Alternatives to bankruptcy proceedings.

A person is deemed bankrupt if his liabilities exceeds his asserts fairly valued. The person is indeed unable to meet his financial liabilities by paying his debts leaving a leeway for him to be declared bankrupt.

Instead of a person moving to court to be declared bankrupt, there exists several alternatives to bankruptcy proceedings which can aid him comfortably and conveniently service his debts.

These alternatives aid in:-

1. Rescuing financially distressed persons from losing their asserts.
2. Maximizing returns to creditors.
3. Preserving businesses and employment from collapsing.

Such alternatives include:-

1. Individual voluntary arrangements. Established under Sections 303 to 318 of the insolvency Act. It involves the debtor making a proposal to the creditors for a voluntary arrangement proposal on the mode of satisfaction of the debts due. The proposed voluntary arrangement takes effect if approved by the creditors’ meeting. Once approved, it is submitted to the official receiver who makes a report to court for adoption of the agreement as binding. Once approved and adopted, it acts as a shield against bankruptcy proceedings.
2. Summary instalment order. It’s governed by sections 323 to 343 of the Insolvency Act. It involves the official receiver allowing the debtor to service the debt in installments other than paying the entire lump sum in one transaction. A supervisor is appointed to ensure compliance with the settlement procedure.
3. No assert procedure. It’s provided for under sections 343 to 361 of the Insolvency Act. This process involves the debtor who reasonably and in good faith has no realizable asserts making an application to be declared as unable to meet his liabilities due to his financial status. For the debtor to be admitted to the no assert procedure, he must prove that:-
4. He has no realizable assets
5. He has not previously been admitted to the no-asset procedure
6. He has not previously been adjudged bankrupt
7. He has total debts that are not less than one hundred thousand shillings and not more than four million shillings
8. He does not have the means to repay any amount towards those debts

The application is made to the official receiver and upon admission, the Official Receiver notifies all creditors who are then restricted from taking legal steps to recover their debts.

At Siyasa and Company Advocates, we offer expertise and professional legal services to individuals who are enduring financial constraints objectively to assist them stabilize their financial status by advising them on several alternatives to bankruptcy proceedings. We have a seasoned, competent and esteemed team ready to serve you diligently. Conduct us for further advise.

Disclaimer: “This article is for informational purposes only and does not constitute legal advice. For inquiries, please contact Siyasa and Company Advocates.”

-Contributed by-

-Francis Kitheka-