Background and Introduction
1. Before the Court for determination is an application dated 24th February 2025, brought under Sections 304, 305, 306, and 307 of the Insolvency Act, 2015. The application was duly served upon the Official Receiver, who has not filed any response or written submissions as directed by the Court.
2. I have considered the application, the grounds on its face, and the supporting affidavit sworn by the applicant, Stephen Habwe Amatalo.
Analysis and Determination
3. Sections 304 to 307 of the Insolvency Act, 2015 establish the legal framework for a debtor to seek an interim order from the Court where the debtor intends to propose a voluntary arrangement with creditors either as a composition in satisfaction of debts or a scheme of arrangement of the debtor’s financial affairs. The provisions also set out the requirements for appointing a supervisor, the effect of an interim order, and the reporting obligations of a provisional supervisor.
4. I am mindful of the provisions of Section 306(5), which states that an interim order issued under Section 304 shall lapse after 14 days from the date of issuance unless extended by the Court. However, given that this application is unopposed and considering the need for meaningful engagement between the debtor and creditors, I am persuaded that an extended period of 60 days is appropriate to allow the Official Receiver adequate time to assess the viability of the proposed arrangement and to determine whether a creditors’ meeting should be convened under Section 307.
5. The schedule of liabilities presented by the applicant, together with the supporting documents, provide prima facie evidence of his insolvency and financial distress. I am satisfied that the applicant meets the threshold for the issuance of an interim order. Importantly, this relief is consistent with one of the central objectives of the Insolvency Act, namely, to establish a fair and orderly process for addressing the financial affairs of individuals in distress, while affording honest debtors a second chance.
6. The law seeks not only to protect creditor rights but also to promote the rehabilitation and reintegration of individuals into economic life through non-punitive debt resolution mechanisms. In the circumstances, I find merit in the application and grant it in terms of prayers 1 and 2.
Disposition
7. Accordingly,
i. An interim moratorium order is hereby granted against all creditors of the applicant for a period of sixty (60) days from the date hereof. During this period, no enforcement action shall be taken against the applicant, including, but not limited to harassment, asset seizure, or the institution or continuation of legal proceedings, pending the consideration and possible approval of an individual voluntary arrangement.
ii. The Official Receiver is appointed as provisional supervisor of the proposed individual voluntary arrangement. The Official Receiver shall oversee the assessment of the applicant’s proposal, facilitate communication with the applicant’s creditors, and file a report in accordance with Section 307 of the Insolvency Act.
iii. The applicant shall serve a copy of this order upon the Official Receiver forthwith, and in any event not later than seven (7) days from the date hereof.
iv. The Court declines to grant prayers 4, 5, and 6, which seek orders on the restructuring of the applicant’s debts, freezing of further interest, penalties and charges, and compelling creditors to negotiate and accept a proposed payment structure. These issues are substantive in nature and fall within the ambit of the voluntary arrangement process itself. They are dependent on the outcome of negotiations between the applicant and his creditors and, where applicable, the approval of the arrangement under the procedures set out in the Act.
It is so ordered.
1. Before the Court for determination is an application dated 24th February 2025, brought under Sections 304, 305, 306, and 307 of the Insolvency Act, 2015. The application was duly served upon the Official Receiver, who has not filed any response or written submissions as directed by the Court.
2. I have considered the application, the grounds on its face, and the supporting affidavit sworn by the applicant, Stephen Habwe Amatalo.
Analysis and Determination
3. Sections 304 to 307 of the Insolvency Act, 2015 establish the legal framework for a debtor to seek an interim order from the Court where the debtor intends to propose a voluntary arrangement with creditors either as a composition in satisfaction of debts or a scheme of arrangement of the debtor’s financial affairs. The provisions also set out the requirements for appointing a supervisor, the effect of an interim order, and the reporting obligations of a provisional supervisor.
4. I am mindful of the provisions of Section 306(5), which states that an interim order issued under Section 304 shall lapse after 14 days from the date of issuance unless extended by the Court. However, given that this application is unopposed and considering the need for meaningful engagement between the debtor and creditors, I am persuaded that an extended period of 60 days is appropriate to allow the Official Receiver adequate time to assess the viability of the proposed arrangement and to determine whether a creditors’ meeting should be convened under Section 307.
5. The schedule of liabilities presented by the applicant, together with the supporting documents, provide prima facie evidence of his insolvency and financial distress. I am satisfied that the applicant meets the threshold for the issuance of an interim order. Importantly, this relief is consistent with one of the central objectives of the Insolvency Act, namely, to establish a fair and orderly process for addressing the financial affairs of individuals in distress, while affording honest debtors a second chance.
6. The law seeks not only to protect creditor rights but also to promote the rehabilitation and reintegration of individuals into economic life through non-punitive debt resolution mechanisms. In the circumstances, I find merit in the application and grant it in terms of prayers 1 and 2.
Disposition
7. Accordingly,
i. An interim moratorium order is hereby granted against all creditors of the applicant for a period of sixty (60) days from the date hereof. During this period, no enforcement action shall be taken against the applicant, including, but not limited to harassment, asset seizure, or the institution or continuation of legal proceedings, pending the consideration and possible approval of an individual voluntary arrangement.
ii. The Official Receiver is appointed as provisional supervisor of the proposed individual voluntary arrangement. The Official Receiver shall oversee the assessment of the applicant’s proposal, facilitate communication with the applicant’s creditors, and file a report in accordance with Section 307 of the Insolvency Act.
iii. The applicant shall serve a copy of this order upon the Official Receiver forthwith, and in any event not later than seven (7) days from the date hereof.
iv. The Court declines to grant prayers 4, 5, and 6, which seek orders on the restructuring of the applicant’s debts, freezing of further interest, penalties and charges, and compelling creditors to negotiate and accept a proposed payment structure. These issues are substantive in nature and fall within the ambit of the voluntary arrangement process itself. They are dependent on the outcome of negotiations between the applicant and his creditors and, where applicable, the approval of the arrangement under the procedures set out in the Act.
It is so ordered.