High Court gives nod to Karuturi liquidation
By Patrick Alushula | July 21st 2016
Karuturi flower firm will now be liquidated after a case challenging the suitability of the liquidation managers was thrown out.
In his ruling, High Court Judge Justice Fred Ochieng noted that the appointment of Thoithi Muniu and Kuria Muchiru of PricewaterhouseCoopers (PwC) as joint receiver managers was in line with Section 734 (2) of Insolvency Act.
The judge said despite the changes in some parts of the Companies Act, the law continues to bind matters that were before the court before the changes in the law.
“Despite the repeal of the Companies Act or Part VI of IX of the Act, those parts and any other provisions of that Act necessary for their operation, continue to apply, to the exclusion of this Act, to any past event and to any step or proceeding, following or relating to that past event even if it is a step or proceeding that is taken after the commencement,” his ruling read in part.
The ruling now validates the appointment of the two receivers and paves way for the liquidation process to go on.
The liquidators now have the go-ahead to call for a meeting with creditors to look for a new liquidator.
“The injunction stopping the meeting convened by the joint liquidators on grounds that they were not properly appointed was set aside,” said Muniu Thoithi, a managing partner at Pwc when contacted about this development.
The process of looking for a new liquidator will be a priority now since PwC opted out of the liquidation exercise in May after their suitability was questioned by the directors of Karuturi.
They had then gone ahead to call for a meeting with creditors to choose another liquidator.
On May 11, 2016, an application was filed in the High Court by lawyer Samora Owino to question the qualifications of the two liquidators.
The matter, which was certified as urgent, saw the directors argue that the two were acting contrary to the Insolvency Act 2015.
The flower company had sought an opinion from the office of the Attorney General, which said in its response that only Ponangipalli Venkata Ramana Rao is licensed to operate as a liquidator in Kenya under the new insolvency law.
The company stopped trading on May 6, following a winding up order issued in court. It had been placed under receivership two years ago after encountering trouble in servicing its financial obligations. Its key creditors include CFC Stanbic Bank, which it owes Sh383 million.
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