The Bankruptcy Act in Kenya

Originally passed on September 3, 1930, the Bankruptcy Act of Kenya is extensive, with 164 sections and numerous amendments. The Act covers all aspects of bankruptcies, including the formal definition and the proceedings of the bankruptcy court.

Types

The Act formally defines bankruptcy as occurring when an individual voluntarily transfers his property or debts to a trustee in order to avoid paying a creditor, or if an individual files for bankruptcy with the court. However, bankruptcy can also be declared involuntarily, such as when an individual leaves Kenya for the purpose of avoiding paying debts, or if a debtor fails when attempting to collect a payment from a creditor at a previously specified time. The Act specifies that only Kenyan debtors may put Kenyans into bankruptcy.

Procedure

Once declared bankrupt, the individual in Kenya is brought before a bankruptcy court. The court convenes a meeting of the individual's debtors and their assets are examined. Only assets that can be liquidated are considered in bankruptcy court. The court then creates a scheme that establishes a time table by which the bankrupt individual or his trustee (an individual who guarantees for a bankrupt person) agrees to pay back his debtors.

Offenses

The Act also establishes criminal offenses related with bankruptcy proceedings. This includes punishments against false debtors when discovered upon an examination of their assets--individuals who declare bankruptcy when they could pay their debts)--which can be punished by up to three years in prison.

References

• Laws of Kenya: Bankruptcy Act