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{
    "id": 575507,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/575507/?format=api",
    "text_counter": 330,
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    "content": "Liquidation of companies is governed by the Companies Act, Chapter 486; it particularly deals with issues of liquidation of companies. The Act largely reflects the English position of the time; such law has not been repealed and is rarely amended. The objective, as mentioned by the Leader of the Majority Party - I do not want to go into detail - is to secure an equitable distribution of the property of the debtor or the company to the creditors according to their respective rights against them. This is a complete transformation of our legal system. It introduces new jurisprudence into our legal system. For those who are interested, particularly the scholars in universities, this makes very good reading and is text for books on insolvency law. For the first time, we are seeing a very clear and well-thought out legislation being brought to this House. When the Departmental Committee on Justice and Legal Affairs went through this Bill, we made several amendments. Those amendments led to the withdrawal of the Insolvency Bill 2014 that has given birth to the current Insolvency Bill 2015. The Departmental Committee on Justice and Legal Affairs itself has gone through this Bill and satisfied itself that it meets the international standards of companies which are seeking to do business. One of the things we are seeking is to attract foreign investment. We need an environment which is seamless in terms of reflecting what abounds in the international fora. We do not want to be an island when we are seeking investment from outside, what we call the foreign direct investment. We need to have a law which guarantees that whenever companies run into problems, they are protected. For the first time, we are introducing in Kenya what is popularly known in the United States of America (USA) as “Chapter 11”. This has been introduced here for the first time. We would not have seen Uchumi or other companies going down. What we did in Uchumi was purely grace. There was no law that governed that particular understanding between creditors and debtors that resuscitated Uchumi. Unfortunately, it has run into the same headwinds in the recent past. The success of the former Chief Executive Officer (CEO) confused him in ensuring that there was good governance. That notwithstanding, this law is a good start in protecting companies, which have run into problems. It seeks to promote business and provides better safeguards for investors who wish to grow their business in this country. Salient features that we see in this legislation are that this Bill amalgamates the Bankruptcy Act, Cap 53 of the Laws of Kenya and the Companies Act, into one insolvency Bill and modernises it into a new regime governing insolvency in this country. The Bill introduces a provisions on insolvency practitioners as mentioned by the Leader of the Majority Party. An insolvency practitioner will be in charge of administration of bankruptcy and liquidation of companies. The Official Receiver’s Office will be in charge of regulation of the insolvency practice in Kenya. Qualified insolvency practitioners/professionals will apply to the Official Receiver to act as such. For the first time, we are going to have a body of professionals, like lawyers, who will be charged with the responsibility of managing companies that have gone into receivership or have been declared insolvent. Companies that have been declared insolvent, as it is right now, take a straight path to the grave. When this Bill is passed, it will give an opportunity, for the first time, to companies that have been declared insolvent to be revived and resuscitated, to ensure that they continue in business. The Bill introduces an instant bankruptcy once a petition for bankruptcy is filed. A bankruptcy order takes effect when the court makes an order in respect of a debtor that has been 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."
}