Corporate Restructuring Strategies
Strategic legal counsel for businesses in transition. From turnaround planning and creditor negotiations to formal corporate rescue and scheme of arrangement proceedings, we help restore viability and protect stakeholder interests.
Navigating Corporate Distress & Transformation
Financial distress does not have to mean the end of a business. With the right legal strategy, companies can restructure their obligations, restore operational viability, and emerge stronger. Our corporate restructuring practice provides expert guidance through every stage of business distress -- from early-stage turnaround planning and informal creditor negotiations to formal insolvency proceedings including corporate rescue (administration), schemes of arrangement, and, where necessary, orderly liquidation. We also advise investors on acquiring distressed assets and businesses at favourable valuations. Our objective is always to preserve value and achieve the best possible outcome for all stakeholders.
Scheme of Arrangement
Court-supervised debt and capital restructuring under the Companies Act, 2015. We design, negotiate, and implement schemes that bind all creditors and shareholders to achieve sustainable solutions.
Business Turnaround Plans
Strategic planning and legal implementation of business turnaround programmes, including operational restructuring, cost rationalisation, management changes, and stakeholder communication strategies.
Distressed Asset Acquisition
Legal advisory for investors acquiring distressed businesses and assets, including due diligence on insolvency risks, transaction structuring to isolate liabilities, and negotiation with administrators and receivers.
Creditor Negotiations
Expert negotiation with banks, trade creditors, and other stakeholders to achieve consensual restructuring solutions. We negotiate debt standstills, payment moratoriums, debt-for-equity swaps, and revised repayment terms.
Corporate Rescue
Initiation and management of formal corporate rescue (administration) proceedings under the Insolvency Act, 2015, including administrator appointments, rescue plan development, and moratorium management.
Liquidation Advisory
When a business cannot be saved, we provide orderly liquidation advisory to maximise returns for creditors, manage statutory compliance, and ensure directors fulfil their fiduciary duties throughout the winding-up process.
Scheme of Arrangement Under Kenyan Law
A scheme of arrangement is one of the most powerful restructuring tools available under Kenyan corporate law. Governed by Part XXVI of the Companies Act, 2015, it enables a company to propose a binding compromise or arrangement with its creditors or shareholders through a court-supervised process.
The process begins with an application to the High Court for leave to convene meetings of the affected classes of creditors or shareholders. The company then presents the scheme proposal, which may include debt write-offs, payment deferrals, debt-to-equity conversions, or changes to shareholder rights. If approved by a majority in number representing 75% in value of each class, the scheme is submitted to the court for final sanction. Once sanctioned, it binds all parties, including those who voted against it.
- Scheme design and feasibility assessment
- Court applications for convening meetings
- Creditor and shareholder class identification and negotiation
- Court sanction proceedings and scheme implementation
Corporate Rescue & Administration
The Insolvency Act, 2015 introduced a formal corporate rescue mechanism for Kenyan companies through the administration procedure. Administration provides a breathing space for financially distressed companies by imposing a moratorium on creditor actions while an administrator develops and implements a rescue plan.
Administration can be initiated by the company itself, its directors, or a qualifying creditor. The administrator, once appointed by the court, takes control of the company's affairs and has a statutory period to propose a rescue plan. During this period, no legal action can be commenced or continued against the company without the administrator's consent or court permission. The administrator's objectives, in order of priority, are to rescue the company as a going concern, achieve a better outcome for creditors than liquidation, and realise property for secured or preferential creditors.
- Application for administration orders in the High Court
- Administrator appointment and oversight
- Rescue plan development and creditor approval
- Moratorium management and creditor communication
Acquiring Distressed Assets & Businesses
Financial distress creates opportunities for strategic and financial investors to acquire businesses and assets at attractive valuations. However, distressed transactions carry unique legal risks that require specialist advice, including successor liability, preferential transfer challenges, and the rights of existing creditors.
We advise buyers on the full spectrum of distressed acquisitions -- from acquiring assets out of receivership or administration to purchasing businesses through pre-packaged insolvency proceedings. Our due diligence process identifies and quantifies insolvency risks, including potential voidable transactions, floating charge validity, and employee obligations under the Employment Act. We structure transactions to maximise value while isolating the buyer from legacy liabilities.
- Insolvency-specific due diligence and risk assessment
- Asset purchase versus share purchase structuring
- Negotiation with administrators, receivers, and liquidators
- Post-acquisition integration and compliance planning
Corporate Restructuring Questions
A scheme of arrangement is a court-supervised process under Part XXVI of the Companies Act, 2015 that enables a company to restructure its debts, share capital, or corporate structure through a binding compromise with creditors or shareholders. The company proposes a scheme, obtains court approval to hold class meetings, and must secure approval from a majority in number representing 75% in value of each affected class. Once the court sanctions the scheme, it becomes binding on all parties -- including those who voted against it. It is a powerful tool that allows companies to restructure without entering formal insolvency proceedings.
Kenyan law offers several pathways for financially distressed companies. Informal options include creditor workout arrangements, where the company negotiates directly with creditors for revised terms without court involvement. Formal options include corporate rescue (administration) under the Insolvency Act, 2015, which provides court protection while a rescue plan is developed. A scheme of arrangement under the Companies Act allows court-sanctioned debt restructuring. Receivership may apply where a secured creditor enforces their security. As a last resort, liquidation -- either voluntary or compulsory -- provides for orderly winding up. The best option depends on the company's financial position, the nature and extent of its debts, and the realistic prospects for recovery. Early legal advice is critical.
Corporate rescue (administration) under the Insolvency Act, 2015 begins with an application to the High Court by the company, its directors, or a qualifying creditor. Upon appointment, the administrator takes control of the company and a moratorium automatically prevents creditors from enforcing debts or commencing legal proceedings without permission. The administrator has 12 months (which can be extended) to assess the business, develop a rescue plan, and present it to creditors for approval. The rescue plan may involve debt restructuring, operational changes, asset sales, or a combination thereof. If the rescue plan is approved and successfully implemented, the company exits administration as a going concern. If rescue is not feasible, the administrator may recommend liquidation.
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