ADVOKS GLOBAL · KENYA
Insolvency Act
505. Power of the Court to make orders against officers of company and others found to have participated in fraudulent trading by company in liquidation
Edition: 2022-12-31 · In force
505. Power of the Court to make orders against officers of company and others found to have participated in fraudulent trading by company in liquidation
(1)A liquidator of a company may make an application to the Court to make an order under subsection (2) if—(a)in the course of the liquidation of the company, the liquidator forms the view that a business of the company has been carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose; and(b)the liquidator believes that specified persons participated (directly or indirectly) in the business with the knowledge that the business was being carried on in that manner.(2)If, on hearing an application made under subsection (1), the Court finds that the persons specified in the application did in fact participate (directly or indirectly) in a business of the company with the knowledge that it was being carried on in the manner referred to in subsection (1)(a), it may order those persons (or any of them) to make such contributions to the company's assets as the Court considers fair and reasonable.(3)The persons specified in an application made under subsection (2) are entitled to be served with a copy of the application and to appear and be heard as respondents at the hearing of the application.(4)If the Court makes an order against a person under subsection (2), it may also make an order disqualifying the person from—(a)being or acting as a director of a company or a partner of a limited liability partnership;(b)being or acting as a liquidator, provisional liquidator or administrator of a company or limited liability partnership;(c)being or acting as a supervisor of a voluntary arrangement approved by the company or a limited liability partnership; or(d)in any way, whether directly or indirectly, being concerned in the promotion, formation or management of a company or limited liability partnership,for such period, not exceeding fifteen years, as may be specified in the order.