'
1. I have considered the Liquidation Petition dated 19th March, 2024, together with the affidavit sworn in support on even date. The Petition is brought pursuant to Section 425 of the Insolvency Act, No. 18 of 2015. The Petition seeks orders for the liquidation of Braced Contractors Limited on the grounds that it is insolvent and unable to pay its debts, and that it is just and equitable that it be liquidated. I note the same is unopposed.
2. Despite the fact that the Petition was undefended, the Petitioner still had the duty to prove that the Petition be allowed. In Intona Ranch Ltd vs. O’Brien (1992) KLR 1 the Court of Appeal expressly stated that: -
“It is settled law that the winding up order is not automatic. There must be proof of insolvency and/or inability on the part of the Company to pay its debts.”
3. The Petitioner submitted that the Company has not generated any revenue since 2017, has accumulated liabilities, and has consistently failed to meet its financial obligations. As at 31st December, 2023, the Company’s liabilities stood at over Kshs. 1.3 Million, with no realizable assets to offset them. The Petitioner produced financial statements annexed as Exhibit AMK-2 and schedule of assets and liabilities annexed as Exhibit AMK-4. The Petitioner submitted that the Company has also sustained cumulative losses of Kshs. 1,363,740.00/=.
4. The applicable law is found at Section 424(1)(e) of the Insolvency Act No. 18 of 2015 (hereinafter referred to as ‘the Insolvency Act’) the same provides as follows: -
(1) A company may be liquidated by the Court if –
a. ………………….
b. …………………..
c. …………………..
d. The company is unable to pay its debts;
5. Section 384 of the Insolvency Act provides for the circumstances in which a company may be deemed unable to pay its debts. The provision states as follows:-
(1) For purposes of this Part, a company is unable to pay its debts-
a) if a Creditor (by assignment of otherwise) to whom the company is indebted for hundred thousand shillings or more has served on the company, by leaving it at the company’s registered office, a written demand requiring the company to pay the debt and the company has for twenty-one days afterwards failed to pay the debt or to secure or compound for it to the reasonable satisfaction of the Creditor.
b) if execution or other process issued on a judgments, decree or order of any court in favour of a Creditor of the company is returned unsatisfied in whole or in part; or
c) If it is proved to the satisfaction of the Court that the company is unable to pay its debts as they fall due.
(2) A company is also unable to pay its debts for the purposes of this Part if it is proved to the satisfaction of the Court that the value of the company’s assets is less than the amount of its liabilities (including its contingent and prospective liabilities).
(3) The insolvency regulations may increase or reduce the amount specified in subsection (1) (a).
6. As regards, Section 384(1)(b), the Petitioner submitted that execution of various decrees against the Company have been returned unsatisfied. The decree in Machakos CMCC No. E138 of 2020 remains wholly unpaid despite lawful demand. Creditors have gone as far as moving the court to pierce the corporate veil (the same is found as Exhibit AMK-8).
7. In terms of Section 384(1)(c), Counsel submitted that the Company has ceased trading since 2017, generates no income, and has consistently failed to meet its debts as they fall due.
8. Moving to Section 424(1) of the Insolvency Act, 2015, the same states:-
A company may be liquidated by the court if—
(a) the company has by special resolution resolved that the company be liquidated by the court;
(e) the company is unable to pay its debits; }
(9) the court is of the opinion that it is just and equitable that the company should be liquidated. (Emphasis mine)
9. The Petitioner submitted that the Company has passed a valid resolution to be liquidated by the Court. Annexure AMK-5 is a resolution dated 15th March 2024, by which the sole surviving director resolved that the Company file a Petition for liquidation. This invokes Section 424(1)(a) directly. Secondly, as already established, the Company is insolvent within the meaning of Section 384. This brings it squarely under Section 424(1)(e).
10. Finally, the Petitioner pointed out that most importantly, liquidation is warranted on the “just and equitable” ground under Section 424(1)(g). This ground is broader and empowers the Court to consider the wider circumstances of the Company, including fairness, futility of continued existence, and protection of Creditors.
11. Based on the above, I am persuaded that the facts of this case justify liquidation on just and equitable grounds. I say so, because the facts show that the Company ceased trading in 2017, following the demise of its Managing Director, Ms. Janet Wangui Mararo, and has since remained dormant with no income, no employees, and no operations. Over time, the Company has accumulated liabilities exceeding Kshs. 1.3 Million against zero realizable assets as shown by Exhibit AMK-4. Its continued existence serves no useful commercial purpose and only prejudices Creditors who remain unpaid.
12. Kenyan jurisprudence is clear on this point. In Re Ukwala Supermarket Limited [2019] eKLR, the Court stated:-
“In any Petition brought for the purposes of liquidating a Company, the Court has the discretion once the Petitioner has established the right to bring a Petition and established the grounds alleged, to make or deny the order sought. … The Court also has an inherent jurisdiction to strike out any Petition which is bound to fail or is an abuse of the process of the Court.” (Paragraph 2)
13. Further, the Court recognised that directors’ duties shift once insolvency is apparent: “It is a long-established principle of Company law that Directors must act in the best interests of their Company, but once the Company approaches insolvency, their first duty must be to the Creditors.” (Paragraph. 10)
14. As Ringera J. observed in Kenya Power & Lighting Co. Ltd v National Cereals & Produce Board (2002) 1 KLR 652, liquidation is akin to “passing a death sentence on an individual.” Yet, where a company is no more than an empty shell, the Court must not shy away from making such an order to protect Creditors and maintain fairness in commerce.
15. Finally, I note that the Petition was advertised on 18th March, 2025. An affidavit of service is sworn on 19th March, 2025, in compliance with the insolvency regulations. No Creditor has to date sought to join the Petition and there is no response to the Petition at present. The notice of the Petition was further published in the official gazette on 7th November, 2025.
16. Further, the Official Receiver issued a certificate of compliance on 19th March, 2024, and the same is available in the court file.
17. I further note that the gazette notice states that the hearing of the Petition is scheduled for 26th November, 2025, being the present date.
18. In the foregoing, I am satisfied that the Petitioner has met the applicable threshold to warrant the orders sought and has complied with the requirements set out under the Insolvency Act. The Court hereby orders:-
a) A declaration is made that Braced Contractors Limited is insolvent and unable to pay its debts within the meaning of Section 384 of the Insolvency Act, 2015.
b) An order is issued that the said company be liquidated by the Court under Section 425 of the Insolvency Act, 2015.
c) An order is issued that the Official Receiver be appointed as the liquidator of the company.
d) Costs of the Petition shall be paid out of the assets of the Company.
e) The file is marked as closed.
Dated and delivered virtually via Microsoft Teams this 26 day of November, 2025
ALEEM VISRAM, FCIArb
JUDGE
In the presence of;
Court Assistant: Lispa
………………..……………...................................................................for Petitioner
……………………………………….............................................…for Respondent
'
1. I have considered the Liquidation Petition dated 19th March, 2024, together with the affidavit sworn in support on even date. The Petition is brought pursuant to Section 425 of the Insolvency Act, No. 18 of 2015. The Petition seeks orders for the liquidation of Braced Contractors Limited on the grounds that it is insolvent and unable to pay its debts, and that it is just and equitable that it be liquidated. I note the same is unopposed.
2. Despite the fact that the Petition was undefended, the Petitioner still had the duty to prove that the Petition be allowed. In Intona Ranch Ltd vs. O’Brien (1992) KLR 1 the Court of Appeal expressly stated that: -
“It is settled law that the winding up order is not automatic. There must be proof of insolvency and/or inability on the part of the Company to pay its debts.”
3. The Petitioner submitted that the Company has not generated any revenue since 2017, has accumulated liabilities, and has consistently failed to meet its financial obligations. As at 31st December, 2023, the Company’s liabilities stood at over Kshs. 1.3 Million, with no realizable assets to offset them. The Petitioner produced financial statements annexed as Exhibit AMK-2 and schedule of assets and liabilities annexed as Exhibit AMK-4. The Petitioner submitted that the Company has also sustained cumulative losses of Kshs. 1,363,740.00/=.
4. The applicable law is found at Section 424(1)(e) of the Insolvency Act No. 18 of 2015 (hereinafter referred to as ‘the Insolvency Act’) the same provides as follows: -
(1) A company may be liquidated by the Court if –
a. ………………….
b. …………………..
c. …………………..
d. The company is unable to pay its debts;
5. Section 384 of the Insolvency Act provides for the circumstances in which a company may be deemed unable to pay its debts. The provision states as follows:-
(1) For purposes of this Part, a company is unable to pay its debts-
a) if a Creditor (by assignment of otherwise) to whom the company is indebted for hundred thousand shillings or more has served on the company, by leaving it at the company’s registered office, a written demand requiring the company to pay the debt and the company has for twenty-one days afterwards failed to pay the debt or to secure or compound for it to the reasonable satisfaction of the Creditor.
b) if execution or other process issued on a judgments, decree or order of any court in favour of a Creditor of the company is returned unsatisfied in whole or in part; or
c) If it is proved to the satisfaction of the Court that the company is unable to pay its debts as they fall due.
(2) A company is also unable to pay its debts for the purposes of this Part if it is proved to the satisfaction of the Court that the value of the company’s assets is less than the amount of its liabilities (including its contingent and prospective liabilities).
(3) The insolvency regulations may increase or reduce the amount specified in subsection (1) (a).
6. As regards, Section 384(1)(b), the Petitioner submitted that execution of various decrees against the Company have been returned unsatisfied. The decree in Machakos CMCC No. E138 of 2020 remains wholly unpaid despite lawful demand. Creditors have gone as far as moving the court to pierce the corporate veil (the same is found as Exhibit AMK-8).
7. In terms of Section 384(1)(c), Counsel submitted that the Company has ceased trading since 2017, generates no income, and has consistently failed to meet its debts as they fall due.
8. Moving to Section 424(1) of the Insolvency Act, 2015, the same states:-
A company may be liquidated by the court if—
(a) the company has by special resolution resolved that the company be liquidated by the court;
(e) the company is unable to pay its debits; }
(9) the court is of the opinion that it is just and equitable that the company should be liquidated. (Emphasis mine)
9. The Petitioner submitted that the Company has passed a valid resolution to be liquidated by the Court. Annexure AMK-5 is a resolution dated 15th March 2024, by which the sole surviving director resolved that the Company file a Petition for liquidation. This invokes Section 424(1)(a) directly. Secondly, as already established, the Company is insolvent within the meaning of Section 384. This brings it squarely under Section 424(1)(e).
10. Finally, the Petitioner pointed out that most importantly, liquidation is warranted on the “just and equitable” ground under Section 424(1)(g). This ground is broader and empowers the Court to consider the wider circumstances of the Company, including fairness, futility of continued existence, and protection of Creditors.
11. Based on the above, I am persuaded that the facts of this case justify liquidation on just and equitable grounds. I say so, because the facts show that the Company ceased trading in 2017, following the demise of its Managing Director, Ms. Janet Wangui Mararo, and has since remained dormant with no income, no employees, and no operations. Over time, the Company has accumulated liabilities exceeding Kshs. 1.3 Million against zero realizable assets as shown by Exhibit AMK-4. Its continued existence serves no useful commercial purpose and only prejudices Creditors who remain unpaid.
12. Kenyan jurisprudence is clear on this point. In Re Ukwala Supermarket Limited [2019] eKLR, the Court stated:-
“In any Petition brought for the purposes of liquidating a Company, the Court has the discretion once the Petitioner has established the right to bring a Petition and established the grounds alleged, to make or deny the order sought. … The Court also has an inherent jurisdiction to strike out any Petition which is bound to fail or is an abuse of the process of the Court.” (Paragraph 2)
13. Further, the Court recognised that directors’ duties shift once insolvency is apparent: “It is a long-established principle of Company law that Directors must act in the best interests of their Company, but once the Company approaches insolvency, their first duty must be to the Creditors.” (Paragraph. 10)
14. As Ringera J. observed in Kenya Power & Lighting Co. Ltd v National Cereals & Produce Board (2002) 1 KLR 652, liquidation is akin to “passing a death sentence on an individual.” Yet, where a company is no more than an empty shell, the Court must not shy away from making such an order to protect Creditors and maintain fairness in commerce.
15. Finally, I note that the Petition was advertised on 18th March, 2025. An affidavit of service is sworn on 19th March, 2025, in compliance with the insolvency regulations. No Creditor has to date sought to join the Petition and there is no response to the Petition at present. The notice of the Petition was further published in the official gazette on 7th November, 2025.
16. Further, the Official Receiver issued a certificate of compliance on 19th March, 2024, and the same is available in the court file.
17. I further note that the gazette notice states that the hearing of the Petition is scheduled for 26th November, 2025, being the present date.
18. In the foregoing, I am satisfied that the Petitioner has met the applicable threshold to warrant the orders sought and has complied with the requirements set out under the Insolvency Act. The Court hereby orders:-
a) A declaration is made that Braced Contractors Limited is insolvent and unable to pay its debts within the meaning of Section 384 of the Insolvency Act, 2015.
b) An order is issued that the said company be liquidated by the Court under Section 425 of the Insolvency Act, 2015.
c) An order is issued that the Official Receiver be appointed as the liquidator of the company.
d) Costs of the Petition shall be paid out of the assets of the Company.
e) The file is marked as closed.
Dated and delivered virtually via Microsoft Teams this 26 day of November, 2025
ALEEM VISRAM, FCIArb
JUDGE
In the presence of;
Court Assistant: Lispa
………………..……………...................................................................for Petitioner
……………………………………….............................................…for Respondent
'