1. The Petitioner (“the Company”) was incorporated on 5th September 2003 with a share capital of Kshs. 100,000.00 divided into 1,000 ordinary shares of Kshs. 100.00. Its main business was to manufacture, produce and sell plastic and related goods. It filed the petition dated 24th April 2018 following a resolution by its board of directors on 9th March 2018 to wind it up on the ground that it had ceased operations when its plant and assets were taken over by Guaranty Trust Bank (Kenya) Limited and that it is insolvent and unable to pay its debts.
2. The petition was advertised in the Standard Newspaper on 16th October 2016. Proto Energy Limited (formerly My Gas Limited) filed its affidavit sworn on 12th November 2019 by its Legal Officer, Maureen Wanjiru Gitau, supporting the petition on account of a debt of Kshs. 3,944,744.60 in respect of bulk Liquefied Petroleum Gas ordered and delivered to the Company. Prime Bank Limited filed its notice to appear at the hearing of the petition dated 18th February 2019 claiming the it was owed Kshs. 3,498,890.66. Snetor Chimie also filed a Notice of Intention to Appear dated 15th February 2019 on account of a debt of USD 382,558.76 which is the subject of HC COMM No. 389 of 2016, Snetor Chemie v Polytanks Limited. Snetor Chimie also filed an application dated 15th February 2019 seeking, inter alia, to strike out the petition.
3. On 22nd October 2019, the court recorded a consent on the following terms:
(1) THAT the petitioner/Debtor ascertains and admits its indebtedness towards Snetor Chimie in the sum of USD 382,558.76.
(2) THAT the Petitioner/Debtor ascertains and admits its indebtedness towards Proto Energy Limited in the sum of Kshs. 3,944,084.60.
(3) THAT leave be and is hereby granted to the Petitioner/Debtor to furnish he court with the account of inventory and proceeds of sale of machinery held by Prime Bank Limited, within 21 days of today’s date and the same be furnished to the court by means of a supplementary affidavit.
(4) THAT the parties to appear before the court for further orders thereafter.
(5) THAT for mention on 5th December 2019.
4. On 9th November 2020, the court dismissed the petition for want of prosecution and non-attendance by the petitioner. This caused the Company to file a Notice of Motion dated 17th March 2021 seeking to set aside the dismissal order. I heard the application and allowed it by the ruling dated 11th November 2021 on the following terms:
(a)The dismissal order made on 9th November 2020 be and is hereby set aside.
(b) The Directors of the Petitioner are hereby directed to file in this court a list of all the creditors, assets, liabilities and annual accounts since 2018 to date within 14 days from the date hereof.
5. In due course, the directors of the Company filed an affidavit sworn on 16th May 2022 by its director Derrick Correa, setting out the documents the court had directed. He was also cross-examined by counsel for the creditors.
6. I have considered the facts of the petition alongside what the Creditor’s now assert. They contend that the petition is fraudulent scheme by the Company to avoid the unsecured creditors. They also complain that the Company has been preferring other creditors over them. On the basis of the material before the court, I cannot say that petition has been filed fraudulently bearing in mind the high burden of proof required to prove fraud.
7. What is clear though is that Guaranty Trust Bank (Kenya) Limited (‘’GTB’’) held all the Company’s assets and property by way of a Debenture dated 24th September 2015 securing banking facilities advanced to the Company. This is as evidenced by the Letter of Offer dated 17th November 2014 sanctioning a Kshs. 120,000,000.00 overdraft, Letter of Credit Import Finance facility of USD 1,200,000.00, Letter of Guarantee/Bid Bond of Kshs. 10,000,000.00, a Revolving Asset Finance facility of Kshs. 20,000,000.00 and a term loan of Kshs. 108,000,000.00. Because of the default, GTB exercised its rights under the Debenture and sold the business undertaking to a third party on 9th March 2018 in order to recover its debt.
8. According to Mr Correa, once the business was sold to recover the debt due to GTB, the secured creditor, it lost control of it computers and records. It was thus unable to produce all the books of account. However, in his deposition, he demonstrates that the Company owes Kshs. 55,243,494.14 to unsecured creditors as against debts due to it and other receivables amounting to Kshs. 1,632,212,31. It has no other assets to settle the debts of its creditors. Moreover, the debt admittedly owed to the two creditors participating in these proceedings is yet to be settled.
9. From totality of evidence, I find and hold that the Company is insolvent and unable to pay its debts. Its liabilities clearly outweigh its assets and there is no evidence that it is trading or carrying on any business. I am of the view that once the Liquidator takes office, it will be in a position to investigate whether there have been any preferences and move the court appropriately.
10. I therefore allow the petition and make the following orders:
(1) A Liquidation Order be and is hereby issued against the Company, Polytanks Limited.
(2) The Official Liquidator is appointed as the provisional liquidator. Within a period of 3 months, the Creditors may furnish the court with the name of any authorized and qualified liquidator to be appointed as Liquidator in place of the Official Receiver.
(3) The costs of the petition shall be costs in the liquidation.
DATED and DELIVERED at NAIROBI this 12th day of APRIL 2023.
D. S. MAJANJA
JUDGE
2. The petition was advertised in the Standard Newspaper on 16th October 2016. Proto Energy Limited (formerly My Gas Limited) filed its affidavit sworn on 12th November 2019 by its Legal Officer, Maureen Wanjiru Gitau, supporting the petition on account of a debt of Kshs. 3,944,744.60 in respect of bulk Liquefied Petroleum Gas ordered and delivered to the Company. Prime Bank Limited filed its notice to appear at the hearing of the petition dated 18th February 2019 claiming the it was owed Kshs. 3,498,890.66. Snetor Chimie also filed a Notice of Intention to Appear dated 15th February 2019 on account of a debt of USD 382,558.76 which is the subject of HC COMM No. 389 of 2016, Snetor Chemie v Polytanks Limited. Snetor Chimie also filed an application dated 15th February 2019 seeking, inter alia, to strike out the petition.
3. On 22nd October 2019, the court recorded a consent on the following terms:
(1) THAT the petitioner/Debtor ascertains and admits its indebtedness towards Snetor Chimie in the sum of USD 382,558.76.
(2) THAT the Petitioner/Debtor ascertains and admits its indebtedness towards Proto Energy Limited in the sum of Kshs. 3,944,084.60.
(3) THAT leave be and is hereby granted to the Petitioner/Debtor to furnish he court with the account of inventory and proceeds of sale of machinery held by Prime Bank Limited, within 21 days of today’s date and the same be furnished to the court by means of a supplementary affidavit.
(4) THAT the parties to appear before the court for further orders thereafter.
(5) THAT for mention on 5th December 2019.
4. On 9th November 2020, the court dismissed the petition for want of prosecution and non-attendance by the petitioner. This caused the Company to file a Notice of Motion dated 17th March 2021 seeking to set aside the dismissal order. I heard the application and allowed it by the ruling dated 11th November 2021 on the following terms:
(a)The dismissal order made on 9th November 2020 be and is hereby set aside.
(b) The Directors of the Petitioner are hereby directed to file in this court a list of all the creditors, assets, liabilities and annual accounts since 2018 to date within 14 days from the date hereof.
5. In due course, the directors of the Company filed an affidavit sworn on 16th May 2022 by its director Derrick Correa, setting out the documents the court had directed. He was also cross-examined by counsel for the creditors.
6. I have considered the facts of the petition alongside what the Creditor’s now assert. They contend that the petition is fraudulent scheme by the Company to avoid the unsecured creditors. They also complain that the Company has been preferring other creditors over them. On the basis of the material before the court, I cannot say that petition has been filed fraudulently bearing in mind the high burden of proof required to prove fraud.
7. What is clear though is that Guaranty Trust Bank (Kenya) Limited (‘’GTB’’) held all the Company’s assets and property by way of a Debenture dated 24th September 2015 securing banking facilities advanced to the Company. This is as evidenced by the Letter of Offer dated 17th November 2014 sanctioning a Kshs. 120,000,000.00 overdraft, Letter of Credit Import Finance facility of USD 1,200,000.00, Letter of Guarantee/Bid Bond of Kshs. 10,000,000.00, a Revolving Asset Finance facility of Kshs. 20,000,000.00 and a term loan of Kshs. 108,000,000.00. Because of the default, GTB exercised its rights under the Debenture and sold the business undertaking to a third party on 9th March 2018 in order to recover its debt.
8. According to Mr Correa, once the business was sold to recover the debt due to GTB, the secured creditor, it lost control of it computers and records. It was thus unable to produce all the books of account. However, in his deposition, he demonstrates that the Company owes Kshs. 55,243,494.14 to unsecured creditors as against debts due to it and other receivables amounting to Kshs. 1,632,212,31. It has no other assets to settle the debts of its creditors. Moreover, the debt admittedly owed to the two creditors participating in these proceedings is yet to be settled.
9. From totality of evidence, I find and hold that the Company is insolvent and unable to pay its debts. Its liabilities clearly outweigh its assets and there is no evidence that it is trading or carrying on any business. I am of the view that once the Liquidator takes office, it will be in a position to investigate whether there have been any preferences and move the court appropriately.
10. I therefore allow the petition and make the following orders:
(1) A Liquidation Order be and is hereby issued against the Company, Polytanks Limited.
(2) The Official Liquidator is appointed as the provisional liquidator. Within a period of 3 months, the Creditors may furnish the court with the name of any authorized and qualified liquidator to be appointed as Liquidator in place of the Official Receiver.
(3) The costs of the petition shall be costs in the liquidation.
DATED and DELIVERED at NAIROBI this 12th day of APRIL 2023.
D. S. MAJANJA
JUDGE