1. Before the Court for determination are two applications: the application dated 17th March 2026 filed by Copia Kenya Limited (Under Administration) and the application dated 26th May 2026 filed by Tuffsteel Limited, one of the unsecured creditors and the 1st Respondent herein.
2. Through the application dated 17th March 2026, Copia Kenya Limited (Under Administration) seeks orders that the Company be liquidated by the Court pursuant to the provisions of the Insolvency Act, No. 18 of 2015, and that Julius Mumo Ngonga and Anthony Makenzi Muthusi of KPMG Advisory Services Limited be appointed as Joint Liquidators.
3. The application is based on the grounds set out on its face and is supported by the affidavit sworn by Anthony Makenzi Muthusi, a Joint Administrator of the Company. He depones that Copia Kenya Limited was placed under administration on 21st May 2024, and that he and Julius Mumo Ngonga were appointed as Joint Administrators over the whole of the Company's property and business. He states that, pursuant to Section 593 of the Insolvency Act, the administration was due to lapse on 21st May 2025. However, before the expiry of the administration period, the Joint Administrators successfully applied for an extension of six months, which was subsequently extended to 16th April 2026.
4. The Administrator avers that significant progress has been made in the realization of the Company's assets and that only a few outstanding matters remain, the timelines for whose completion are uncertain. He further states that during a Creditors' Committee meeting held on 10th December 2025, the Joint Administrators proposed that the administration be converted into liquidation and that they be appointed as Joint Liquidators to ensure continuity. According to him, members of the Committee requested additional time to consider the proposal, and the majority have yet to communicate their position. He contends that despite substantial asset realizations, the Company's liabilities continue to exceed its assets. It is therefore his position that the administration process has reached its logical conclusion, as the Company can no longer be sustained as a going concern and should consequently be placed into liquidation.
5. The application is opposed by Tuffsteel Limited through the Replying Affidavit sworn on 26th May 2026 by its Managing Director, Dev Mukund Patel. He depones that Tuffsteel became an unsecured creditor of the Company through various commercial transactions in the ordinary course of business involving the supply of goods and services.
6. Tuffsteel contends that liquidation, if commenced without adequate safeguards, transparency, investigations, and preservatory measures, would occasion substantial prejudice to unsecured creditors. It argues that, under the insolvency framework, secured creditors rank ahead of unsecured creditors in the distribution of assets, thereby exposing unsecured creditors to the risk of only partial recovery or complete non-recovery of their claims. According to Tuffsteel, liquidation would therefore materially affect both its ranking and prospects of recovery.
7. Acknowledging the statutory roles of administration and liquidation, Tuffsteel maintains that insolvency practitioners are under a duty to uphold the principles of transparency, accountability, fairness, and the protection of creditors' interests. Relying on Section 560 of the Insolvency Act, it asserts that administrators owe fiduciary duties to act in the interests of creditors as a whole and to avoid conduct that may prejudice any class of creditors.
8. Tuffsteel therefore submits that before any liquidation order is granted, there should be full disclosure and accountability regarding the Company's assets and liabilities, the asset realization process undertaken during administration, any disposals or transfers of assets, the Company's financial records and books of account, the conduct of both the directors and administrators, and the extent of recoveries realized or anticipated for the benefit of creditors.
9. It further expresses concern that, absent preservatory and investigative orders, there is a real risk of dissipation, concealment, transfer, wastage, or improper disposal of the Company's assets. Consequently, it urges the Court to exercise close supervisory oversight over the proposed transition from administration to liquidation.
10. Tuffsteel also objects to the proposed appointment of the current Joint Administrators as Joint Liquidators. It contends that such an appointment raises legitimate concerns regarding accountability, transparency, and the need for independent scrutiny of the administration process. In its view, an independent review of the conduct, decisions, and dealings undertaken during administration should precede any appointment of the same administrators as liquidators.
11. Accordingly, Tuffsteel indicates that it will seek various preservatory and investigative orders, including orders restraining the disposal, transfer, alienation, or dissipation of the Company's assets pending a full accounting and verification process; orders compelling the production and preservation of the Company's books, records, financial statements, bank records, asset registers, and other relevant documentation; orders directing a forensic audit or independent review of the Company's financial affairs, transactions, and management both before and during administration; and orders safeguarding its participation as an unsecured creditor throughout the insolvency proceedings.
12. Tuffsteel further states that it has lodged a formal Proof of Debt together with supporting documentation, for purposes of substantiating its claim in the insolvency process. It therefore urges the Court to impose strict conditions, oversight measures, and appropriate safeguards before granting the orders sought by the Joint Administrators.
13. The application is equally opposed by the 2nd Respondent, Jastan Traders Limited through the Replying Affidavit sworn on 20th June 2026 by Wangari Mwangi, its Operations Manager. She states that during March and April 2024, Jastan Traders Limited provided delivery and logistics services to the Company. Although the services were duly rendered and invoices issued, a substantial portion of the debt remains outstanding. She avers that as at 25th May 2024, the amount due and payable stood at Kshs. 793,022/=, exclusive of accruing interest.
14. Jastan Traders Limited opposes the proposed liquidation unless adequate safeguards are implemented to ensure that the interests of unsecured creditors are protected and that their claims are properly accounted for within the insolvency process.
15. Mwangi further points to the Administrators' Third Creditors' Report dated 12th March 2026, which contains an Estimated Outcome Statement as at 28th February 2026. According to that report, the Company's realizable assets are estimated at approximately Kshs. 206,558,544/= while creditors and administration costs are estimated at approximately Kshs. 169,479,677/=. She contends that the administrators' own projections demonstrate that only a limited surplus would remain after satisfaction of realization expenses and before consideration of any preferential claims.
16. She further depones that, notwithstanding those projections, the administrators have not explained why liquidation, which would inevitably attract additional costs such as liquidators' remuneration, statutory advertisement expenses, and professional fees, would yield a better outcome than allowing the administration process to continue. Nor, in her view, have the administrators disclosed whether alternative insolvency mechanisms were considered or provided reasons for rejecting such alternatives.
17. Jastan Traders Limited associates itself with and adopts the objections raised by Tuffsteel Limited and urges the Court to dismiss the administrators' application.
18. The second application before the Court is that of Tuffsteel Limited dated 26th May 2026, in which the Applicant seeks the following orders:
i. Spent.
ii. Spent.
iii. That this Court be pleased to issue preservatory orders securing all movable and immovable assets belonging to Copia Kenya Limited pending the hearing and determination of the liquidation application dated 17th March 2026.
iv. That the Court be pleased to direct the administrators to file and serve, within fourteen (14) days, a comprehensive inventory of the assets and liabilities of Copia Kenya Limited, including a detailed statement of all dispositions, transfers, sales, or encumbrances effected from the commencement of the administration to date.
v. That the Court be pleased to direct the Directors and Administrators of Copia Kenya Limited to produce and preserve all books of account, statutory records, bank statements, financial records, contracts, asset registers, electronic records, and any other documents relating to the affairs of the Company pending the determination of the liquidation proceedings.
vi. That the Court be pleased to order an independent forensic audit and investigation into the affairs of Copia Kenya Limited for the period commencing three (3) years prior to the administration to date, with particular focus on asset transfers and dispositions, related-party transactions, payments made to directors, shareholders and affiliated entities, transactions at an undervalue, preferential payments, and any suspected concealment, diversion, or dissipation of assets.
vii. That the Court be pleased to appoint an independent forensic auditor and/or insolvency practitioner to conduct the investigation and file a report within such period as the Court may direct.
viii. That the Court be pleased to direct the administrators to disclose the complete list of secured and unsecured creditors, the nature and value of all securities held by secured creditors, all claims received and admitted during the administration, and the estimated recoverable asset pool available for distribution.
ix. That the Court be pleased to direct that no distribution of the Company's assets be undertaken pending the filing and consideration of the forensic audit report and further directions of the Court.
x. That the Court be pleased to direct the proposed Joint Liquidators, Julius Mumo Ngonga and Anthony Makenzi Muthusi, if appointed, to preserve all assets and records of Copia Kenya Limited and to file periodic reports before the Court on the status of the liquidation process and asset realization.
xi. That the Applicant be granted leave to participate fully in the liquidation proceedings and to file such further pleadings, objections, and applications as may be necessary for the protection of its interests as a creditor.
xii. Costs of the application.
19. The application is premised on the grounds appearing on its face and is supported by the affidavit sworn by Dev Mukund Patel, the Managing Director of Tuffsteel Limited. He depones that Tuffsteel supplied goods and rendered services to Copia Kenya Limited pursuant to various contractual arrangements, as a result of which the Company became indebted to it in the sum of Kshs. 13,312,133/= together with accrued contractual and statutory interest.
20. He further states that Copia Kenya Limited was placed under administration pursuant to orders of this Court and that the administrators' term was subsequently extended by a ruling of the Court. He states that the administrators have now applied for orders converting the administration into liquidation and appointing themselves as Joint Liquidators.
21. According to Tuffsteel, the proposed liquidation fundamentally alters the status of the Company and directly affects the rights and interests of all creditors, particularly unsecured creditors whose claims rank behind those of secured creditors. It contends that unless adequate measures are taken to preserve the Company's assets and ensure transparency throughout the insolvency process, unsecured creditors face a substantial risk of recovering only a fraction of their debts, if any.
22. The Applicant expresses concern that, in the absence of immediate preservatory orders, the Company's assets may be transferred, alienated, concealed, or otherwise placed beyond the reach of creditors. It complains that it has not been furnished with an updated and comprehensive inventory of the Company's assets and liabilities, nor has it received sufficient information concerning the realization, preservation, or disposal of assets during the period of administration. Consequently, it is unable to accurately assess the Company's financial position, the extent of its asset base, or the prospects of recovery available to unsecured creditors.
23. Tuffsteel further contends that there are reasonable grounds warranting an independent investigation into the affairs of Copia Kenya Limited in order to ascertain the true state of the Company's affairs and determine whether all assets have been properly identified and accounted for. In its view, such an investigation should examine whether there exist transactions capable of challenge under the Insolvency Act, including transactions at an undervalue, preferential transactions, fraudulent dealings, transfers intended to defeat creditors, acts of misfeasance by directors or officers, and instances of wrongful or fraudulent trading. It also seeks an inquiry into whether assets were transferred to related parties, directors, shareholders, or associated entities either before or during the administration period.
24. He maintains that the orders sought are not intended to obstruct the administration or proposed liquidation process, but rather to preserve the value of the insolvent estate and safeguard the interests of creditors. He contends that neither the Company, the Joint Administrators, nor the proposed Joint Liquidators would suffer any prejudice if the orders sought were granted. He accordingly urges the Court to allow the application.
25. The 2nd application is opposed by the Joint Administrators through the Replying Affidavit sworn on 20th July 2026 by Anthony Makenzi Muthusi. He depones that the Joint Administrators were appointed over Copia Kenya Limited on 17th May 2024. That although the administration was initially due to expire on 21st May 2025, they successfully applied for an extension and, by a ruling delivered on 23rd April 2026, the Court extended the administration for a further two months, which extension expired on 23rd June 2026.
26. Muthusi avers that throughout their tenure, the administration was conducted transparently and in strict compliance with the Insolvency Act and the Insolvency Regulations. He states that immediately upon their appointment, the administrators publicized the administration through notices published in the daily newspapers on 25th May 2024 and through Gazette Notice No. 6705 of 28th May 2024, inviting creditors to lodge proofs of debt..
27. He further states that by a letter dated 24th May 2024, the administrators requested all creditors, including Tuffsteel Limited, to provide statements of amounts owing to them. According to him, despite these invitations, Tuffsteel did not furnish the requested information and failed to submit its proof of debt.
28. He depones that after receiving proofs of debt and the Company's Statement of Affairs, and pursuant to Section 566 of the Insolvency Act and Regulation 110 of the Insolvency Regulations, 2016, the administrators prepared and circulated their Proposals and First Report dated 23rd July 2024 to all creditors, including Tuffsteel Limited. He states that their assessment revealed that the Company was asset-deficient and burdened with substantial liabilities. Consequently, they proposed the realization of the Company's assets for purposes of making distributions to creditors.
29. He further explains that because the available assets were insufficient to facilitate any meaningful distribution to unsecured creditors, the administrators considered it unnecessary, pursuant to Section 569(1) of the Insolvency Act, to convene an initial creditors' meeting. Instead, they proposed the establishment of a Creditors' Committee to facilitate consultation and communication with creditors. In that regard, creditors were notified by email dated 23rd August 2024 to nominate their representatives, which they subsequently did.
30. The administrators also contend that creditors were continuously updated throughout the administration process. In particular, they circulated their Second Report dated 28th March 2025 outlining the progress made in achieving the objectives of the administration. Thereafter, they prepared and filed their Final Report dated 12th March 2026, which was also circulated to creditors and relied upon in support of the application dated 17th March 2026 seeking conversion of the administration into liquidation.
31. The administrators therefore maintain that they acted openly and transparently and kept creditors informed of all material developments and transactions during the administration, as required by law. They further contend that the administration has reached its logical conclusion, as the Company can no longer continue as a going concern.
32. Muthusi further states that the concerns raised by Tuffsteel Limited were adequately addressed during the administration process and in the reports circulated to creditors. In any event, he contends that those concerns will be addressed within the liquidation process itself, since, upon the commencement of liquidation, the directors will be required to prepare a Statement of Affairs, creditors will formally lodge and prove their claims, and the liquidators will be required to file the requisite reports before the Court.
33. In response to the Applicant's request for investigations into alleged transactions at an undervalue, preferential payments, fraudulent transfers, misfeasance, wrongful trading, and fraudulent trading, the administrators contend that the statutory powers to investigate and pursue such antecedent transactions arise only upon the commencement of liquidation proceedings and are exercisable by a liquidator under the Insolvency Act.
34. They therefore argue that granting the preservatory and investigative orders sought at this stage would effectively require the Court to assume functions reserved by statute for a liquidator. In their view, the matters raised by Tuffsteel Limited can more appropriately be addressed within the liquidation process and ought not to delay the transition from administration to liquidation.
35. Pursuant to the directions of the Court, both applications were canvassed by way of written submissions. The Applicant/ Administrators filed submissions dated 28th May 2026, while the 2nd Respondent's submissions are dated 2nd July 2026.
Applicant/Administrators' Submissions
36. The Administrators’ began by outlining the procedural background of the matter and identified two issues for determination: whether Copia should be placed into liquidation and whether the Joint Administrators should be appointed as Joint Liquidators.
37. On the first issue, they submitted that the administration process has failed to restore the company to financial viability and that any further delay would prejudice the interests of creditors and shareholders. They argued that the Court has jurisdiction under sections 424, 425 and 427 of the Insolvency Act to grant the orders sought and that the application is properly before the Court both procedurally and substantively. Relying on Re Garnets Mining Co. Ltd [1978] eKLR, they submitted that the decision to grant a liquidation order falls within the Court's broad discretion and that liquidation is the most appropriate outcome in the circumstances.
38. The Applicants contended that although they were appointed with the objective of rescuing the company as a going concern, the company has remained incapable of rehabilitation despite their efforts. Referring to the Administrators' Progress Report dated 12th March 2026 and the Estimated Outcome Statement as at 28th February 2026, they submitted that the company's realizable assets are approximately Kshs. 206,558,544/=, while its liabilities substantially exceed that amount. They argued that these figures demonstrate the company's insolvency and indicate that, even in the most favourable circumstances, only preferential creditors may receive any distribution. Consequently, liquidation represents the best available outcome for creditors and members.
39. The Applicants further submitted that the application was brought in good faith. Relying on Re Ukwala [2019] eKLR, they argued that they acted transparently by notifying creditors of the proposed liquidation and advertising the application. They stated that a creditors' committee meeting was convened on 10th December 2025, during which the proposal to convert the administration into liquidation and to appoint the Administrators as liquidators was discussed. Although some committee members sought additional time to consider the proposal, the deliberations were duly recorded. Following the filing of the application, the Applicants caused it to be advertised through Kenya Gazette Notice No. 6531 of 2026, thereby informing creditors and contributors of their right to oppose the application.
40. Regarding the second issue, the Applicants submitted that section 441 of the Insolvency Act empowers the Court to appoint a former administrator as liquidator upon the making of a liquidation order. They argued that the current Joint Administrators are the most suitable persons for appointment because they have managed the company's affairs since May 2024 and possess extensive knowledge of its assets, liabilities, and operations. They contended that this familiarity would facilitate an efficient and expeditious liquidation process. They further submitted that the administration has substantially achieved its statutory objectives, save for a few matters dependent on external factors, and that appointing different liquidators would unnecessarily delay the process and reverse the progress already made. They therefore urged the Court to appoint the existing Joint Administrators as Joint Liquidators.
41. In conclusion, the Applicants asked the Court to allow the Notice of Motion dated 17th March 2026 in its entirety.
2nd Respondent's Submissions
42. The 2nd Respondent commenced by setting out its background and standing as an unsecured creditor. It submitted that, unlike secured creditors whose recoveries are protected by proprietary security interests, unsecured creditors depend on the minimization of administration costs, the realization of assets at fair market value, the avoidance of transactions that diminish the estate, and the control of professional fees. It argued that any disposal at an undervalue or avoidable reduction of the estate directly prejudices unsecured creditors.
43. The 2nd Respondent identified seven issues for determination, including whether the Administrators had discharged the statutory burden of demonstrating that the objectives of administration had been achieved and that liquidation was in the best interests of creditors; whether sufficient financial and evidential disclosure had been provided to justify conversion to liquidation; whether the disposal of the company's intellectual property, brand assets and transactional data required independent investigation; whether the same insolvency practitioners should be appointed as liquidators; whether the creditors' consultation process was lawfully concluded; whether the relief sought by Tuffsteel Limited was necessary and proportionate; and what orders would best promote transparency, accountability and creditor recoveries.
44. The 2nd Respondent submitted that the Administrators' own reports reveal the existence of unresolved issues and demonstrate that the statutory objectives of administration have not been fully achieved. It argued that the Administrators had failed to discharge the burden required for conversion to liquidation and that there remained a need for independent valuation of asset disposals, scrutiny of related-party transactions, and investigation of transactions allegedly conducted at an undervalue. It further contended that the Administrators had not adequately addressed their obligations concerning antecedent transactions under sections 682 to 684 of the Insolvency Act and that this omission constituted a material evidentiary gap.
45. With respect to the proposed appointment of the Joint Administrators as Joint Liquidators, the 2nd Respondent submitted that such an appointment would be inappropriate in the circumstances. It argued that the liquidators would be required to review and potentially investigate decisions and transactions undertaken during the administration under their own supervision. Even in the absence of actual impropriety, the Respondent contended that this would create a reasonable apprehension of institutional self-review inconsistent with the degree of independence expected by creditors and the Court.
46. Accordingly, the 2nd Respondent urged the Court to dismiss the application for conversion of the administration into liquidation in its current form. Alternatively, it asked the Court to defer determination of the application pending compliance with creditor participation requirements and the provision of independent valuation evidence relating to material asset disposals. It further sought orders directing an independent forensic audit and investigation into the disposal of the company's brand, intellectual property and transactional data and requested that, if liquidation were ordered, the Court appoint an independent insolvency practitioner as liquidator in place of the current Administrators.
Analysis and Determination
47. Having considered the two applications, the affidavits filed by all parties, the documentary evidence annexed thereto and the written submissions on record, the issues arising for determination are;
a) Whether the Joint Administrators have established sufficient basis to warrant the conversion of Copia Kenya Limited (Under Administration) into liquidation.
b) Whether the present joint administrators should be appointed as the joint liquidators of the company.
c) Whether Tuffsteel Limited has established sufficient basis for the orders sought in the Notice of Motion dated 26th May 2026.
Whether the Joint Administrators have established sufficient basis to warrant the conversion of Copia Kenya Limited (Under Administration) into liquidation.
48. The Joint Administrators seek orders that Copia Kenya Limited (Under Administration) be placed under liquidation pursuant to Section 427 of the Insolvency Act, 2015 and other enabling provisions of the law. The issue that falls for determination is therefore whether, having regard to the objectives of administration, the conduct of the administration process, and the material placed before the Court, the statutory threshold for terminating the administration and commencing liquidation has been met.
49. Administration under the Insolvency Act, 2015 is fundamentally a corporate rescue mechanism. Its primary purpose is to afford an insolvent company an opportunity to achieve one or more of the objectives set out under Section 522 of the Act, namely: maintaining the company as a going concern; achieving a better outcome for creditors than would likely be achieved through immediate liquidation; or realising property for the benefit of secured or preferential creditors. It is therefore clear that liquidation is not the principal objective of administration. Rather, administration is intended to provide a temporary protective framework within which the viability of the company may be assessed and, where possible, preserved through restructuring, refinancing, investment, or other rescue interventions. It is only where those objectives become unattainable that the law contemplates an exit from administration.
50. The Insolvency Act provides various mechanisms through which an administration may come to an end. Of particular relevance to the present application is Section 427(1), which provides:
427. Powers of Court on hearing of liquidation application
(1)On the hearing of a liquidation application, the Court may make such of the following orders as it considers appropriate—
(a)an order dismissing the application;
(b)an order adjourning the hearing, conditionally or unconditionally;
(c)an interim liquidation order; or
(d)any other order that, in its opinion, the circumstances of the case require.
51. Section 427 must be read together with the overarching objectives of the Insolvency Act as set out in Section 3, which, in relation to insolvent companies whose financial position is capable of redemption, seeks:
“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”
52. It follows that the Court's jurisdiction under Section 427 is not merely procedural but supervisory in nature. In exercising that jurisdiction, the Court must remain guided by the statutory objectives of administration and the interests of creditors as a whole. In my view, an application such as the present one is not determined solely by whether the company is insolvent. Rather, the critical inquiry is whether the administration has exhausted the statutory purpose for which it was initiated. The Court must therefore determine whether the administrators have demonstrated that the object
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2. Through the application dated 17th March 2026, Copia Kenya Limited (Under Administration) seeks orders that the Company be liquidated by the Court pursuant to the provisions of the Insolvency Act, No. 18 of 2015, and that Julius Mumo Ngonga and Anthony Makenzi Muthusi of KPMG Advisory Services Limited be appointed as Joint Liquidators.
3. The application is based on the grounds set out on its face and is supported by the affidavit sworn by Anthony Makenzi Muthusi, a Joint Administrator of the Company. He depones that Copia Kenya Limited was placed under administration on 21st May 2024, and that he and Julius Mumo Ngonga were appointed as Joint Administrators over the whole of the Company's property and business. He states that, pursuant to Section 593 of the Insolvency Act, the administration was due to lapse on 21st May 2025. However, before the expiry of the administration period, the Joint Administrators successfully applied for an extension of six months, which was subsequently extended to 16th April 2026.
4. The Administrator avers that significant progress has been made in the realization of the Company's assets and that only a few outstanding matters remain, the timelines for whose completion are uncertain. He further states that during a Creditors' Committee meeting held on 10th December 2025, the Joint Administrators proposed that the administration be converted into liquidation and that they be appointed as Joint Liquidators to ensure continuity. According to him, members of the Committee requested additional time to consider the proposal, and the majority have yet to communicate their position. He contends that despite substantial asset realizations, the Company's liabilities continue to exceed its assets. It is therefore his position that the administration process has reached its logical conclusion, as the Company can no longer be sustained as a going concern and should consequently be placed into liquidation.
5. The application is opposed by Tuffsteel Limited through the Replying Affidavit sworn on 26th May 2026 by its Managing Director, Dev Mukund Patel. He depones that Tuffsteel became an unsecured creditor of the Company through various commercial transactions in the ordinary course of business involving the supply of goods and services.
6. Tuffsteel contends that liquidation, if commenced without adequate safeguards, transparency, investigations, and preservatory measures, would occasion substantial prejudice to unsecured creditors. It argues that, under the insolvency framework, secured creditors rank ahead of unsecured creditors in the distribution of assets, thereby exposing unsecured creditors to the risk of only partial recovery or complete non-recovery of their claims. According to Tuffsteel, liquidation would therefore materially affect both its ranking and prospects of recovery.
7. Acknowledging the statutory roles of administration and liquidation, Tuffsteel maintains that insolvency practitioners are under a duty to uphold the principles of transparency, accountability, fairness, and the protection of creditors' interests. Relying on Section 560 of the Insolvency Act, it asserts that administrators owe fiduciary duties to act in the interests of creditors as a whole and to avoid conduct that may prejudice any class of creditors.
8. Tuffsteel therefore submits that before any liquidation order is granted, there should be full disclosure and accountability regarding the Company's assets and liabilities, the asset realization process undertaken during administration, any disposals or transfers of assets, the Company's financial records and books of account, the conduct of both the directors and administrators, and the extent of recoveries realized or anticipated for the benefit of creditors.
9. It further expresses concern that, absent preservatory and investigative orders, there is a real risk of dissipation, concealment, transfer, wastage, or improper disposal of the Company's assets. Consequently, it urges the Court to exercise close supervisory oversight over the proposed transition from administration to liquidation.
10. Tuffsteel also objects to the proposed appointment of the current Joint Administrators as Joint Liquidators. It contends that such an appointment raises legitimate concerns regarding accountability, transparency, and the need for independent scrutiny of the administration process. In its view, an independent review of the conduct, decisions, and dealings undertaken during administration should precede any appointment of the same administrators as liquidators.
11. Accordingly, Tuffsteel indicates that it will seek various preservatory and investigative orders, including orders restraining the disposal, transfer, alienation, or dissipation of the Company's assets pending a full accounting and verification process; orders compelling the production and preservation of the Company's books, records, financial statements, bank records, asset registers, and other relevant documentation; orders directing a forensic audit or independent review of the Company's financial affairs, transactions, and management both before and during administration; and orders safeguarding its participation as an unsecured creditor throughout the insolvency proceedings.
12. Tuffsteel further states that it has lodged a formal Proof of Debt together with supporting documentation, for purposes of substantiating its claim in the insolvency process. It therefore urges the Court to impose strict conditions, oversight measures, and appropriate safeguards before granting the orders sought by the Joint Administrators.
13. The application is equally opposed by the 2nd Respondent, Jastan Traders Limited through the Replying Affidavit sworn on 20th June 2026 by Wangari Mwangi, its Operations Manager. She states that during March and April 2024, Jastan Traders Limited provided delivery and logistics services to the Company. Although the services were duly rendered and invoices issued, a substantial portion of the debt remains outstanding. She avers that as at 25th May 2024, the amount due and payable stood at Kshs. 793,022/=, exclusive of accruing interest.
14. Jastan Traders Limited opposes the proposed liquidation unless adequate safeguards are implemented to ensure that the interests of unsecured creditors are protected and that their claims are properly accounted for within the insolvency process.
15. Mwangi further points to the Administrators' Third Creditors' Report dated 12th March 2026, which contains an Estimated Outcome Statement as at 28th February 2026. According to that report, the Company's realizable assets are estimated at approximately Kshs. 206,558,544/= while creditors and administration costs are estimated at approximately Kshs. 169,479,677/=. She contends that the administrators' own projections demonstrate that only a limited surplus would remain after satisfaction of realization expenses and before consideration of any preferential claims.
16. She further depones that, notwithstanding those projections, the administrators have not explained why liquidation, which would inevitably attract additional costs such as liquidators' remuneration, statutory advertisement expenses, and professional fees, would yield a better outcome than allowing the administration process to continue. Nor, in her view, have the administrators disclosed whether alternative insolvency mechanisms were considered or provided reasons for rejecting such alternatives.
17. Jastan Traders Limited associates itself with and adopts the objections raised by Tuffsteel Limited and urges the Court to dismiss the administrators' application.
18. The second application before the Court is that of Tuffsteel Limited dated 26th May 2026, in which the Applicant seeks the following orders:
i. Spent.
ii. Spent.
iii. That this Court be pleased to issue preservatory orders securing all movable and immovable assets belonging to Copia Kenya Limited pending the hearing and determination of the liquidation application dated 17th March 2026.
iv. That the Court be pleased to direct the administrators to file and serve, within fourteen (14) days, a comprehensive inventory of the assets and liabilities of Copia Kenya Limited, including a detailed statement of all dispositions, transfers, sales, or encumbrances effected from the commencement of the administration to date.
v. That the Court be pleased to direct the Directors and Administrators of Copia Kenya Limited to produce and preserve all books of account, statutory records, bank statements, financial records, contracts, asset registers, electronic records, and any other documents relating to the affairs of the Company pending the determination of the liquidation proceedings.
vi. That the Court be pleased to order an independent forensic audit and investigation into the affairs of Copia Kenya Limited for the period commencing three (3) years prior to the administration to date, with particular focus on asset transfers and dispositions, related-party transactions, payments made to directors, shareholders and affiliated entities, transactions at an undervalue, preferential payments, and any suspected concealment, diversion, or dissipation of assets.
vii. That the Court be pleased to appoint an independent forensic auditor and/or insolvency practitioner to conduct the investigation and file a report within such period as the Court may direct.
viii. That the Court be pleased to direct the administrators to disclose the complete list of secured and unsecured creditors, the nature and value of all securities held by secured creditors, all claims received and admitted during the administration, and the estimated recoverable asset pool available for distribution.
ix. That the Court be pleased to direct that no distribution of the Company's assets be undertaken pending the filing and consideration of the forensic audit report and further directions of the Court.
x. That the Court be pleased to direct the proposed Joint Liquidators, Julius Mumo Ngonga and Anthony Makenzi Muthusi, if appointed, to preserve all assets and records of Copia Kenya Limited and to file periodic reports before the Court on the status of the liquidation process and asset realization.
xi. That the Applicant be granted leave to participate fully in the liquidation proceedings and to file such further pleadings, objections, and applications as may be necessary for the protection of its interests as a creditor.
xii. Costs of the application.
19. The application is premised on the grounds appearing on its face and is supported by the affidavit sworn by Dev Mukund Patel, the Managing Director of Tuffsteel Limited. He depones that Tuffsteel supplied goods and rendered services to Copia Kenya Limited pursuant to various contractual arrangements, as a result of which the Company became indebted to it in the sum of Kshs. 13,312,133/= together with accrued contractual and statutory interest.
20. He further states that Copia Kenya Limited was placed under administration pursuant to orders of this Court and that the administrators' term was subsequently extended by a ruling of the Court. He states that the administrators have now applied for orders converting the administration into liquidation and appointing themselves as Joint Liquidators.
21. According to Tuffsteel, the proposed liquidation fundamentally alters the status of the Company and directly affects the rights and interests of all creditors, particularly unsecured creditors whose claims rank behind those of secured creditors. It contends that unless adequate measures are taken to preserve the Company's assets and ensure transparency throughout the insolvency process, unsecured creditors face a substantial risk of recovering only a fraction of their debts, if any.
22. The Applicant expresses concern that, in the absence of immediate preservatory orders, the Company's assets may be transferred, alienated, concealed, or otherwise placed beyond the reach of creditors. It complains that it has not been furnished with an updated and comprehensive inventory of the Company's assets and liabilities, nor has it received sufficient information concerning the realization, preservation, or disposal of assets during the period of administration. Consequently, it is unable to accurately assess the Company's financial position, the extent of its asset base, or the prospects of recovery available to unsecured creditors.
23. Tuffsteel further contends that there are reasonable grounds warranting an independent investigation into the affairs of Copia Kenya Limited in order to ascertain the true state of the Company's affairs and determine whether all assets have been properly identified and accounted for. In its view, such an investigation should examine whether there exist transactions capable of challenge under the Insolvency Act, including transactions at an undervalue, preferential transactions, fraudulent dealings, transfers intended to defeat creditors, acts of misfeasance by directors or officers, and instances of wrongful or fraudulent trading. It also seeks an inquiry into whether assets were transferred to related parties, directors, shareholders, or associated entities either before or during the administration period.
24. He maintains that the orders sought are not intended to obstruct the administration or proposed liquidation process, but rather to preserve the value of the insolvent estate and safeguard the interests of creditors. He contends that neither the Company, the Joint Administrators, nor the proposed Joint Liquidators would suffer any prejudice if the orders sought were granted. He accordingly urges the Court to allow the application.
25. The 2nd application is opposed by the Joint Administrators through the Replying Affidavit sworn on 20th July 2026 by Anthony Makenzi Muthusi. He depones that the Joint Administrators were appointed over Copia Kenya Limited on 17th May 2024. That although the administration was initially due to expire on 21st May 2025, they successfully applied for an extension and, by a ruling delivered on 23rd April 2026, the Court extended the administration for a further two months, which extension expired on 23rd June 2026.
26. Muthusi avers that throughout their tenure, the administration was conducted transparently and in strict compliance with the Insolvency Act and the Insolvency Regulations. He states that immediately upon their appointment, the administrators publicized the administration through notices published in the daily newspapers on 25th May 2024 and through Gazette Notice No. 6705 of 28th May 2024, inviting creditors to lodge proofs of debt..
27. He further states that by a letter dated 24th May 2024, the administrators requested all creditors, including Tuffsteel Limited, to provide statements of amounts owing to them. According to him, despite these invitations, Tuffsteel did not furnish the requested information and failed to submit its proof of debt.
28. He depones that after receiving proofs of debt and the Company's Statement of Affairs, and pursuant to Section 566 of the Insolvency Act and Regulation 110 of the Insolvency Regulations, 2016, the administrators prepared and circulated their Proposals and First Report dated 23rd July 2024 to all creditors, including Tuffsteel Limited. He states that their assessment revealed that the Company was asset-deficient and burdened with substantial liabilities. Consequently, they proposed the realization of the Company's assets for purposes of making distributions to creditors.
29. He further explains that because the available assets were insufficient to facilitate any meaningful distribution to unsecured creditors, the administrators considered it unnecessary, pursuant to Section 569(1) of the Insolvency Act, to convene an initial creditors' meeting. Instead, they proposed the establishment of a Creditors' Committee to facilitate consultation and communication with creditors. In that regard, creditors were notified by email dated 23rd August 2024 to nominate their representatives, which they subsequently did.
30. The administrators also contend that creditors were continuously updated throughout the administration process. In particular, they circulated their Second Report dated 28th March 2025 outlining the progress made in achieving the objectives of the administration. Thereafter, they prepared and filed their Final Report dated 12th March 2026, which was also circulated to creditors and relied upon in support of the application dated 17th March 2026 seeking conversion of the administration into liquidation.
31. The administrators therefore maintain that they acted openly and transparently and kept creditors informed of all material developments and transactions during the administration, as required by law. They further contend that the administration has reached its logical conclusion, as the Company can no longer continue as a going concern.
32. Muthusi further states that the concerns raised by Tuffsteel Limited were adequately addressed during the administration process and in the reports circulated to creditors. In any event, he contends that those concerns will be addressed within the liquidation process itself, since, upon the commencement of liquidation, the directors will be required to prepare a Statement of Affairs, creditors will formally lodge and prove their claims, and the liquidators will be required to file the requisite reports before the Court.
33. In response to the Applicant's request for investigations into alleged transactions at an undervalue, preferential payments, fraudulent transfers, misfeasance, wrongful trading, and fraudulent trading, the administrators contend that the statutory powers to investigate and pursue such antecedent transactions arise only upon the commencement of liquidation proceedings and are exercisable by a liquidator under the Insolvency Act.
34. They therefore argue that granting the preservatory and investigative orders sought at this stage would effectively require the Court to assume functions reserved by statute for a liquidator. In their view, the matters raised by Tuffsteel Limited can more appropriately be addressed within the liquidation process and ought not to delay the transition from administration to liquidation.
35. Pursuant to the directions of the Court, both applications were canvassed by way of written submissions. The Applicant/ Administrators filed submissions dated 28th May 2026, while the 2nd Respondent's submissions are dated 2nd July 2026.
Applicant/Administrators' Submissions
36. The Administrators’ began by outlining the procedural background of the matter and identified two issues for determination: whether Copia should be placed into liquidation and whether the Joint Administrators should be appointed as Joint Liquidators.
37. On the first issue, they submitted that the administration process has failed to restore the company to financial viability and that any further delay would prejudice the interests of creditors and shareholders. They argued that the Court has jurisdiction under sections 424, 425 and 427 of the Insolvency Act to grant the orders sought and that the application is properly before the Court both procedurally and substantively. Relying on Re Garnets Mining Co. Ltd [1978] eKLR, they submitted that the decision to grant a liquidation order falls within the Court's broad discretion and that liquidation is the most appropriate outcome in the circumstances.
38. The Applicants contended that although they were appointed with the objective of rescuing the company as a going concern, the company has remained incapable of rehabilitation despite their efforts. Referring to the Administrators' Progress Report dated 12th March 2026 and the Estimated Outcome Statement as at 28th February 2026, they submitted that the company's realizable assets are approximately Kshs. 206,558,544/=, while its liabilities substantially exceed that amount. They argued that these figures demonstrate the company's insolvency and indicate that, even in the most favourable circumstances, only preferential creditors may receive any distribution. Consequently, liquidation represents the best available outcome for creditors and members.
39. The Applicants further submitted that the application was brought in good faith. Relying on Re Ukwala [2019] eKLR, they argued that they acted transparently by notifying creditors of the proposed liquidation and advertising the application. They stated that a creditors' committee meeting was convened on 10th December 2025, during which the proposal to convert the administration into liquidation and to appoint the Administrators as liquidators was discussed. Although some committee members sought additional time to consider the proposal, the deliberations were duly recorded. Following the filing of the application, the Applicants caused it to be advertised through Kenya Gazette Notice No. 6531 of 2026, thereby informing creditors and contributors of their right to oppose the application.
40. Regarding the second issue, the Applicants submitted that section 441 of the Insolvency Act empowers the Court to appoint a former administrator as liquidator upon the making of a liquidation order. They argued that the current Joint Administrators are the most suitable persons for appointment because they have managed the company's affairs since May 2024 and possess extensive knowledge of its assets, liabilities, and operations. They contended that this familiarity would facilitate an efficient and expeditious liquidation process. They further submitted that the administration has substantially achieved its statutory objectives, save for a few matters dependent on external factors, and that appointing different liquidators would unnecessarily delay the process and reverse the progress already made. They therefore urged the Court to appoint the existing Joint Administrators as Joint Liquidators.
41. In conclusion, the Applicants asked the Court to allow the Notice of Motion dated 17th March 2026 in its entirety.
2nd Respondent's Submissions
42. The 2nd Respondent commenced by setting out its background and standing as an unsecured creditor. It submitted that, unlike secured creditors whose recoveries are protected by proprietary security interests, unsecured creditors depend on the minimization of administration costs, the realization of assets at fair market value, the avoidance of transactions that diminish the estate, and the control of professional fees. It argued that any disposal at an undervalue or avoidable reduction of the estate directly prejudices unsecured creditors.
43. The 2nd Respondent identified seven issues for determination, including whether the Administrators had discharged the statutory burden of demonstrating that the objectives of administration had been achieved and that liquidation was in the best interests of creditors; whether sufficient financial and evidential disclosure had been provided to justify conversion to liquidation; whether the disposal of the company's intellectual property, brand assets and transactional data required independent investigation; whether the same insolvency practitioners should be appointed as liquidators; whether the creditors' consultation process was lawfully concluded; whether the relief sought by Tuffsteel Limited was necessary and proportionate; and what orders would best promote transparency, accountability and creditor recoveries.
44. The 2nd Respondent submitted that the Administrators' own reports reveal the existence of unresolved issues and demonstrate that the statutory objectives of administration have not been fully achieved. It argued that the Administrators had failed to discharge the burden required for conversion to liquidation and that there remained a need for independent valuation of asset disposals, scrutiny of related-party transactions, and investigation of transactions allegedly conducted at an undervalue. It further contended that the Administrators had not adequately addressed their obligations concerning antecedent transactions under sections 682 to 684 of the Insolvency Act and that this omission constituted a material evidentiary gap.
45. With respect to the proposed appointment of the Joint Administrators as Joint Liquidators, the 2nd Respondent submitted that such an appointment would be inappropriate in the circumstances. It argued that the liquidators would be required to review and potentially investigate decisions and transactions undertaken during the administration under their own supervision. Even in the absence of actual impropriety, the Respondent contended that this would create a reasonable apprehension of institutional self-review inconsistent with the degree of independence expected by creditors and the Court.
46. Accordingly, the 2nd Respondent urged the Court to dismiss the application for conversion of the administration into liquidation in its current form. Alternatively, it asked the Court to defer determination of the application pending compliance with creditor participation requirements and the provision of independent valuation evidence relating to material asset disposals. It further sought orders directing an independent forensic audit and investigation into the disposal of the company's brand, intellectual property and transactional data and requested that, if liquidation were ordered, the Court appoint an independent insolvency practitioner as liquidator in place of the current Administrators.
Analysis and Determination
47. Having considered the two applications, the affidavits filed by all parties, the documentary evidence annexed thereto and the written submissions on record, the issues arising for determination are;
a) Whether the Joint Administrators have established sufficient basis to warrant the conversion of Copia Kenya Limited (Under Administration) into liquidation.
b) Whether the present joint administrators should be appointed as the joint liquidators of the company.
c) Whether Tuffsteel Limited has established sufficient basis for the orders sought in the Notice of Motion dated 26th May 2026.
Whether the Joint Administrators have established sufficient basis to warrant the conversion of Copia Kenya Limited (Under Administration) into liquidation.
48. The Joint Administrators seek orders that Copia Kenya Limited (Under Administration) be placed under liquidation pursuant to Section 427 of the Insolvency Act, 2015 and other enabling provisions of the law. The issue that falls for determination is therefore whether, having regard to the objectives of administration, the conduct of the administration process, and the material placed before the Court, the statutory threshold for terminating the administration and commencing liquidation has been met.
49. Administration under the Insolvency Act, 2015 is fundamentally a corporate rescue mechanism. Its primary purpose is to afford an insolvent company an opportunity to achieve one or more of the objectives set out under Section 522 of the Act, namely: maintaining the company as a going concern; achieving a better outcome for creditors than would likely be achieved through immediate liquidation; or realising property for the benefit of secured or preferential creditors. It is therefore clear that liquidation is not the principal objective of administration. Rather, administration is intended to provide a temporary protective framework within which the viability of the company may be assessed and, where possible, preserved through restructuring, refinancing, investment, or other rescue interventions. It is only where those objectives become unattainable that the law contemplates an exit from administration.
50. The Insolvency Act provides various mechanisms through which an administration may come to an end. Of particular relevance to the present application is Section 427(1), which provides:
427. Powers of Court on hearing of liquidation application
(1)On the hearing of a liquidation application, the Court may make such of the following orders as it considers appropriate—
(a)an order dismissing the application;
(b)an order adjourning the hearing, conditionally or unconditionally;
(c)an interim liquidation order; or
(d)any other order that, in its opinion, the circumstances of the case require.
51. Section 427 must be read together with the overarching objectives of the Insolvency Act as set out in Section 3, which, in relation to insolvent companies whose financial position is capable of redemption, seeks:
“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”
52. It follows that the Court's jurisdiction under Section 427 is not merely procedural but supervisory in nature. In exercising that jurisdiction, the Court must remain guided by the statutory objectives of administration and the interests of creditors as a whole. In my view, an application such as the present one is not determined solely by whether the company is insolvent. Rather, the critical inquiry is whether the administration has exhausted the statutory purpose for which it was initiated. The Court must therefore determine whether the administrators have demonstrated that the object
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