Law & Regulation
Insolvency Act, 2015
The Insolvency Act is Kenya's principal framework for individual and corporate insolvency, including rescue, administration, liquidation, creditor participation, avoidance rules and cross-border cooperation. For InfraLex, the corporate and secured-creditor consequences are especially significant.
Legal Significance
What This Instrument Does
It defines insolvency procedures and office-holder powers, establishes administration and liquidation pathways, regulates claims and distributions, permits challenge to specified pre-insolvency transactions and addresses cross-border cases. It interacts with security statutes but does not replace their creation and perfection rules.
Why It Matters
Project contracts and financing models must account for counterparty distress, enforcement stays, continuity, priority and recoveries. Security that is valid outside insolvency may be affected by collective-process rules; contractual termination or step-in expectations must be tested against mandatory insolvency law.
Key Provisions
- Insolvency tests and entry routes
Determine when debtors, creditors or other authorised persons may invoke a procedure.
- Administration
Provides a rescue or realisation procedure under an administrator and may constrain individual enforcement.
- Company voluntary arrangements
Permit negotiated restructuring through a statutory process where conditions are met.
- Liquidation
Governs winding up, control of assets and distribution to creditors.
- Moratoria and stays
Protect collective process objectives by limiting specified proceedings or enforcement.
- Office-holder powers and duties
Define control, investigation, realisation and reporting responsibilities.
- Proof and ranking of claims
Establishes creditor participation and the applicable distribution hierarchy.
- Secured-creditor position
Preserves or qualifies enforcement and priority according to the procedure and applicable security law.
- Preferential claims
Identifies claims receiving statutory priority over ordinary unsecured debt.
- Avoidance transactions
Allows challenge to preferences, undervalue transactions or other suspect dealings within statutory conditions.
- Set-off and mutual dealings
Affects net exposure between insolvent counterparties.
- Directors and misconduct
Addresses responsibility for specified conduct around insolvency.
- Cross-border insolvency
Supports recognition and cooperation in qualifying international cases.
When You Would Use This
Drafting default and insolvency provisions
Assessing enforcement strategy
Restructuring a distressed SPV or contractor
Calculating likely priority and recovery
Reviewing suspect pre-insolvency transactions
Coordinating a cross-border process
InfraLex Relevance
Primary / Framework for Insolvency / Bankruptcy; Supporting / Related for Security / Collateral only through priority, stay and enforcement consequences. It is not a substitute for MPSR or land-security creation/perfection analysis.
Legal Framework Position
- Insolvency / BankruptcyPrimary / Framework Instrument
- Security / CollateralSupporting / Related Instrument
Instrument Overview
- Official Citation
- Act No. 18 of 2015 (Cap. 53)
- Instrument Type
- Law / Act
- Source Language
- English
- Last Verified
- 6 September 2026