Change the insolvency law for a rapid overhaul of the sugar sector

0

Columnists

Change the insolvency law for a rapid overhaul of the sugar sector


Sugar trucks at the port of Mombasa. FILE PHOTO | NMG

Summary

  • Muhoroni Sugar Company has been in receivership for over 20 years and many creditors have yet to be paid.
  • Efforts to revive these businesses have proven futile with endless court battles intrigued by behind-the-scenes political machinations.
  • Insolvency law has enhanced the options by providing additional alternatives such as administration and voluntary corporate arrangements.

The sugar sub-sector is a key factor in Kenya’s economy. In addition to ensuring food security, the sector employs millions of people who depend on it directly or indirectly through the cultivation of sugar cane, distribution, retail services and other upstream and downstream supply chain.

The genesis of the poor performance of state-owned sugar mills began when the state took over the management of these companies among others Mehta Group, Booker Tate, Magahbhai D. Hindocha, Devjibhai K. Hindocha and George Russell Mayers and others expatriates. Political appointments ruined their management.

Muhoroni Sugar Company has been in receivership for over 20 years and many creditors have yet to be paid.

Efforts to revive these businesses have proven futile with endless court battles intrigued by behind-the-scenes political machinations.

The main legislation governing insolvency in Kenya is the Insolvency Act 2015. Insolvency occurs when a company cannot raise enough funds to meet its obligations as they come due.

Prior to the enactment of the Insolvency Act on September 11, 2015, liquidation was often the creditor’s only recovery option.

Insolvency law has enhanced the options by providing additional alternatives such as administration and voluntary corporate arrangements.

Current insolvency law states that an escrow manager’s role is first to assess the viability of the ailing business, creditors’ investments and debt in order to develop a repayment strategy without completely liquidating the business. ‘business. The ultimate goal is financial recovery as quickly as possible.

The insolvency regulations stress the need to repay debts, including unpaid benefits to employees, suppliers, farmers, transporters, licensed distributors and to negotiate with creditors to obtain lower interest rates, enforce standards and government regulations if necessary, and hire new management.

The state of “receipt” has caused much pain and woe to employees, businesses and farmers.

Many former employees have died leaving their benefits behind. So sad.

Insolvency law needs to be reviewed to limit the time allowed to a receiver to collect its debt. If it is too long, it undermines the philosophy of legal positivism upon which insolvency law is based.

In Kenya, only a few companies in receivership have been revived.

The Kenya Commercial Bank (KCB) group has been instrumental over the past few years in reviving these struggling businesses. This was demonstrated with the successful acquisition of National Bank, the rapid resolution of Imperial Bank of Kenya and the successful resuscitation of Chase Bank (now SBM Bank).

Cane cultivation is an important economic activity and there is an urgent need to prevent it from collapsing. There is a need for new players in the industry with proven experience capable of improving production techniques.

Regulations regarding production, marketing and distribution need to be reviewed.

Share.

About Author

Comments are closed.