CHARGES & MORTGAGES EXPLAINED

 CHARGES & MORTGAGES

Charges and mortgages are basically lending transactions. They are basically designed to provide security for money advanced by creditors.

 In the case of samtley vs. wilde, Lindley J defined a mortgage as a disposition of some interest in land or other property as a security for the payment of a debt on the discharge of some other obligation for which it is given. In simple terms a mortgage is a conveyance of land as a security for the payment a debt or the discharge of some other obligation.

Stratham defines a mortgage as follows; “a mortgage is a transaction in which a borrower transfer to a lender ownership of an interest in land, the condition of the transfer being that the ownership or interest is vested in the lender as security for the loan. The borrower is called the mortgagor and the lender is called the mortgagee, the loan is called the mortgage debts and the land, the mortgage property.

Under the ITPA, a mortgage is defined as the transfer of an interest in specific immovable property for purposes of securing interest in payment of money advanced or to be advanced by way of loan an existing or future debt on the performance of an engagement which may give rise to a pecuniary liability.

A charge on the other hand is defined under s. 3 of the RLA as an interest in land securing the payment of money or monies worth or the fulfillment of any condition (and includes sub-charge and the instruments creating the charge). This is the same definition adopted in s.2 of the land act. Under the land act, a charge includes:

a.        Informal charge

b.       Customary charge

It is important to differentiate what constitutes a mortgage and charge,

A mortgage is peculiar to land registered under Government Lands Act & Land Titles Act; A charge is peculiar to land registered under Registered Land Act & Registered Titles Act

A mortgage transfers an interest in specific immovable property for the purposes of securing the payment of money, advanced, or to be advanced by way of a loan; a charge on the other hand does not transfer any interest in the land but designates the land as security for the debts. A mortgage therefore conditionally assigns/conveys interest in land to secure the payment of a debt. The assignment or conveyance is conditional on the default by the borrower in that in the event that the borrower defaults, the mortgagee’s interest in the land becomes absolute. Where the borrower or mortgagor does not default, the land reverts to the mortgagor.

 A charge on the other hand only gives a rise to payment without aspiring transfers in the title unlike a mortgage. In other words whereas mortgage confers interest on the property, charge confers over the property

  Under s. 78 of the land act the provision of charges have a retrospective event. The land act therefore applies to charges that were created before the act came into force. Reference to charged land has the meaning of charged land, charged lease and a second or subsequent charge.

The land act at s.79  creates informal charges by way of a written and witnessed undertaking to charge in land or interest in land or by way of deposit to title of documents with the charge. This is a form of equitable charge.

Under Registered Titles Act, equitable charge is created by deposit of documents of title to land under the act evidenced by an instrument in writing. Memorandum of deposit of title is to be registered under equitable mortgages act. An equitable mortgage or charge is created when the borrower deposits with the lender the documents of title with intent to create security thereon.

Under the RLA it was controversial as to whether an equitable charge may be created under the act. It was argued on the one hand  that RLA does not provide for equitable charges as the title documents is not itself a title per se and further that the RLA provides for how to create a security. In the case of K.C.F.C vs. Ngeny the court of appeal held that s.163 of the RLA imports the common law principle of equity including equitable charges. The express provision recognizing equitable charges under the land act puts this matter to rest.

Under section79 (3) of the RLA a charge of a matrimonial home shall be valid only if any document or form used in applying for such a charge or used to grant the charge is executed by the chargor or any spouse of the chargor leaving in that matrimonial home or there is evidence from the document that it has been accented to by all such persons.

Issues:

i.                     Who qualifies as a spouse?

ii.                    What is a matrimonial home?

Under the act, matrimonial home refers to any property owned or leased by one or both spouses and occupied by the spouses as their family home.

Under s. 79(5), a normal charge shall take effect only when it is registered in a prescribed register and a charge shall not be entitled to exercise any of the remedies under that charge unless it is registered.

What are the ingredients of a charge?

Every charge instrument must contain the following:

i.                     Terms and condition of sale.

ii.                    An explanation of the consequences of default

iii.                  The reliefs of the chargor including the right of sale

Under s. 81(1) of the act, charges shall run according to the order in which they’re registered. Informal charges are also ranked according to the order in which they are made but a registered informal charge shall have priority over unregistered informal charge.

Subject to the provisions of the act, a charge may make provisions to the charge to give further credit to the chargor to a current or continuing account. This is what is called tacking.

Variation of interest rates

Under s. 84(1) of the act, where it is contractually agreed that the rate of interest is variable, the rate of interest payable under the charge shall not be increased or reduced without a written notice served on the chargor by the charge.

The chargee must give the chargor at least 30days notice of the reduction or increment. His notice must state clearly and in a manner that can be clearly understood the new rate of interest to be paid.

Covenants, conditions and powers implied in charges

Under s. 88(1) of the land act, in every charge there shall be covenants binding the chargor to:

a.        Pay the principle money on the day appointed in the charge agreement.

b.       To pay all rates, charges, taxes, rent and other outgoings that are payable in respect to the charged land.

c.        To repair and keep in repair all buildings and improvements upon the charged land and to permit the chargee and chargee’s agent to inspect the state and condition of the building.

d.       To ensure by insurance or any other means that maybe described or which are appropriate.

e.        In the case of agricultural land, to use the land in a sustainable manner.

f.         Not to lease or sub-lease the charged land or part of it for a period longer than one year without the consent of the chargee.

g.       Not to transfer, assign or lease the land or part of it without the consent of the chargee.

h.       In the case of a charge of a lease, during the continuance of the charge to pay, perform and observe the rent, covenants and conditions contained in or implied by and in the lease.

i.         If the charge is a second or subsequent charge that the chargor will pay interest from time to time accruing on the prior charge when it becomes due and will at the proper time pay the principle sum.

j.         If the chargor fails to comply with any of the covenants implied, the chargee may spend any money which is reasonable to remedy the breach and they add the money to the principle sum.

Remedies of a chargee

The remedies that obtain to a chargee under the RLA included the realization of security by way of statutory power of sell, appointment of a receiver and institution of a suit by the chargee to recover the loan amount as a civil debt.

RLA outlawed the remedies for closure and the right of possession.

Exercise right of sale

Institute a suit

Appoint a Receiver

Under the ITPA the chargee or mortgagee would be titled to exercise statutory power of sale, appoint a receiver right to for closure and the right to take possession.

Under s.90 (1) of the Land Act, if a chargor is in default of any obligation fails to pay interest or any other periodic payment or any part therefore due under any charge or in the performance or observation of any covenant, express or implied, and continues to be in default for one month, the chargee may serve on the chargor a notice in writing to pay the money owing or to perform and observe the agreement as the case may be.x

The notice is required to notify the recipient (chargor) on the following:

i.                     Nature and extent of default by the chargor

ii.                    If the default is about failure to perform or observe any covenant in the charge, the thing that the chargor must do or desist from doing so as to rectify the default and the time being not less than two months by the end of which the default must have been rectified

iii.                  If the default consists of non-payment of any money due under the charge, the amount that must be paid to rectify the default and the time being not less than 3 months by the end of which the payment in default must have been completed.

iv.                  The consequences that if the default is not rectified within the time specified in the notice the chargee will proceed to exercise any of the remedies referred to in the act.

v.                   The right of the chargor in respect of certain remedies to apply to the court for the relief against those remedies. If the chargor does not comply within two months after the debt of service of the notice then the chargee may :

a.        Sue the chargor for any money a due and owing  under the charge

b.       Appoint a receiver of the income of the charged land.

c.        Lease the charged land or if the charge is of a lease, sub-lease the land.

d.       Enter into possession of the charged land

e.        Sell the charged land.

Chargee sues for money owed if:

a.    The chargor is personally bound to pay the money.

b.    If by any course other than the wrongful act of the chargor or chargee, the security is rendered insufficient and the chargee has given the chargor sufficient time to give additional security.

c.    If the chargee is deprived of the whole or part of the security through a wrongful act or default of the chargor

Under s. 92(1) the court may order the postponement of any proceedings brought under this section until the chargee has resolved all the remedies relating to the charged land.

A chargee may exercise a power to sell the land. Before exercising the power of sale, the chargee shall serve the charger with a notice to sell which has to be in the prescribed form and shall not proceed to complete a sale until at least 45 days have elapsed from the date of service of that notice of sale.. A copy of the notice is supposed to be served among others;

i.                      the commission if the charged land is a public land;

ii.                    the holder of the land out of which the lease has been granted if the charged land is a lease;

iii.                  spouse of the chargor who had given the consent ;

iv.                  Any leasee and sub-leasee of the charged land.

v.                   Guarantor of the money advanced under the charge

Before a chargee exercises the right to sale:

i.                      A forced sale valuation has to be done.

ii.                    If the sale is to proceed by public auction, the chargee shall ensure that the sale is publicly advertised in such a manner and form as to bring it to the attention of interested buyers.

iii.                  The sale shall be made in a prescribed form and the registrar shall take it as sufficient evidence that the sale has taken place.

Courts have intervened where a statutory notice issued is not valid.

Case St. John vs. cooperative bank of Kenya; the court held that the commission to serve a valid statutory notice is a fundamental breach of statute and it delegates the chargor’s equity of redemption. If a statutory notice is not valid, the chargee’s statutory power of sale does not approve.

Conveyancing : Outline of a simple conveyancing transaction

 

Conveyancing- Outline of a simple conveyancing transaction

 

Seller’s Advocate (SA)	Buyer’s Advocate (BA)
Take instructions   At this stage- must obtain documentary proof of the client’s identity (to comply with money laundering regulations)	Take instructions   At this stage- must obtain documentary proof of the client’s identity (to comply with money laundering regulations)
Prepare Pre-contract package   This comprises of; Draft contract, showing what land the seller is selling and on what terms he is prepared to sell Evidence of the seller’s legal title to the property, to prove that he does own it Sometimes the results of the pre-contract searches which the seller has made and the other information about the property   The package may also include other information such as planning permission.
	Investigate Title   Must check that the seller is entitled to see  what he is purporting to sell If problems with the title are discovered, the buyer can withdraw as there is no binding contract as yet
	Pre-contract searches and enquiries   Necessary because of caveat emptor- buyer beware The National Land information service provides an internet ‘one-stop-shop’
	Check buyer’s finances   To ensure he is able to proceed with the transaction, including all associated costs and deposits
	Approve the draft contract   It must be then returned to SA, telling him that the buyer has approved the terms The contract is the prepared for the client’s signatures Two copies are printed, buyer signs one, seller signs the other The contract comes into existence by ‘exchange of contracts’ (i.e. the buyer received the copy signed by the seller and vice versa) Prior to physical exchange through the post, parties usually agree over the phone that the contract should come into existence at that moment. This is telephonic exchange
EXCHANGE CONTRACTS   This marks the stage where a binding contract comes into existence   On exchange, the buyer will normally pay the deposit
	Raise requisitions with the seller   These are questions or requests, usually directed at the resolution of procedural queries relation to the mechanics of completion its self. E.g. buyer needs to know how much money is required to complete, where completion is to take place and who holds the keys. Standard form is usually used here.
	Prepare transfer deed Sends to SA for approval at the same time as requisitions NB sometimes the contract will provide for SA to draft the transfer deed, which will be provided to the buyer at the same time as the draft contract The contract states what the parties have agreed to do, the transfer carries it out
Approve Transfer deed This approval is normally notified to the buyer’s solicitor at the stage when replying to requisition The transfer deed can then be engrossed- i.e. a copy is prepared containing any agreed amendments. This is the copy which will be signed by the parties
	Pre completion searches To ensure no last minute problems have occurred with the title
Prepare for completion   Take steps to ensure that completion will proceed smoothly and without delay	Prepare for completion   Make a checklist of what is to happen at completion, to ensure nothing has been overlooked
Completion
Post completion matters   Tie up loose ends Send the seller’s lender the amount required to pay off the seller’s mortgage, obtain a receipt, and send it to BS who will need this to prove to land registry that the mortgage has been discharged Account to his client for the proceeds of sale and submit bill of costs (if not already done). The proceeds of sale should be dealt with asap, or the SS may have to pay interest on them	Post completion matters   Deal with payment of stamp duty land tax, usually paid within 30 days of completion Particulars of the transaction must be delivered to HMRC after completion, a certificate is then issued which allows registration of the transaction at the Land Registry. Without registration the buyer will not acquire legal ownership to the property After these formalities, BS must apply to Land Registry for is client’s title to be registered. Land registry will provide a Title info Document, which should be kept either with the buyer, lender or BS

 

INSOLVENCY LAW NOTES (Summary Notes)

 Insolvency

BANKRUPTCY

• Debtors application 

• Creditors application

• Discharge from bankruptcy

• Alternatives

• Voluntary arrangement 
• Instalment order
• No asset procedure

CORPORATE INSOLVENCY

• Liquidation

• Members Voluntary Liquidation 
• Creditors Voluntary Liquidation 
• Liquidation by the Court

• Alternatives

• Administration
• Company Voluntary Arrangement

•The Insolvency the UK Insolvency Act   2015  in Kenya borrows heavily  from Act of 1986.

•With its adoption of the Insolvency Act 2015 Kenya has become the 40th State in the world to have enacted legislation based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency.

•The following are the highlights of the act

• It enables persons and entities to continue to operate as going concerns so that ultimately they may be able to meet their financial obligations to their creditors in full or at least to the satisfaction of those creditors
• The act also provides for management of the debtors alternative procedures affairs for the benefit of to insolvency e.g the creditors
• The act also provides for and unincorporated bodies Liquidation procedures for incorporated (whether solvent or otherwise)
•  It also provides provisions for alternatives to liquidation like administration
•  Another aim is to whole than would adjudged bankrupt achieve be the a better outcome for case if those persons the creditors as a and entities were
•  Rehabilitating the debtor is also targeted at honest but unfortunate debtors.
• There is also a provision for cross-border insolvency.

The Insolvency Practitioner

Bankruptcy

• Acts as the bankruptcy trustee or interim trustee in respect of the person’s property or as permanent or interim trustee in the sequestration of the person’s estate
• A trustee under a deed
• as supervisor of a voluntary arrangement

Companies

• Acts as the liquidator, provisional liquidator, administrator of the company; • a supervisor of a voluntary arrangement
• a supervisor of a voluntary arrangement

 

• A person who, not being the holder of an authorisation, purports to act as an insolvency practitioner in relation to a company or a natural person commits an offence and is on conviction liable to a fine not exceeding five million shillings. Sec 5 of the Insolvency Act 2015

Qualifications

• holds a degree from a university recognized in Kenya;
• has at least five years' relevant professional experience as a member of a professional body recognized under section 7 of the Act;
• has at least two years' experience in insolvency practice before commencement of the Act;
• has worked under the apprenticeship of an insolvency practitioner for at least four years
• satisfies the requirements of Chapter 6 of the Constitution.
• An advocate who has worked for the Official Receiver for not less than two years automatically qualifies to Act as an Insolvency Practitioner.

Bankruptcy

•Originally the law governing the insolvency regime in respect of enacted in the year 1938, modelled after the English 1914 Bankruptcy

•debtor adjudging the debtor bankrupt on- es an order in respect of a

(a)accordance with section 17 - 31 of the Insolvency Act 2015; made in 

(b)on the application of the debtor made in accordance with section 32

 

•The creditor's application for bankruptcy order shall be in form of a petition in Form 3 set out in the First Schedule and shall be accompanied by the following documents—

• verifying affidavit which shall be in Form 4 set out in the First Schedule;
• proof of the debt which shall be in Form 5 set out in the First Schedule; and
• the application for appointment of trustee which shall be Form 9 of the First schedule.

•The petition shall be preceded by a statutory demand and shall be in Form 6 set out in the First Schedule.

> An application for a bankruptcy order by the debtor may be made by way of a bankruptcy petition and shall be in Form 10 set make application for out in the First Schedule.

The petition shall be accompanied by the following documents -

• an affidavit to the petition which shall be in Form 8 set out in the First Schedule;
• statement of debtors financial position which shall be called a "statement of affairs",  and shall, be in Form 11 set out in  the First Schedule; and 
• application for appointment of trustee which shall be in Form 9 of the First Schedule

•Once an application for bankruptcy is made then an interim trustee is appointed to take over the matters of the debtor

•The next stage is the appointment of a trustee( could be the Official Receiver or an Insolvency Practitioner)

•The purpose of a trustee is to manage the debtors affairs.

•The bankrupts property after declaration of bankruptcy vests in the trustee and the same will apply to any subsequent acquisition or passing of property into the bankrupts estate.

•The Bankrupt is then to lodge statement of his financial position with bankruptcy trustee(Sec 50). This is to ascertain the true financial position of the debtor. It is an offence under the Act to hide any pertinent information during the public examination

•Here the Creditors get other interested parties to inspect the financial statements as well as including unsecured creditors

• After the public examination a meeting can be convened by the official receiver or the creditors to chart a way forward in relation to the outstanding creditors

• Once the debts of a bankrupt individual or of the company are ascertained, they will be paid out to creditors. 

• The Second Schedule to the Act sets out preferential debts in order of their priority as follows:

First priority claims

• These include the costs of the bankruptcy process i.e.

1. The bankruptcy trustee’s/liquidator’s/administrator’s remuneration;
2. Reasonable costs incurred during the court proceedings; and
3. Costs incurred by the creditor to preserve the bankrupt’s assets.

• This is provided for under section 247 of the Act (for bankrupts), section 473 (for companies in liquidation) and section 615 (for companies under administration).

Second priority claims

Include the following:  

i. Wages and salaries payable to employees of the bankrupt during the four months before the commencement of bankruptcy. Each employee is entitled to a maximum of Kshs. 200,000. (including holiday pay and compensation for redundancy and for loss of employment before, or because of the bankruptcy/liquidation)

ii. Statutory deductions from employees (e.g. PAYE, NSSF, NHIF).

iii. Amounts that are preferential claims under section 175(2) and (3) of the Act, which are for services relating to the bankrupt’s business records and has a lien over such documents (having not been paid). Advocates and accountants would fall in this category. The maximum amount payable is capped at Kshs. 200,000.

iv. Other amounts required by other written law (especially those paid by the buyer to a seller on account of the purchase price of goods).

Third priority claims

Third priority claims are the taxes payable by the bankrupt such as income tax, customs duty and excise duty which are unpaid.

• Claims  having  the  same  priority  rank  equally among themselves and are payable in full, unless the  property  of  the  bankrupt is insufficient to meet them whereupon they shall be paid out in equal proportions to the creditors. 
• After the payment of the debts, any surplus is to be applied in paying outstanding interest on debts since the commencement of the bankruptcy.

Discharge from Bankruptcy

• S. 254.(l) A bankrupt is automatically discharged from bankruptcy three years after the bankrupt lodged a statement of the bankrupt's financial position in accordance with section 50, but may apply to be discharged earlier.

•Automatic discharge was not found in Cap 53. One had to go to court to get a discharge order and sometimes the court would hold that the bankrupt order remain in force thus tying many down in their ability to recover.

•Similarly a creditor can apply to court to cancel the discharge 

•A Trustee can also object to discharge

 

Look at

•Assets a bankrupt can retain Sec 161-167 •Final Meeting of creditors Sec 253

•Bankruptcy offences Sec 289-302 i.e anything that would aggravate the circumstances of the bankrupt, or selling of assets or not keeping proper records. These offences have been enhanced and clearly enumerated unlike in cap 53

•Duties of the Bankrupt Sec 140-148

•Powers of the Bankruptcy trustee - power to summon and examine,

•Restrictions during Bankruptcy Sec 149 - 160

 

Alternatives to Bankruptcy

•The Insolvency Act 2015 by the introduction of Part IV thereof makes provisions for alternative procedures to bankruptcy, instead of the usual foreclosure mechanism and distribution of the assets of a non-performing debtor.

•The administration procedure facilitates the rescue of a company or the better realization and application of its assets. Here an insolvent company is allowed  to continue trading with protection from its creditors through a statutory moratorium.

•Thus corporate rehabilitation for failed enterprises by the administrators comes into play. In this regard a debtor can enter into a proposal for financial restructuring subject to the agreement of creditors.

•Voluntary arrangements- a "supervisor" in relation to a voluntary arrangement, means the person who is for the time being performing the functions imposed as a result of the approval of the arrangement by the creditors of the debtor; 

•The supervisor is responsible for implementing and supervising a voluntary arrangement

•A summary instalment order (Sec 323) is an order made by the Official Receiver directing the debtor to pay the debtor's debts- 

(a) in instalments or in some other way; and 

(b) in full or to the extent that the Official Receiver considers practicable in the particular circumstances of the case.

• No asset procedure (sec 343) 

(a) the debtor has no realizable assets; 

(b) the debtor has not previously been admitted to the no-asset procedure; 

(c) the debtor has not previously been adjudged 

(d) the debtor has total debts that are not less than one hundred thousand shillings and not more than four million shillings; and 

(e) the debtor does not have the means to repay any amount towards those debts.

Notices in Bankruptcy

• Under Section 9. (1) of the regulations, A notice relating to a bankruptcy shall identify the bankrupts  address in which the bankrupt has resided in the proceeding period of twelve months before the issuance of the bankruptcy order; 

• the principal trading address, if different from the bankrupt's residential address; 

• the bankrupt's date of birth; 

• the bankrupt's occupation; 

• any other name by which the bankrupt has been known; 

• and any name or style ,other than the bankrupt' own name, under which- the bankrupt carried on business; and  how any debt owed to a creditor was incurred. 

Corporate Insolvency

•  A company becomes insolvent if it does not have enough assets to cover its debts and/or it cannot pay its debts on the due dates

• Liquidation

• Members Voluntary Liquidation
• Creditors Voluntary Liquidation
• Liquidation by the Court

• Administration

• Company Voluntary Arrangement

Liquidation

•Members Voluntary Liquidation

•This can occur when the specific object of forming the company has expired and the company in a general meeting has passed a resolution providing for its voluntary liquidation .

•Sec 394 provides that a notice of the resolution shall be published within 14 days after the passing of the resolution in the:

• •In the Kenya Gazette
• •Once in at least two papers of national circulation •On the companies website
• •Additionally notice has to be given to any holder of a floating charge. 

• Additionally notice has to be given to any holder of a floating charge. 

• On or after the commencement of liquidation a company shall cease to carry out any business, except as may be beneficial to the liquidation

• Members in a members one or more liquidators,

• Members in a members voluntary liquidation the company shall appoint one or more liquidators, This must be a qualified IP practitioner Sec 399

• Any transfer of shares or changes in the directorship or shareholding

• Liquidator manages the process of liquidation

• Upon appointment of the liquidator all powers of the directors cease

• Ensures meetings are held with the creditors so as to have an agreeable formula as to the liquidation

• There is also a provision to convert the members voluntary liquidation to a creditors liquidation

• Look at Creditors Voluntary Liquidation Sec 405

•Liquidation by the court Sec 423

• Only the High Court has jurisdiction to supervise the liquidation of Companies (Sec 424)  

* Section 425 provides the circumstances a company may be liquidated by the Court

• The liquidator has various powers in the act to ensure that the liquidation process is carried out effectively sec 460 -470

• The end result at the culmination of the Liquidation process is that the company stands dissolved

 Administration of Insolvent companies

•The objectives of administration are to maintain the company as a going concern, to achieve a better outcome for the company’s creditors as a whole than would likely to be the case if the company were liquidated and to realize the property of the company in order to make a distribution to one or more secured or preferential creditors

•An administrator is appointed to mange the affairs and property of the company in the context provided for under the Act,

•Appointment of administrators can be 

• •By an administration order of the court 
• •By the holder of a floating charge
• •By the company or its directors

•Additionally an application can be made to the court for an administration order in respect of the company by

• •The company itself 
• •The directors
• •Any other person of a class prescribed by the insolvency regulations e.g Holder of a floating charge

•While a company is under administration

• •A resolution for the liquidation of the company may not be made
• •The court may not make an order for the liquidation of the company 

•Administration automatically ends after 12 months Sec 593 however this can be extended

 

Company Voluntary Arrangements

 • The provisions with respect to the voluntary arrangement for an insolvent company are similar to those for an insolvent natural person. 

 • Therefore, there are restrictions where a proposal’s effect is to affect a secured creditor’s right to enforce their security. 

• A voluntary arrangement once approved, is binding on every person, including the secured creditor.

• There is a moratoria on debt payments when company directors propose voluntary arrangement

• The implications of a moratorium are that the company is restricted in obtaining credit or paying its debts and liabilities during this period. 

• Further, any steps taken to enforce any security over the company’s property can only be done with the approval of the Court and the Court may impose some conditions on such an approval. Also, approval of the Court is required where proceedings are commenced against the company or its property.

• A company in respect of which a moratorium has effect may dispose of any of its property only if there are reasonable grounds for believing that the disposal will benefit the company and the disposal is approved by the moratorium committee.

 • It is important to note however that a company may transfer property as if it were not subject to the security only where the holder of the security consents or the Court gives its approval

• Supervisors this is a person appointed to supervise the voluntary arrangement: He/she can convene and chair meetings with the creditors(See sec 134 of the Regulations on the conduct of meetings)

• Under sec 631 certain persons can challenge the decisions at the meetings in voluntary agreements

 Cross Border Insolvency Part 13

• With the adoption of the Insolvency Act 2015 Kenya has become the 40th State in the world to have enacted legislation based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency. 

• Section 720

• Purpose is to provide

• Corporation between the courts and other competent authorities of Kenya and foreign states
• Fair and administration of cross border insolvencies
• Application of  reliefs from foreign proceedings: application made to court (Sec 17 of the Fifth Schedule)
• Court of ensure protection of local creditors
• Co-operation with foreign Representatives e,g communication of notices
• Provision for concurrent Proceedings

• Look at Companies not eligible for administration (sec 640)