Court declares businessman bankrupt over millions owed to friends, shylocks

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Economy

Court declares businessman bankrupt over millions owed to friends, shylocks


The High Court has granted a businessman’s wish to be declared bankrupt after proving he cannot repay his debts amounting to millions of shillings.

Mr Madhav Moolraj, who ran a catering business known as Horse Shoe Tavern Limited, told the court he feared he would be sent to jail because he had no prospect or repay almost 60 millions of shillings due to friends, associates, shylocks, money changers and banks.

The businessman whose business closed in March 2020 said some of the creditors may seek to collect the debt and his failure to repay could see him jailed.

Judge Abigael Mshila granted his request and declared him bankrupt. “A temporary stay order is granted against any action, execution or other legal proceeding against the property or person of the debtor,” the judge said.

He ordered the matter to be mentioned on October 6th.

Under Section 304 of the Insolvency Act, a debtor can apply for interim orders to allow them to make a proposal, which provides for a person to act as supervisor of the voluntary arrangement.

The procedure aims to protect genuine people who have unfortunately found themselves in debt until they recover.

In the case of Mr Moolraj, he proposed Mark Gakuru as official receiver and paid 30,000 shillings for his expenses.

In an affidavit filed in court, the company said its bank statement showed it had 188,536 shillings in cash, but the debt was 59,589,531 shillings.

He told the court the debt included an overdraft borrowed from Prime Bank. He said the account had a balance of 73,749 shillings, while another account had a balance of 88 shillings.

A third bank account at Mayfair Bank Ltd had a balance of 1,935 shillings.

“As the Petitioner was filed in good faith and supported by evidence, the Court finds no reason to deny the bankruptcy order against the Petitioner,” the judge said.

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