The Insolvency (Amendment) Bill, 2023
Status Timeline
Proposed
Active now
Public Review
Pending
Debate
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Executive
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Final
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Court-Appointed Professional Administrators
Empowers the Court under Section 575D to appoint qualified administrators who meet the prescribed criteria to oversee and run the fast-track corporate insolvency process.
Strict Eighteen-Month Completion Timeline
Requires the fast-track administration to be completed within eighteen months from the issuance of the administration order under Section 575E. A single extension of up to six months is permitted only if supported by a 75 percent vote of creditors.
Fast-Track Administration for Small Companies
Introduces Division 8A (Section 575A) to allow small companies (under section 623 of the Companies Act) and other entities meeting prescribed asset, turnover, or debt thresholds to access an expedited insolvency resolution process.
Six-Month Deadline for Implementation Regulations
Mandates the Cabinet Secretary responsible for finance to draft and prescribe all supporting regulations required under the Act within six months from the commencement of the amendment.
Bill No.
Senate Bills No. 36
Gazette No.
Supplement No. 156 of 2023
Sponsor
Mutinda Maureen Tabitha
Background
Kenya's banking sector has experienced a steady increase in non-performing loans, which reached an unprecedented rate of 14.1% in 2020 during the COVID-19 pandemic. To preserve businesses, protect jobs, and secure the interests of creditors and shareholders, the Insolvency (Amendment) Bill, 2023 seeks to amend the Insolvency Act, No. 18 of 2015. It introduces a fast-track administration framework designed to offer a cost-effective and rapid resolution of financial distress for Micro, Small, and Medium Enterprises (MSMEs).
Key Amendments
- Insertion of Division 8A: Adds new sections 575A to 575F to the principal Act to establish the Fast Track Administration Process.
- Eligibility Framework (Section 575A): Applies to small companies subject to the regime under section 623 of the Companies Act, and companies falling within asset, turnover, or debt thresholds prescribed by the Cabinet Secretary.
- Application Procedure (Section 575B): Allows a company debtor, director, creditor, or other prescribed individuals to apply to the Court for fast-track administration, accompanied by clear evidence of default.
- Judicial Determination (Section 575C): Empowers the Court to approve the fast-track order, dismiss the application, or impose relevant conditions.
New Obligations
- Notification Duty (Section 575B(3)): Upon filing a fast-track application, the applicant is legally obligated to notify other eligible applicants and interested parties.
- Administrator Standards (Section 575D): Administrators must meet prescribed qualifications and must oversee the process in strict accordance with rules set by the Cabinet Secretary.
- Timeline and Extension Rules (Section 575E): The administration process must finish within 18 months. If an extension is approved by a 75% creditor vote, the administrator must submit the resolution to the Court within seven days. This extension can only be granted once.
Transitional Provisions
- Drafting of Regulations: The Cabinet Secretary for Finance is required to develop and publish all necessary implementation regulations within six months of the commencement of the Act.
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