Introduction
1. Before this Court for determination is the debtor’s petition dated 7 June 2024 seeking a Bankruptcy Order under the Insolvency Act, 2015. The debtor, Augustine Maina Ngetha, prays that he be adjudged bankrupt and that the Official Receiver be appointed trustee of his estate.
2. The petition is accompanied by a supporting affidavit, statement of affairs, application for trustee, and a certificate of compliance from the Official Receiver. The debtor asserts inability to pay a judgment debt of Kshs. 18,911,276.37 owed to Worldwide City Ventures Ltd.
Background
3. The debtor avers that he operated, together with other directors, a quarrying enterprise under Chania Mining Ltd until the business collapsed around 2012. In 2010, he obtained Kshs. 1,700,000 from Worldwide City Ventures Ltd, which he says was advanced against his membership/shareholding and supported by guarantees. The lending relationship subsequently deteriorated, culminating in Milimani CMCC No. 5175 of 2016, Worldwide City Ventures v Augustine Maina Ngetha, where judgment was entered against the debtor for Kshs. 8,784,739 together with interest and costs as particularized in the decree and certificate of costs, later asserted by the creditor to have grown to approximately Kshs. 18,911,276.37.
4. The debtor states he sought to challenge the recoverable amount on grounds including contravention of the duplum rule and the character of the lending vis-à-vis shares and guarantees, but the matter concluded adversely following the death of his advocate. He now asserts inability to pay the decretal sum and seeks a Bankruptcy Order, the appointment of the Official Receiver as trustee, and consequential directions under the Act.
5. The debtor’s statement of affairs discloses assets comprising cash (Kshs. 5,000) and household furniture (Kshs. 30,000), totaling Kshs. 35,000. His liabilities disclose a single judgment creditor, Worldwide City Ventures Ltd, in the sum of Kshs. 18,911,276.37, unsecured. The debtor has sworn that the debts are due and payable and that he has made no transfers, preferences, or dispositions within the relevant statutory look-back periods.
The Debtor’s Submissions
6. In support of the Petition, the Debtor filed submissions dated 3rd June 2025, generally reiterating the facts of the case as set out above.
Analysis and Determination
7. Having considered the Petition, the supporting affidavit and the submissions filed herein by the debtor, I find that the sole issue that arises for determination is; whether Debtor’s petition is merited.
8. The Insolvency Act, 2015 vests jurisdiction in the High Court for bankruptcy petitions by individuals. Section 15 (2) thereof empowers the court to make bankruptcy Orders, on application of either a creditor(s), debtor, or “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.”
9. In re James Maina Kabatha (Debtor/Applicant) [2020] KEHC 2685 (KLR), the Court (Prof Ngugi J – as he then was) observed as follows;
“The twin goals of consumer or individual bankruptcy law are to protect creditors and ensure optimal payment to them where possible; and the provision of shelter and a "fresh start" to individual debtors overburdened by debt.’
10. The learned judge adds at paragraphs 3, 4 and 5 of the Ruling that:
“The “fresh start” goal is accomplished through the bankruptcy discharge, which usually releases the debtor from personal liability from certain debts and prevents creditors from taking any action against the debtor to collect those debts.
Consequently, bankruptcy protection being an extraordinary relief, one of the corollaries to these seemingly conflictual twin goals of bankruptcy law – the protection of creditors and the provision of fresh start for the honest but unfortunate debtor -- is that an individual seeking bankruptcy protection is required to scrupulously demonstrate that he is acting in good faith and disclose all his financial information.
It is only upon meeting this double threshold – demonstration of good faith and full disclosure of all financial information – that a Petitioner can become entitled to a bankruptcy order. The architecture and structure of the Insolvency Act and Insolvency Regulations, 2018 reinforce these double thresholds for individual Petitioners. “
11. Section 32 of the Insolvency Act provides as follows;
(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. “
12. In Re Abdallah Chitechi Munyendo [2022] eKLR, the court stressed that incomplete statements or failure to publish are fatal. The Cout (J. Kamau J) stated that:
“The Petitioner was required to comply with the Insolvency Regulations by gazetting the Petition herein. A perusal of the Petition herein showed that the Petitioner did not annex any newspaper advertisement. The court could not shut its eyes to such a grave failure to comply with the law. The omission to advertise the Insolvency Cause went to the root of the competence of the Petition herein. It was not a procedural technicality that could be excused under the provisions of Article 159(2)(d) of the Constitution of Kenya, 2010 that mandates courts to administer justice without undue regard to procedural technicalities because it shut out other creditors who may have wished to participate in the Insolvency proceedings herein. The Petition could not be saved but was instead incompetent for want of conformity.”
13. In the present case, it is plain that the record contains a statement of affairs detailing assets, liabilities, and required personal particulars, sworn before a Commissioner for Oaths. The statement captures the debtor’s creditors, debt amounts, asset values, and relevant disclosures. The debtor’s schedules disclose assets of Kshs. 35,000 and liabilities of Kshs. 18.9M.
14. Additionally, publication of the notice has been demonstrated through a Daily Nation advertisement. The affidavit of service and annexed mention notice indicate that publication occurred in a newspaper of nationwide circulation and within the debtor’s region of residence (Nairobi). Section 32(4)’s mandatory publication requirement is therefore met.
15. The Official Receiver’s Certificate of Compliance confirms lodgment of the prescribed forms and payment of Kshs. 30,000 deposit toward expenses, with a receipt number referenced. This satisfies the administrative preconditions anticipated by the Regulations and supports the petition’s procedural regularity.
16. The debtor also filed an application for appointment of a trustee and expressly seeks the appointment of the Official Receiver. That is consistent with the statutory framework and the court’s practice of appointing the Official Receiver where no private trustee is proposed or circumstances warrant neutral administration.
17. On its face, it meets the prescribed particulars and there is no evident omission or misstatement that would warrant rejection under Section 32(3). The supporting affidavit contextualizes the insolvency, origins of indebtedness, current inability to pay, and confirms unsecured status of the debt.
18. Further, the debtor has complied with Section 32 of the Insolvency Act, 2015 and the Insolvency Regulations, 2016. The debt threshold of is met. The statement of affairs and supporting affidavit establish inability to pay. There is no procedural defect or substantive bar disclosed on the record.
19. From the totality of the evidence, I am satisfied that the Debtor is unable to pay her debts, and all the statutory prerequisites have been complied with. I therefore do not find any compelling reason to deny the order of bankruptcy against the Petitioner.
20. Accordingly, I hereby allow the Debtor’s Petition dated 7th June 2024, in the following manner:
i. Augustine Maina Ngetha be and is hereby adjudged bankrupt and a bankruptcy order is made against his estate.
ii. The Official Receiver (or a person duly nominated by the Official Receiver) is hereby appointed to be the Bankruptcy Trustee in respect of the Debtor’s Property.
iii. Cost of the petition shall be borne out of the Debtor’s estate.
21. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
11TH DECEMBER 2025
ADO MOSES
JUDGE
In the presence of: -
C/A – Moses
.…………..for the Plaintiff/Debtor
….………. for the Defendant/Respondent
1. Before this Court for determination is the debtor’s petition dated 7 June 2024 seeking a Bankruptcy Order under the Insolvency Act, 2015. The debtor, Augustine Maina Ngetha, prays that he be adjudged bankrupt and that the Official Receiver be appointed trustee of his estate.
2. The petition is accompanied by a supporting affidavit, statement of affairs, application for trustee, and a certificate of compliance from the Official Receiver. The debtor asserts inability to pay a judgment debt of Kshs. 18,911,276.37 owed to Worldwide City Ventures Ltd.
Background
3. The debtor avers that he operated, together with other directors, a quarrying enterprise under Chania Mining Ltd until the business collapsed around 2012. In 2010, he obtained Kshs. 1,700,000 from Worldwide City Ventures Ltd, which he says was advanced against his membership/shareholding and supported by guarantees. The lending relationship subsequently deteriorated, culminating in Milimani CMCC No. 5175 of 2016, Worldwide City Ventures v Augustine Maina Ngetha, where judgment was entered against the debtor for Kshs. 8,784,739 together with interest and costs as particularized in the decree and certificate of costs, later asserted by the creditor to have grown to approximately Kshs. 18,911,276.37.
4. The debtor states he sought to challenge the recoverable amount on grounds including contravention of the duplum rule and the character of the lending vis-à-vis shares and guarantees, but the matter concluded adversely following the death of his advocate. He now asserts inability to pay the decretal sum and seeks a Bankruptcy Order, the appointment of the Official Receiver as trustee, and consequential directions under the Act.
5. The debtor’s statement of affairs discloses assets comprising cash (Kshs. 5,000) and household furniture (Kshs. 30,000), totaling Kshs. 35,000. His liabilities disclose a single judgment creditor, Worldwide City Ventures Ltd, in the sum of Kshs. 18,911,276.37, unsecured. The debtor has sworn that the debts are due and payable and that he has made no transfers, preferences, or dispositions within the relevant statutory look-back periods.
The Debtor’s Submissions
6. In support of the Petition, the Debtor filed submissions dated 3rd June 2025, generally reiterating the facts of the case as set out above.
Analysis and Determination
7. Having considered the Petition, the supporting affidavit and the submissions filed herein by the debtor, I find that the sole issue that arises for determination is; whether Debtor’s petition is merited.
8. The Insolvency Act, 2015 vests jurisdiction in the High Court for bankruptcy petitions by individuals. Section 15 (2) thereof empowers the court to make bankruptcy Orders, on application of either a creditor(s), debtor, or “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.”
9. In re James Maina Kabatha (Debtor/Applicant) [2020] KEHC 2685 (KLR), the Court (Prof Ngugi J – as he then was) observed as follows;
“The twin goals of consumer or individual bankruptcy law are to protect creditors and ensure optimal payment to them where possible; and the provision of shelter and a "fresh start" to individual debtors overburdened by debt.’
10. The learned judge adds at paragraphs 3, 4 and 5 of the Ruling that:
“The “fresh start” goal is accomplished through the bankruptcy discharge, which usually releases the debtor from personal liability from certain debts and prevents creditors from taking any action against the debtor to collect those debts.
Consequently, bankruptcy protection being an extraordinary relief, one of the corollaries to these seemingly conflictual twin goals of bankruptcy law – the protection of creditors and the provision of fresh start for the honest but unfortunate debtor -- is that an individual seeking bankruptcy protection is required to scrupulously demonstrate that he is acting in good faith and disclose all his financial information.
It is only upon meeting this double threshold – demonstration of good faith and full disclosure of all financial information – that a Petitioner can become entitled to a bankruptcy order. The architecture and structure of the Insolvency Act and Insolvency Regulations, 2018 reinforce these double thresholds for individual Petitioners. “
11. Section 32 of the Insolvency Act provides as follows;
(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. “
12. In Re Abdallah Chitechi Munyendo [2022] eKLR, the court stressed that incomplete statements or failure to publish are fatal. The Cout (J. Kamau J) stated that:
“The Petitioner was required to comply with the Insolvency Regulations by gazetting the Petition herein. A perusal of the Petition herein showed that the Petitioner did not annex any newspaper advertisement. The court could not shut its eyes to such a grave failure to comply with the law. The omission to advertise the Insolvency Cause went to the root of the competence of the Petition herein. It was not a procedural technicality that could be excused under the provisions of Article 159(2)(d) of the Constitution of Kenya, 2010 that mandates courts to administer justice without undue regard to procedural technicalities because it shut out other creditors who may have wished to participate in the Insolvency proceedings herein. The Petition could not be saved but was instead incompetent for want of conformity.”
13. In the present case, it is plain that the record contains a statement of affairs detailing assets, liabilities, and required personal particulars, sworn before a Commissioner for Oaths. The statement captures the debtor’s creditors, debt amounts, asset values, and relevant disclosures. The debtor’s schedules disclose assets of Kshs. 35,000 and liabilities of Kshs. 18.9M.
14. Additionally, publication of the notice has been demonstrated through a Daily Nation advertisement. The affidavit of service and annexed mention notice indicate that publication occurred in a newspaper of nationwide circulation and within the debtor’s region of residence (Nairobi). Section 32(4)’s mandatory publication requirement is therefore met.
15. The Official Receiver’s Certificate of Compliance confirms lodgment of the prescribed forms and payment of Kshs. 30,000 deposit toward expenses, with a receipt number referenced. This satisfies the administrative preconditions anticipated by the Regulations and supports the petition’s procedural regularity.
16. The debtor also filed an application for appointment of a trustee and expressly seeks the appointment of the Official Receiver. That is consistent with the statutory framework and the court’s practice of appointing the Official Receiver where no private trustee is proposed or circumstances warrant neutral administration.
17. On its face, it meets the prescribed particulars and there is no evident omission or misstatement that would warrant rejection under Section 32(3). The supporting affidavit contextualizes the insolvency, origins of indebtedness, current inability to pay, and confirms unsecured status of the debt.
18. Further, the debtor has complied with Section 32 of the Insolvency Act, 2015 and the Insolvency Regulations, 2016. The debt threshold of is met. The statement of affairs and supporting affidavit establish inability to pay. There is no procedural defect or substantive bar disclosed on the record.
19. From the totality of the evidence, I am satisfied that the Debtor is unable to pay her debts, and all the statutory prerequisites have been complied with. I therefore do not find any compelling reason to deny the order of bankruptcy against the Petitioner.
20. Accordingly, I hereby allow the Debtor’s Petition dated 7th June 2024, in the following manner:
i. Augustine Maina Ngetha be and is hereby adjudged bankrupt and a bankruptcy order is made against his estate.
ii. The Official Receiver (or a person duly nominated by the Official Receiver) is hereby appointed to be the Bankruptcy Trustee in respect of the Debtor’s Property.
iii. Cost of the petition shall be borne out of the Debtor’s estate.
21. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
11TH DECEMBER 2025
ADO MOSES
JUDGE
In the presence of: -
C/A – Moses
.…………..for the Plaintiff/Debtor
….………. for the Defendant/Respondent