This Act may be cited as the Insolvency Act.

The provisions of this Act shall come into operation on such date as the Cabinet Secretary may, by notice in the Gazette, appoint and different dates may be appointed for different provisions.

Notwithstanding subsection (2), any provision that has not been brought into force within nine months after the publication of this Act shall come into force on the expiry of that period.

For the purposes of this Act, a person is a member of the family of a natural person if the person is the parent, spouse, brother, sister, child, uncle, aunt, nephew, niece, stepfather, stepmother, stepchild, or adopted child of the person concerned and, in case of an adopted child, the child's adopted parents.

For the purposes of this Act, the prescribed bankruptcy level is the amount for the time being specified in the Insolvency Regulations.

This Act applies to natural persons, partnerships, limited liability partnership, companies and other corporate bodies established by any written law.

A reference in this section to a natural person includes, except in so far as the context otherwise requires, a reference to a partnership other than a limited liability partnership.

A person who, not being the holder of an authorisation, purports to act as an insolvency practitioner in relation to a company or a natural person commits an offence and is on conviction liable to a fine not exceeding five million shillings.

This section does not apply to the Official Receiver.

A body corporate is not eligible to be an insolvency practitioner, but this subsection does not extend to an employee of a body corporate.

A natural person who, during the two years immediately preceding the commencement of this Part, was carrying on any of the activities referred to in section 4(1) or (2) is, unless disqualified under subsection (2), taken to be qualified to be and to act as an insolvency practitioner on and after that commencement, but ceases to be so qualified unless the person has, within the twelve months after that commencement, complied with the requirements of subsection (1).

The Cabinet Secretary shall, by notice published in the Gazette, declare one or more professional bodies to be recognised professional bodies for the purposes of this Act.

A reference to the members of a recognised professional body includes a reference to persons who are, whether members of that body or not, governed by its rules in the practice of the relevant profession.

The Cabinet Secretary may revoke a notice made under subsection (1) if it appears to the Cabinet Secretary that the professional body no longer meets the requirements of subsection (2).

A notice made by the Cabinet Secretary under this section takes effect from the date of the notice or such other date as is specified in it.

The Cabinet Secretary may, in revoking a notice made under subsection (1), exempt a specified member, or a specified class of members, of the professional body concerned from the effect of the revocation and to authorise the member, or the members of that class, to continue acting as an insolvency practitioner or as insolvency practitioner for such period as the Cabinet Secretary determines and notifies in writing to the member or members concerned.

In this section, "profession" means a profession involving carrying on any of the activities referred to in section 4(1) or (2).

A person who wishes to act as an insolvency practitioner may apply to the Official Receiver for an authorisation to act as an insolvency practitioner for the purposes of this Act.

The Official Receiver may direct that notice of the application be published in the Gazette or in such other publication as the Official Receiver specifies.

Information to be provided to the Official Receiver under this section is, if the Official Receiver so requires, to be in such form or verified in such manner as the Official Receiver may specify.

An application made under subsection (1) may be withdrawn at any time before it is granted or refused.

As soon as practicable after receiving an application made under section 8, the Official shall either grant or refuse the application.

The Official Receiver may not refuse an application for an authorisation without having given the applicant an opportunity to be heard.

On granting an authorisation under this section, the Official Receiver shall notify the applicant in writing of the authorisation and specify the date on which the authorisation is to take effect.

An authorisation granted under this section continues in force for such period, and subject to such reasonable conditions, as are specified in the authorisation.

An authorisation granted under this section may be revoked by the Official Receiver at the request, or with the consent, of the holder of the authorisation.

The Official Receiver may not revoke an authorisation (otherwise than at the request or with the consent of its holder) without having given its holder an opportunity to be heard.

A revocation of an authorisation does not take effect until the period within which an appeal within which the holder of the authorisation can appeal against the revocation has expired or, if within that period, the holder lodges such an appeal, until the appeal is finally determined or is withdrawn, whichever first occurs.

A person whose application for an authorisation to act as an insolvency practitioner is refused may appeal to the Court against the refusal.

A person whose authorisation to act as insolvency practitioner is revoked otherwise than at the person's request or with the person's consent may appeal to the Court against the refusal.

The Official Receiver is entitled to be served with a copy of the appeal and to appear at the hearing of the appeal as respondent.

On the hearing of an appeal lodged in accordance with this section, the Court shall, if it considers that the refusal of the appellant's application, or the revocation of the appellant's authorisation, was not warranted, make an order quashing the decision of the Official Receiver refusing the application, or revoking the authorisation, but otherwise, it shall make an order confirming the Official Receiver's decision.

The Court may make such ancillary or consequential orders as it considers appropriate, including an order as to payment of costs of the appeal proceedings.

On the hearing of such an application, the Court may, subject to and in accordance with the provisions of this Part, make a bankruptcy order.

A bankruptcy application may not be withdrawn without the approval of the Court.

The Court has a general power to dismiss a bankruptcy application or to stay proceedings on such an application on the ground that the Court is of the opinion that a requirement of this Part or the insolvency regulations has not been complied with in a material respect.

If the Court stays proceedings on a bankruptcy application, it may do so on such terms as it considers appropriate.

One or more creditors of a debtor may make an application to the Court for a bankruptcy order to be made in respect of the debtor in relation to a debt or debts owed by the debtor to the creditor or creditors.

This section is subject to sections 18 to 20.

In a case to which subsection (1)(b) applies, the secured and unsecured parts of the debt are to be treated for the purposes of sections 17, 19 and 20 as separate debts.

If the application contains a statement of the kind referred to in section 19, the Court may not make a bankruptcy order until at least twenty-one days have elapsed since the service of the relevant statutory demand.

In determining for the purposes of subsection (3) whether the debtor is able to pay all of the debtor's debts, the Court shall take into account the debtor's contingent and prospective liabilities.

In determining for the purposes of this section what constitutes a reasonable prospect that a debtor will be able to pay a debt when it falls due, the Court shall presume that the prospect given by the information known to the creditor when the creditor entered into the transaction resulting in the debt was a reasonable prospect.

Nothing in sections 17 to 19 prevents the Court from allowing a creditor's application to be amended by the omission of any creditor or debt and to be proceeded with as if action taken for the purposes of those sections had been taken only by or in relation to the remaining creditors or debts.

A creditor who makes an application for a bankruptcy order in respect of a debtor may not issue an execution process against the debtor in respect of the property of the debtor to recover a debt on which the application is based.

If the creditor has already issued the execution process, the creditor may not continue it.

The creditor may make an application to the relevant court for approval to issue or continue the execution process.

On the hearing of an application made under subsection (3), the relevant court may make an order permitting the applicant to begin or continue the execution process but only if it is satisfied after considering all representations made to it that the interests of the other creditors will not be detrimentally affected.

Any action taken in contravention of subsection (1) or (2) is void.

After a creditor's application has been made, the debtor or any creditor may apply to the relevant court for an order stopping the issue or continuance by any other creditor of an execution process against the debtor in respect of the property of the debtor.

This section applies if an execution process has been issued by a court other than the High Court.

The Court may make a bankruptcy order in respect of the debtor if the creditor has complied with section 7.

If there is more than one bankruptcy application in respect of a debtor, and one application has been stayed by an order of the Court, the Court may, if it believes there is a good reason to do so, make a bankruptcy order in respect of the application that has not been stayed.

On making a bankruptcy order under subsection (1), the Court shall dismiss the application that has been stayed on such terms as it considers appropriate.

The debtor, the bankruptcy trustee or any creditor may apply for an order under this section.

This section does not limit the powers of the Court under section 39.

As a condition of staying the application, the

Court may require the debtor to give security to the creditor for any debt that may be established as owing by the debtor to the creditor, and for the cost of establishing the debt.

A debtor may make an application to the Court for an order adjudging the debtor bankrupt only on the grounds that the debtor is unable to pay the debtor's debts.

The Court may reject a statement of the debtor's financial position if of the opinion that it is incorrect or incomplete.

The Court may decline to hear the application if subsection (4) has not been complied with to its satisfaction.

An interim order made in accordance with subsection (3)(a) ceases to have effect at the end of such period as the Court may specify for the purpose of enabling the debtor's proposal to be considered by the debtor's creditors in accordance with the applicable provisions of Division I of Part IV.

If the insolvency practitioner has proposed in the report that a meeting of the debtor's creditors should be convened, the insolvency practitioner shall, unless the Court otherwise directs, convene such a meeting for the time, date and place proposed in the report.

Such a meeting is to be taken to have been convened under section 309 in which case subsections (2) and (3) of that section and sections 309 to 314 apply to the meeting.

After a creditor's application has been made, the creditor or any other creditor of the debtor may apply to the Court for an order for the appointment of an authorised insolvency practitioner as interim trustee in respect of all or a specified part of the debtor’s property.

The Court may make such an order at any time before a bankruptcy order is made in respect of the debtor.

An order authorising the trustee to control a debtor's business may not extend beyond what, in the Court's opinion, is necessary to conserve the debtor's property.

The Official Receiver and any authorised insolvency practitioner are suitably qualified persons for the purpose of subsection (1).

In this section, "debtor's business" includes any business in which the debtor has a financial interest.

After the appointment of an interim trustee under section 36, the Court may, on an application made under subsection (2), make additional orders under that section.

An application for the purpose of subsection (1) made by a creditor or the interim trustee or, with the approval of the Court, by any other person.

The appointment of the interim trustee does not take effect until subsection (1) has been complied with.

A creditor of the debtor may not issue an execution process under section 23 after notice of the appointment of the interim trustee has been published.

A creditor may not continue an execution process already issued before notice of the appointment of the interim trustee has been published.

A creditor or any other interested person may apply to the Court for an order allowing the issue or continuation of an execution process, and the Court may make an order on such terms as it considers appropriate.

Any action taken in contravention of subsection (1) or (2) is void.

On making a bankruptcy order, the Court shall record the date and time when the order was made.

If the debtor is adjudged bankrupt on the application of the debtor, the Official Receiver shall record on the application the date and time when the debtor made the application.

As soon as practicable after receiving a copy of a bankruptcy order, the Official Receiver shall nominate a qualified person to be bankruptcy trustee in respect of the debtor's property.

In this subsection (1), "qualified person" means the Official Receiver or an authorised insolvency practitioner.

The Official Receiver shall establish and maintain a public register of undischarged and discharged bankrupts.

The Official Receiver shall maintain the register in accordance with Division 2 of Part XIl.

Despite subsection (1), the Court may, on the application by a creditor or other person interested in the bankruptcy, allow proceedings that had already begun before the bankruptcy commenced to continue on such terms as the Court considers appropriate.

If the bankrupt has appealed against the order or has applied for its annulment, the Court may order the Official Receiver not to advertise the bankruptcy order, but only if it is satisfied that there are compelling reasons for doing so.

Subsection (1) is subject to section 106.

The Official Receiver shall serve the notice at the address of the bankrupt given in the bankruptcy application or at the bankrupt's address last known to the Official Receiver.

This section does not apply if the bankrupt has already lodged a statement under section 32.

At any time after lodging with the bankruptcy trustee a statement of the bankrupt's financial position, the bankrupt may lodge additional or amended statements or answers with the bankruptcy trustee.

A bankrupt who fails to comply with a requirement of subsection (1) commits an offence and on conviction is liable to a fine not exceeding one million shillings or to imprisonment for a term not exceeding two years, or to both.

If, after being convicted of an offence under subsection (2), a bankrupt, without reasonable excuse, continues to fail to comply with the relevant requirement, the bankrupt commits a further offence on each day during which the failure continues and on conviction is liable to a fine not exceeding one hundred thousand shillings for each such offence.

A person who falsely claims to be a creditor is in contempt of the Court.

The Official Receiver shall, subject to subsection (5), convene the first meeting of the bankrupt's creditors within the prescribed period, unless the Official Receiver decides, in accordance with section 53, not to hold the meeting.

The Official Receiver may delay convening the first meeting of creditors for a period not exceeding fourteen days if the Official Receiver considers that there are special circumstances justifying the delay.

Subsection (1) does not apply if the Official Receiver has not received the statement of the bankrupt's financial position when the notice is sent.

A failure in sending or receiving the documents in subsection (1) does not affect the validity of the proceedings at the meeting.

If, in the case of a bankruptcy, the Official Receiver has not yet convened a first meeting of creditors, or has decided not to convene such a meeting, any creditor of the bankrupt may request the Official Receiver to convene such a meeting.

As soon as practicable after receiving a request under subsection (1), the Official Receiver shall convene a first meeting of creditors if the request appears to the Official Receiver to be made with the concurrence of not less than one-quarter in value of the bankrupt's creditors (including the creditor making the request).

After the notice of the bankruptcy notice has been advertised, or after being given notice of the bankruptcy by the Official Receiver, a creditor may not seize or sell any property by means of distress for rent owed by the bankrupt.

If the distress procedure has already begun, such a creditor may continue with the procedure only with the approval of the Court and subject to such conditions as the Court may specify.

A power to appoint a person as bankruptcy trustee includes power to appoint two or more persons as joint bankruptcy trustees, but such an appointment is not effective unless it makes provision for the circumstances in which the trustees are required to act together and the circumstances in which one or more of them may act on behalf of the others.

The appointment of a person as bankruptcy trustee takes effect only if the person accepts the appointment.

The appointment of a person as a bankruptcy trustee takes effect at the time specified in the document by which the person is appointed.

This section does not affect the provisions of this Part under which the Official Receiver is, in specified circumstances, to be, or required to act as, the bankruptcy trustee in respect of a bankrupt's estate.

If a meeting convened under section 52 or 55 is held but no one is appointed as bankruptcy trustee, the Official Receiver shall decide whether or not there is a need to make such an appointment.

If the Official Receiver decides there is a need to make such an appointment, the Official Receiver shall make an appointment accordingly.

If the Official Receiver decides that there is no need to make such an appointment, the Official Receiver shall notify the decision to the Court.

On giving notice of the decision to the Court in accordance with subsection (3), the Official Receiver becomes bankruptcy trustee in respect of the bankrupt's estate.

The Official Receiver may, at any time while acting as bankruptcy trustee in respect of a bankrupt's estate under a provision of this Division (other than section 62), appoint another qualified person to act as the bankruptcy trustee instead.

Immediately after making such an appointment, the Official Receiver shall notify the appointment to the Court.

If a bankruptcy order is made when there is a supervisor of a summary instalment order approved in relation to the bankrupt under Division 2 of Part IV, the Court may, if it considers it appropriate to do so on making the order, appoint the supervisor of the order as bankruptcy trustee in respect of the bankrupt's estate.

If an appointment is made under subsection (1), the Official Receiver is not required to decide under section 60(1) whether or not to convene a creditors' meeting.

Section 61(4) and (5) apply to a bankruptcy trustee appointed under this section.

An approval given for the purposes of subsection (1)(a) or (2) is required to be a specific one and to relate to a particular exercise of the relevant power.

A person dealing with the bankruptcy trustee in good faith and for value is not required to ascertain whether an approval required by subsection (1)(a) or (2) has been given.

If a bankruptcy trustee has done anything without the approval required by subsection (1)(a) or (2), the Court or the creditor's committee (if any) may, for the purpose of enabling the bankruptcy trustee to meet the bankruptcy trustee's expenses out of the bankrupt's estate, ratify what that trustee has done.

Part 3 of the First Schedule has effect with respect to the things that the bankruptcy trustee is able to do for the purposes of, or in connection with, the exercise of any of the bankruptcy trustee's powers under this Act.

A bankruptcy trustee may use his or her discretion in administering a bankrupt's property, but, in doing so, is required to have regard to the resolutions passed by the creditors at creditors' meetings.

The bankruptcy trustee shall ensure that the proceeds of the sale of a bankrupt's property in accordance with subsection (1) are in every case invested in accordance with section 66.

A bankruptcy trustee shall establish and maintain a bank account in respect of each bankrupt estate administered by that trustee and shall pay into the relevant account all money that that trustee receives in that capacity.

If money held by a bankruptcy trustee in respect of a bankrupt's estate is not immediately required to be paid in connection with the administration of the estate, the bankruptcy trustee may invest the money in an investment of a kind prescribed by the insolvency regulations for the purposes of this section.

A bankruptcy trustee who invests money in accordance with subsection (2) shall credit to the bankrupt's estate the interest, dividends or other money that accrues in respect of the investment.

A bankruptcy trustee may, if the Court has first approved it, assign a right to sue that is conferred on the bankruptcy trustee by this Act.

If a member of a business partnership is adjudged bankrupt, the Court may authorise the bankruptcy trustee to bring proceedings in the names of the bankruptcy trustee and the bankrupt's partner.

The bankruptcy trustee shall serve notice of the application on the partner for authority to bring the proceedings, and the partner may oppose the application.

Any purported release by the partner of the debt or demand to which the proceedings relate is void.

If a person is apprenticed or is an articled clerk to an employer who is adjudged bankrupt, either of them may give notice to the bankruptcy trustee or the Official Receiver requesting that the indenture of apprenticeship or articles of agreement be discharged.

On receiving a notice under subsection (1), the bankruptcy trustee or Official Receiver shall discharge the indenture of apprenticeship or articles of agreement, but only if satisfied that it would be in the interests of the apprentice or clerk to do so.

If money has been paid to the bankrupt by or on behalf of the apprentice or clerk as a fee, the bankruptcy trustee may, on the application of the apprentice or clerk, or of the agent of the apprentice or clerk, pay from the bankrupt's estate such amount as the trustee considers reasonable to or for the use of the apprentice or clerk.

On the application of any apprentice or articled clerk to the bankrupt, or an agent of the apprentice or articled clerk, the bankruptcy trustee or Official Receiver may, instead of acting under subsection (2), transfer the indenture of apprenticeship or articles of agreement to some other person.

Subsection (5) is subject to section 12 of the Industrial Training Act (Cap. 237).

Any person dissatisfied with a decision of the bankruptcy trustee under subsection (3) may apply to the Court for an order quashing or varying the decision.

On the hearing of an application made under subsection (7), the Court may make the order sought by the applicant or such other order as it considers appropriate.

A bankruptcy trustee may apply to the Court for directions on any question concerning the operation of this Part.

A bankruptcy trustee who acts under a direction of the Court discharges the bankruptcy trustee's duty in relation to the matter for which the direction was sought, and it does not matter that the direction is later invalidated, overruled, or set aside or otherwise becomes ineffective.

A person (including the bankrupt or a creditor) whose interests, monetary or otherwise, are detrimentally affected by an act or decision to which this section applies may apply to the Court to reverse or modify the act or decision.

A creditor or other person who has an interest in a particular bankruptcy is entitled to inspect the bankruptcy trustee's accounting records relating to the particular bankruptcy.

The bankruptcy trustee shall publish the final statement of receipts and payments in the prescribed form, and advertise in the prescribed manner that it has been published.

If, in relation to a bankruptcy, the Official Receiver is the bankruptcy trustee, the Auditor-General may from time to time audit the records, statements and account referred to in subsection (1)(a) to (b).

A bankruptcy trustee who is not also the Official Receiver vacates office on ceasing to be authorised as an insolvency practitioner.

A bankruptcy trustee who is not also the Official Receiver may resign office by giving to the Court not less than thirty days' notice of the resignation.

If a person has been appointed by the Court to replace the Official Receiver on his or her ceasing to hold office as bankruptcy trustee in respect of a bankrupt's estate, the Official Receiver is released from such time as the Court orders.

If a person has been appointed by a general meeting of a bankrupt’s creditors to replace the Official Receiver on his or her ceasing to hold office as bankruptcy trustee in respect of the bankrupt’s estate, the Official Receiver is released from office from the time at which the Official Receiver gives notice to the Court that another person has been appointed as a replacement.

If the Official Receiver, while acting as bankruptcy trustee, gives notice to the Cabinet Secretary that the administration of the bankrupt's estate is for practical purposes complete, the Official Receiver's release takes effect from such time as the Cabinet Secretary determines in writing.

On being released under this section, the Official Receiver is, from the time specified in accordance with this section, discharged from all liability both in respect of acts or omissions occurring in the course of, or in relation to, administering the estate of the bankrupt concerned.

This section applies when a person other than the Official Receiver ceases hold office as a bankruptcy trustee.

If the person has been removed from office by a meeting of the bankrupt’s creditors that has not resolved against the person's release or who has died, the person is released from the time at which a notice is given to the Court in accordance with the insolvency regulations that the person has ceased to hold office.

If the person has vacated office under section 75(3), the person is released from such time as the Official Receiver determines, on an application made by that person.

If the person has resigned office under section 75(4), the person is released from such time as may be determined in accordance with the insolvency regulations.

When a bankruptcy order is annulled, the person is released from such time as the Court determines.

On being released under this section, a bankruptcy trustee is, from the time specified in accordance with this section, discharged from all liability both in respect of acts or omissions occurring in the course of, or in relation to, administering the estate of the bankrupt concerned.

Nothing in this section prevents the Court from exercising its powers under section 74 in relation to a person who has been released under this section.

When this section applies to a vacancy, the Official Receiver holds office as bankruptcy trustee until the vacancy is filled.

The Official Receiver may at any time convene a creditors' meeting for the purpose of filling such a vacancy.

If the Official Receiver has not convened, and does not propose to convene, a creditors' meeting for the purpose of filling such a vacancy, any creditor of the bankrupt may request the Official Receiver to convene such a meeting.

If such a request appears to the Official Receiver to be made with the concurrence of not less than one-quarter in value of the bankrupt's creditors (including the creditor making the request), the Official Receiver shall convene the requested meeting.

A reference in this section to a vacancy includes a case in which it is necessary, in relation to particular property that is or may be included in a bankrupt's estate, to revive the trusteeship of the estate after the holding of a final meeting convened under section 253 or after the Official Receiver has given notice under section 76(2) or 77(2).

If, in relation to the bankruptcy trustee in respect of a bankrupt's estate, a person (including the bankrupt or a creditor of the bankrupt) is dissatisfied with any act, omission to act or decision of that trustee, the person may apply to the Court for an order under subsection (2).

The Court may, on the application of a bankruptcy trustee, give directions in respect of the bankrupt's estate in relation to any particular matter arising under the bankruptcy.

Approval of the Court is required for the making of such an application if it is to be made by the bankrupt or if it is to be made after the bankruptcy trustee has been released in accordance with section 77.

If, on hearing an application made under subsection (1), the Court is satisfied that the bankrupt's estate has sustained a loss as a result of misfeasance or a breach of fiduciary or other duty by the bankruptcy trustee in performing that trustee's functions, the Court shall make either or both of the following orders:

The bankruptcy trustee may at any time convene a meeting of creditors after the first meeting of creditors.

The bankruptcy trustee shall advertise the time, date and place of the meeting in the manner prescribed by the insolvency regulations for the purpose of this section.

Nothing in this section limits the general effect of section 63(5) or Part 3 of the First Schedule.

The Chairperson of a creditors' meeting is the bankruptcy trustee or a person appointed by the bankruptcy trustee to be the Chairperson.

However, if neither the bankruptcy trustee nor the person (if any) appointed by the bankruptcy trustee to be the Chairperson attends the meeting, the creditors may appoint one of them to act as Chairperson for the purpose of the meeting, but only if that person is entitled to vote at the meeting.

A person appointed by the bankruptcy trustee or elected by the creditors to act as Chairperson may administer any oath that the bankruptcy trustee could have administered if the bankruptcy trustee had attended the meeting.