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{
"id": 494395,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/494395/?format=api",
"text_counter": 224,
"type": "speech",
"speaker_name": "Hon. Chepkong’a",
"speaker_title": "",
"speaker": {
"id": 1154,
"legal_name": "Samuel Kiprono Chepkonga",
"slug": "samuel-kiprono-chepkonga"
},
"content": "The proposed Insolvency Bill seeks also to achieve a fair balance between restructuring and liquidation. It will allow distressed enterprises to explore possibilities of an easy and efficient revival. If revival is not the solution, it will also be easy for a company to be liquidated to maximize on returns for the stakeholders. It seeks to salvage viable businesses and preserve jobs, while enabling financing institutions to prevent deterioration of assets by giving them a means to enforce claims. The reform proposed in this Bill is a regulatory framework that will be effective for those for whom the insolvency law exists. The proposed law further introduces the office of the insolvency practitioners, who will be held professionally accountable to their clients. As you know, receivers who are appointed at the moment, the unspoken rule is to liquidate the company and not to revive it. As you have seen, many of the sugar companies, right now are ailing. Instead of those companies being revived, the receivers who have gone there have gone there to just milk the companies without the intention of helping the shareholders or the suppliers. We have also seen the example of the Kenya Creameries Co-operative (KCC). The receivers went to the KCC and sold it off. The shareholders, who were farmers, suffered, particularly in my region. The shareholders of that company, who were milk producers, lost colossal sums of money and no one could be held responsible. With the passage of this law, every person who is appointed as an insolvency practitioner, or an administrator, of a company under liquidation will be held personally responsible. This law provides for heavy penalties against all those persons who conduct themselves in a manner as to ensure that the company does not survive and the shareholders lose value. Currently, the process of winding up companies has been left squarely in the hands of courts and individuals who have ended up fleecing companies. Companies are at the mercy of undertakers. As you know, these receivers are no longer called receivers. They are now called “undertakers”, people who take companies to the grave. Instead of reviving them, taking them to hospital and giving them medicine, so that they can come back healthy, they go and bury them alive, that is when they still have a little bit of breadth. Very few companies in the past have survived the process of receivership. Accordingly, the establishment of the office of the insolvency practitioner aims at raising the accountability bar and responsibility, so that the process of administration is professionalized fully. Further, where a company cannot be rescued, as I have stated, the winding up must be finalized within two years. It is now provided for. There is a time period within the law, within which a company must be wound up, if, in the opinion of the administrators, it is incapable of being revived. As for the individuals, the Bill modernizes the process of individual bankruptcy by proposing a fresh beginning for persons who are not able to meet their financial obligations. The Bill proposes that after three years, a person should be discharged from the disability of bankruptcy. As it is at the moment, when you are declared bankrupt, you remain bankrupt for a period of seven years. This law now reduces the period from seven years to three years, so that you can participate in elections. You can imagine that if you are declared insolvent for seven years, you will not vote in the next election. So, you are denied the right to participate in elections. The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}