a voluntary arrangement under which the company enters into a composition in satisfaction of its debts or a scheme for arranging its financial affairs.
(2) In making such a proposal, the directors shall provide for the appointment of a person to supervise the implementation of the voluntary arrangement.
(3) Only an authorised insolvency practitioner may be appointed to supervise a voluntary arrangement.
(4) A proposal under this Division may also be made—
(a) if the company is under administration, by the administrator; or (b) if the company is in liquidation, by the liquidator.
Enhance Your Research with Bookmarks and Annotations
Here's how you can use these features:
- To bookmark this page, click the "Bookmark this Page" button below the document title.
- To add an annotation, highlight text in the document and select "Add Annotation" from the toolbar that appears.
- These features are great for organizing your research and keeping track of key information.
- You can view and manage your bookmarks and annotations on your Bookmarks and Annotations page.
- Section 626 - Procedure if provisional supervisor is not the liquidator or administrator
(1) This section applies if the provisional supervisor in respect of a director's proposal is not the liquidator or administrator of the company and the directors do not propose to take steps to...
- Section 627 - Provisional supervisor to convene meetings of company and of its creditors
(1) If the provisional supervisor appointed under section 625 is not the liquidator or administrator and has reported to the Court that the meetings referred to in section 626(2) should be convened,...
- Section 628 - Conduct of meetings of company and its creditors
(1) The main purpose of a meeting convened under section 627 is to decide whether to approve the proposal or that proposal with modifications.
(2) At the beginning of a creditors' meeting, the...
- Section 629 - Approval of proposal for voluntary arrangement
(1) This section applies to the decisions taken at the meeting of the company and the meeting of the company's creditors held in accordance with section 628 to consider a directors' proposal (with or...
- Section 630 - Approved proposal to take effect as voluntary arrangement and to be binding on company and its creditors
(1) A directors' proposal (with or without modifications) takes effect as a voluntary arrangement by the company on the day after the date on which it is approved by the Court by order made under...
- Section 631 - Certain persons may challenge decisions relating to approved voluntary arrangement by making application to the Court
(1) The following persons may make an application to the Court for an order under this section—
(a) a person who was entitled to vote at the meeting of the company or the meeting of its...
- Section 632 - Offences involving false representations and fraudulent acts by company officers
(1) An officer of a company who—
(a) makes a false representation for the purpose of obtaining the approval of the members or creditors of a company to a proposal for a voluntary arrangement;...
- Section 633 - Implementation of approved voluntary arrangement
(1) When a proposal takes effect as a voluntary arrangement, the supervisor becomes responsible for implementing the arrangement in the interests of the company and its creditors and monitoring...
- Section 634 - Prosecution of delinquent officers of company
(1) This section applies if—
(a) a moratorium under has been obtained for a company under this Division; or
(b) the approval of a voluntary arrangement in relation to a company has taken effect...
- Section 635 - When voluntary arrangement comes to an end prematurely
For the purposes of this Division, a voluntary arrangement the approval of which has taken effect under section 630(1) ends prematurely if, when it ceases to have effect, it has not been fully...
- Section 636 - Interpretation: Part 2
(1) In this Part—
"agreement" includes an agreement or undertaking effected by contract, deed or any other document intended to have effect in accordance with the law of Kenya or another...
- Section 637 - Application of Part 2
This Division has effect with respect to— (a) companies eligible for a moratorium;
(b) the procedure for obtaining such a moratorium;
(c) the effects of such a moratorium; and (d) deleted by Act No....
- Section 638 - Eligible companies
A company is eligible to obtain a moratorium if it—
(a) complies with such requirements (if any) as may be prescribed by the insolvency regulations;
(b) is not declared to be an ineligible company...
- Section 639 - Banking and insurance companies ineligible to obtain moratorium
The following companies are ineligible companies for the purposes of section 638:
(a) a company that holds a licence granted under section 5 of the Banking Act (Cap. 488) authorising it to carry on a...
- Section 640 - Companies under administration, etc., ineligible to obtain moratorium
(1) The following companies are also ineligible companies for the purpose of section 638—
(a) a company that is under administration;
(b) a company that is in liquidation;
(c) a company in respect...
- Section 641 - Certain projects companies ineligible
(1) A company is also an ineligible company for the purposes of section 638 if, on the lodgement date, it is a project company of a project that is a public-private partnership project and includes...
- Section 643 - What steps company's directors have to take to obtain a moratorium
(1) Deleted by Act No. 1 of 2021
(2) If the directors of an eligible company wish to obtain a moratorium, they shall— (a) prepare—
(i) a document setting out why a moratorium is desirable, which may...
- Section 644 - What directors have to do to obtain moratorium
(1) To obtain a moratorium, the directors of a company shall lodge with the Court—
(a) the documents referred to in section 643(2)(a);
(b) a statement to the effect that the company is eligible for...
- Section 645 - Duration of moratorium
(1) A moratorium takes effect when the documents specified in section 644(1) are lodged with the Court.
(2) A moratorium ends after thirty days from and including the day on which the moratorium...
- Section 646 - What happens when moratorium takes effect
(1) When a moratorium takes effect in respect of a company, the directors of the company shall immediately give notice of that fact to the monitor.
(2) If subsection (1) is not complied with, each of...
- Section 647 - Duty of monitor to publish and give notice that moratorium has taken effect
(1) As soon as practicable after being notified that a moratorium has taken effect, the monitor shall— (a) publish—
(i) once in the Gazette;
(ii) once in at least two newspapers circulating in the...
- Section 648 - Notification of end of moratorium to be given by monitor
(1) Within fourteen days after a moratorium has come to an end, the monitor shall— (a) publish—
(i) once in the Gazette;
(ii) once in at least two newspapers circulating in area in which the company...
- Section 649 - Effect of moratorium on creditors and others
(1) While a moratorium has effect in respect of a company—
(a) an application for liquidation of the company may not be made; (b) a meeting of the company may be convened or requisitioned—
(i) only...
- Section 651 - Security not to be enforced unless it would benefit the company
Security given by a company at a time when a moratorium has effect in relation to the company can be enforced only if, at that time, reasonable grounds existed for believing that the security would...
- Section 652 - Application of sections 653 to 657 to company in respect of which a moratorium has effect
(1) Sections 653 to 657 apply to a company in respect of which a moratorium currently has effect.
(2) The fact that a company enters into a transaction in contravention of a provision of sections 653...
- Section 653 - Company invoices and other documents to state monitor's name and that moratorium has effect
(1) A company in respect of which a moratorium has effect shall ensure that every invoice, order for goods or services, business letter or order form (whether in hard copy, electronic or any other...
- Section 654 - Restrictions on company obtaining credit during moratorium
(1) A company in respect of which a moratorium has effect may not obtain credit exceeding twentyfive thousand shillings from a person who has not been informed that a moratorium has effect in respect...
- Section 655 - Restrictions on disposal of property and making payments by company
(1) Subject to subsection (2), a company in respect of which a moratorium has effect may dispose of any of its property only if—
(a) there are reasonable grounds for believing that the disposal will...
- Section 656 - Restriction on company paying debts and other liabilities
(1) Subject to subsection (2), a company in respect of which a moratorium has effect may make a payment in respect of a debt or other liability of the company that was in existence before the...
- Section 657 - Circumstances in which company may dispose of property and goods that are subject to a security or held under credit purchase transaction
(1) This section applies to—
(a) property of the company that is subject to a security; and
(b) goods that are in the possession of the company under a credit purchase transaction.
(2) A company...
- Section 658 - Monitor's to monitor activities of company during moratorium
(1) During the moratorium, the monitor is responsible for monitoring the company's activities in order to ascertain whether the company is likely to have sufficient funds available to it during the...
- Section 659 - Withdrawal of monitor's consent to act
(1) Except with the approval of the Court, a provisional supervisor may withdraw consent to monitor a moratorium only if, during the moratorium—
(a) the monitor concludes that the company will not...
- Section 660 - Creditors and others may challenge monitor's conduct during moratorium by application made to the Court
(1) Any creditor, director or member of the company, or any other person affected by a moratorium, who is dissatisfied with an act, omission or decision of the monitor during the moratorium may apply...
- Section 661 - Creditor may pursue claim against monitor for loss
(1) If there are reasonable grounds for believing that—
(a) as a result of any act, omission or decision of the monitor during the moratorium, the company has sustained loss; and
(b) the company...
- Section 662 - Replacement of monitor by the Court
(1) An application may be made to the Court for an order under subsection (2)—
(a) if the monitor has failed to comply with any duty imposed on that monitor under this Part or has died, by the...
- Section 669 - Extension of moratorium
On the application of the directors, the Court may extend a moratorium for a period of at least thirty days if the Court believes that the extension is desirable in order to achieve the aims for which...
- Section 670 - Conditions for extension of moratorium
(1) The conditions that may be imposed when a moratorium is extended or further extended include a requirement that the monitor be replaced as such by another authorised insolvency...
- Section 671 - Decisions to extend or further extend moratorium
(1) If the Court extends, or further extends, the moratorium, the monitor shall within seven days of the order, lodge a copy of the order with the Registrar for registration.
(2) Deleted by Act No. 1...
- Section 674 - Member or creditor of company may challenge actions of directors
(1) This section applies to and in relation to acts or omissions of the directors of a company during a moratorium.
(2) A creditor or member of the company may apply to the Court for an order under...
- Section 675 - Offences under this Division
(1) This section applies to a company in respect of which a moratorium has or had effect.
(2) A person who, at any time during the twelve months immediately preceding the date on which the moratorium...
- Section 677 - Interpretation: Part X
In this Part—
"deliver", in relation to documents or other property, includes surrender and transfer;
"relevant office-holder" means—
(a) in relation to a company under administration, the...
- Section 678 - Realising property of company that is in liquidation or under administration
(1) This section applies to a company that is under administration or in liquidation.
(2) If a person has control over money, documents or other property to which the company appears to be entitled,...
- Section 679 - Duty of certain persons to co-operate with relevant office-holder
(1) In this section, “relevant office holder", in relation to a company, also includes the Official Receiver even if not the liquidator.
(2) This section applies to the following persons—
(a) those...
- Section 680 - Power of the Court to conduct inquiry into insolvent company's dealings, etc., on application made by relevant office-holder
(1) In this section, "relevant office holder", in relation to a company, includes the Official Receiver even if not the liquidator.
(2) On the application of the relevant office-holder, the Court may...
- Section 681 - Court's enforcement powers under section 680
(1) If, after considering the evidence obtained under section 680 or this section, it appears to the Court that a person has control over property of the company, the Court may, on the application of...
- Section 682 - Power of the Court to set aside transaction that is under value
(1) This section applies to a company that is under administration or in liquidation.
(2) In this section, "relevant time" has the meaning given by section 684.
(3) On forming the reasonable belief...
- Section 683 - Power of the Court to void certain preferences
(1) In this section, "relevant time" has the meaning given by section 684.
(2) If of the view that a company has at a relevant time given a preference to a person, the relevant office-holder may...
- Section 684 - What "relevant time" means in sections 682 and 683
(1) Subject to subsection (3), the time at which a company enters into a transaction at an undervalue is a relevant time if the transaction is entered into at a time—
(a) during the two years...
- Section 685 - Orders under sections 682 and 683: ancillary provisions
(1) An order under section 682 or 683 with respect to a transaction or preference entered into or given by a company may, subject to subsection (
2)—
(a) require property transferred as part of the...
- Section 686 - Power of the Court to set aside certain extortionate credit transactions
(1) This section applies to a transaction to which a company is, or has been, a party to a transaction for, or involving, the provision of credit to the company.
(2) The relevant office-holder may...