DEBT RECOVERY MANAGEMENT DECEMBER 2021 PAST PAPER

THURSDAY: 16 December 2021.      Time Allowed: 3 hours.

Answer ALL questions. Marks allocated to each question are shown at the end of the question.

QUESTION ONE

Zentamatt was admitted to corporate insolvency on 20 June 2020 by the High Court in Kenya. However, a month earlier, a court in Namibia, a country in the South-East of Africa, had appointed a Namibian based trustee to take charge of Zenttamatt’s assets located in Namibia, which was its regional hub of operations in Africa.

The underlying petition had been filed by two creditors in Namibia who asserted claims of unpaid dues worth KES. 280 million prompting the court in Namibia to order the seizure of one of Zenttamatt’s Aircraft. The aircraft was parked at an airport in the Coast of Namibia.

Following Zenttamatt’s admission to corporate insolvency proceeding in Kenya, the administrator appointed by the Namibian court came before the High Court of Kenya seeking recognition of Namibia’s proceedings.

However, the High Court outrightly barred the administrator appointed by the Court in Namibia from participating in the insolvency proceedings in Kenya and declared the overseas bankruptcy proceedings null and void.

The Namibian court appointed administrator, appealed to the Court of Appeal and the Court of Appeal set aside the order and allowed the Namibian administrator to be part of and attend the creditors’ meetings. This was only possible because the cross border laws were made on the principles of the UNICITRAL model law on cross border insolvency which recognised Kenya as the “foreign-main proceeding” and the Namibian proceeding as the “non-main proceeding”.

 

Required:

1.           The Namibian court and the Kenyan courts each had effective and efficient insolvency laws to handle the Zentamatt case.

With reference to the above statement, evaluate six objectives of effective and efficient insolvency laws. (6 marks)

2.         Explain the following terms as used in the above case study in relation to cross-border insolvency:

Foreign main-proceeding.   (2 marks)

Foreign non-main proceeding.    (2 marks)

Foreign representative.   (2 marks)

3.          Discuss four reliefs that the Namibian Court appointed administrator might be granted by the Court in your country on recognition of a foreign proceeding from Namibia.    (8 marks)

(Total: 20 marks)

 

QUESTION TWO

1.          Discuss three exceptions to the general rule in debt management that a debtor shall pay the charges of the auctioneer.     (6 marks)

2.         Summarise four principles of debt management.                                                                                                  (4 marks)

3.         Evaluate five disadvantages of arbitration as an alternative dispute resolution mechanism.                 (10 marks)

(Total: 20 marks)
QUESTION THREE

1.          Explain six causes of corporate insolvency.        (6 marks)

2.          Summarise six rights of creditors in bankruptcy, proceedings.       (6 marks)

3.           Describe four arbitral tribunal orders that might be awarded to a party under United Nations Commission on International Trade Law (UNCITRAL).   (8 marks)

(Total: 20 marks)

 

QUESTION FOUR

1.           Explain three circumstances which indicate that a debtor is unable to pay a debt.    (6 marks)

2.          Describe three persons who might make an application in court for the appointment of a liquidator of a partnership.          (6 marks)

Analyse four ways through which operation of the law could cause dissolution of a partnership firm. (8 marks)

(Total: 20 marks)

 

QUESTION FIVE

1.           Evelyn Kula is a bankrupt Kenyan citizen domiciled in Canada purposely to avoid paying her creditors. She recently returned to Kenya and her long-time friend, Miriam Dea intends to file bankruptcy proceedings in court against her and Evelyn seeks your legal advice concerning bankruptcy of natural persons.

Required:

Discuss four circumstances under which a person might make a bankruptcy application to the Court. (8 marks)

Analyse four types of debts from which a bankrupt might not be released even after being discharged from bankruptcy.      (8 marks)

2.          Highlight four duties of a liquidator appointed to wind up a limited partnership.   (4 marks)

(Total: 20 marks)

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