' 1. The Petitioner, Victoria Commercial Bank Limited (“the Petitioner”), has moved this Court by way of a creditor’s petition dated 23rd August 2022, seeking an order for the liquidation of Specialized Blocks Limited (“the Company”).
2. The petition is supported by a verifying affidavit sworn by Yogesh Kanji Damji Pattni, a director of the Petitioner, and an affidavit of service sworn by Denis Guto Masese, a licensed process server.
3. The Company was incorporated on 6th December 2013 with a nominal capital of KShs. 100,000 divided into shares of KShs. 100 each.
4. On 27th June 2022, the Petitioner served a statutory demand upon the Company requiring payment within 21 days. The affidavit of service confirms service via registered post. The Company has not paid, secured, or applied to set aside the demand.
5. The Petition was heard on 21st July 2025, when the Petitioner’s sole witness testified on behalf of the Petitioner. He produced in evidence a judgment and decree of the High Court dated 12th and 15th November 2022, respectively. He also produced in evidence the 21-day statutory notice dated 27th June 2022 issued by the Petitioner to the Respondent.
6. From the evidence on record, it is clear that the debt arises from a personal guarantee executed by the debtor in favour of the Petitioner. In Commercial Civil Suit No. 7 of 2020: Victoria Commercial Bank Limited v The Othaya Villas Limited & 4 Others, judgment in default of appearance was entered against the debtor on 12th November 2021 for the sum of KShs. 517,926,465.10 together with interest at 11% per annum from 1st January 2021 until payment in full. A decree in respect thereof was subsequently issued on 15th November 2021.
7. It is also not disputed that the Petitioner served a 21 statutory demand upon the Company pursuant to Section 17 of the Insolvency Act and Regulation 15(1) of the Insolvency Regulations, 2016, and that the Company has neither complied with nor applied to set aside the statutory demand.
Analysis and Determination
8. Having carefully considered the Petition, the verifying affidavit, and the evidence tendered herein by the Petitioner’s witness, I find that the sole issue for determination is whether the Petition is merited.
9. This is a liquidation petition by a creditor for the liquidation of a company for inability to pay its debts under Section 425(b) of the Insolvency Act.
10. Under Section 384 of the Insolvency Act, a company is unable to pay its debts: -
(1)
“(1)……..
(a) if a creditor (by assignment or 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 judgment, 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).
11. The decree annexed to the petition conclusively establishes the debt. A judgment of the High Court is binding unless set aside or stayed. The Company has not challenged the decree.
12. In Re Ukwala Supermarket Ltd [2018] eKLR, the Court held that a final decree constitutes a liquidated debt enforceable through insolvency proceedings. Similarly, in Re African Safari Club Ltd [2019] eKLR, the Court emphasized that insolvency petitions may be grounded on judgment debts.
13. Section 384(1) of the Insolvency Act provides that a company is deemed unable to pay its debts if it fails to satisfy a statutory demand for a debt exceeding KShs. 100,000 within 21 days.
14. The affidavit of service demonstrates compliance with Rule 15(3) of the Insolvency Rules. The Company has not disputed service or sought to set aside the demand.
15. In Re A Company [1983] Ch 295 (English Court of Appeal), it was held that failure to comply with a statutory demand is prima facie evidence of insolvency. This principle has been adopted in Kenya, as seen in Re Ukwala Supermarket Ltd. See also, In re Bring Global Kenya Limited (Insolvency Petition E069 of 2024) [2025] KEHC 2929 (KLR) (Commercial and Tax) (6 March 2025) (Judgment).
16. The evidence before the Court demonstrates that the debt is founded upon a valid decree of the High Court. The decree is final, and execution has not been stayed. The debt herein is over Kshs. 517 million, far exceeding the statutory threshold. The Company’s failure to pay or secure the debt demonstrates inability to pay.
17. The Court must therefore consider whether the liquidation sought is just and equitable. Section 425 of the Insolvency Act empowers the Court to order liquidation where a company is unable to pay its debts.
18. The Company has not appeared or opposed the petition. No evidence of solvency or counterclaim has been presented.
19. In Re Ukwala Supermarket Ltd, the Court observed that liquidation serves both creditor protection and commercial certainty. Similarly, English courts have emphasized that liquidation is appropriate where insolvency is clear and undisputed (Re A Company [1983] Ch 295).
20. In light of the foregoing, I am satisfied that the debt is due and payable, the statutory demand was properly served and remains unsatisfied; that the company is insolvent within the meaning of Section 384 of the Insolvency Act; and that liquidation is the appropriate remedy.
21. Accordingly, I order and direct as follows: -
(a) The Company, Specialized Blocks Limited, is hereby placed into liquidation under Section 425 of the Insolvency Act, 2015.
(b) The Official Receiver is appointed as the provisional liquidator of the Company pending further directions.
(c) The costs of this petition shall be borne by the Company.
22. It is so ordered.
SIGNED, DATED, AND DELIVERED AT NAIROBI THIS
27TH NOVEMBER 2025
ADO MOSES
JUDGE
In the presence of: -
C/A – Moses
…………..for the Petitioner
………….…..... for the Respondent
'
2. The petition is supported by a verifying affidavit sworn by Yogesh Kanji Damji Pattni, a director of the Petitioner, and an affidavit of service sworn by Denis Guto Masese, a licensed process server.
3. The Company was incorporated on 6th December 2013 with a nominal capital of KShs. 100,000 divided into shares of KShs. 100 each.
4. On 27th June 2022, the Petitioner served a statutory demand upon the Company requiring payment within 21 days. The affidavit of service confirms service via registered post. The Company has not paid, secured, or applied to set aside the demand.
5. The Petition was heard on 21st July 2025, when the Petitioner’s sole witness testified on behalf of the Petitioner. He produced in evidence a judgment and decree of the High Court dated 12th and 15th November 2022, respectively. He also produced in evidence the 21-day statutory notice dated 27th June 2022 issued by the Petitioner to the Respondent.
6. From the evidence on record, it is clear that the debt arises from a personal guarantee executed by the debtor in favour of the Petitioner. In Commercial Civil Suit No. 7 of 2020: Victoria Commercial Bank Limited v The Othaya Villas Limited & 4 Others, judgment in default of appearance was entered against the debtor on 12th November 2021 for the sum of KShs. 517,926,465.10 together with interest at 11% per annum from 1st January 2021 until payment in full. A decree in respect thereof was subsequently issued on 15th November 2021.
7. It is also not disputed that the Petitioner served a 21 statutory demand upon the Company pursuant to Section 17 of the Insolvency Act and Regulation 15(1) of the Insolvency Regulations, 2016, and that the Company has neither complied with nor applied to set aside the statutory demand.
Analysis and Determination
8. Having carefully considered the Petition, the verifying affidavit, and the evidence tendered herein by the Petitioner’s witness, I find that the sole issue for determination is whether the Petition is merited.
9. This is a liquidation petition by a creditor for the liquidation of a company for inability to pay its debts under Section 425(b) of the Insolvency Act.
10. Under Section 384 of the Insolvency Act, a company is unable to pay its debts: -
(1)
“(1)……..
(a) if a creditor (by assignment or 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 judgment, 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).
11. The decree annexed to the petition conclusively establishes the debt. A judgment of the High Court is binding unless set aside or stayed. The Company has not challenged the decree.
12. In Re Ukwala Supermarket Ltd [2018] eKLR, the Court held that a final decree constitutes a liquidated debt enforceable through insolvency proceedings. Similarly, in Re African Safari Club Ltd [2019] eKLR, the Court emphasized that insolvency petitions may be grounded on judgment debts.
13. Section 384(1) of the Insolvency Act provides that a company is deemed unable to pay its debts if it fails to satisfy a statutory demand for a debt exceeding KShs. 100,000 within 21 days.
14. The affidavit of service demonstrates compliance with Rule 15(3) of the Insolvency Rules. The Company has not disputed service or sought to set aside the demand.
15. In Re A Company [1983] Ch 295 (English Court of Appeal), it was held that failure to comply with a statutory demand is prima facie evidence of insolvency. This principle has been adopted in Kenya, as seen in Re Ukwala Supermarket Ltd. See also, In re Bring Global Kenya Limited (Insolvency Petition E069 of 2024) [2025] KEHC 2929 (KLR) (Commercial and Tax) (6 March 2025) (Judgment).
16. The evidence before the Court demonstrates that the debt is founded upon a valid decree of the High Court. The decree is final, and execution has not been stayed. The debt herein is over Kshs. 517 million, far exceeding the statutory threshold. The Company’s failure to pay or secure the debt demonstrates inability to pay.
17. The Court must therefore consider whether the liquidation sought is just and equitable. Section 425 of the Insolvency Act empowers the Court to order liquidation where a company is unable to pay its debts.
18. The Company has not appeared or opposed the petition. No evidence of solvency or counterclaim has been presented.
19. In Re Ukwala Supermarket Ltd, the Court observed that liquidation serves both creditor protection and commercial certainty. Similarly, English courts have emphasized that liquidation is appropriate where insolvency is clear and undisputed (Re A Company [1983] Ch 295).
20. In light of the foregoing, I am satisfied that the debt is due and payable, the statutory demand was properly served and remains unsatisfied; that the company is insolvent within the meaning of Section 384 of the Insolvency Act; and that liquidation is the appropriate remedy.
21. Accordingly, I order and direct as follows: -
(a) The Company, Specialized Blocks Limited, is hereby placed into liquidation under Section 425 of the Insolvency Act, 2015.
(b) The Official Receiver is appointed as the provisional liquidator of the Company pending further directions.
(c) The costs of this petition shall be borne by the Company.
22. It is so ordered.
SIGNED, DATED, AND DELIVERED AT NAIROBI THIS
27TH NOVEMBER 2025
ADO MOSES
JUDGE
In the presence of: -
C/A – Moses
…………..for the Petitioner
………….…..... for the Respondent
'