Nakumatt’s Bid to Liquidate Insurer Over Sh181 Million Debt Blocked by Court

Nairobi, Kenya — September 23, 2025, 18:00 EAT.

The Commercial Court in Nairobi has blocked an attempt by the administrators of the now-defunct Nakumatt Holdings to liquidate insurance firm Kenindia Assurance over a disputed KSh 181 million debt. Justice Rhoda Rutto ruled that the petition is premature, given conflicting claims, and that Kenindia has demonstrated solvency.

The Latest

• Nakumatt, under administration, had sent a statutory demand and sought to initiate liquidation proceedings claiming Kenindia owed it KSh 181 million in outstanding obligations: premiums, rent, and commercial paper debt.

• Kenindia countered that the debt is substantially disputed and that the insurer is financially sound, citing assets and solvency to the tune of several billion shillings.

• Justice Rutto granted an injunction restraining Nakumatt’s administrators from proceeding with liquidation, stating that where debt is contested on substantial grounds and the debtor is demonstrably solvent, liquidation is inappropriate.

Context in Brief

• Nakumatt Holdings, once a leading supermarket chain in Kenya, has been under administration since 2018 following financial collapse.

• The statutory demand came under laws that allow creditors to demand payment and, failing that, initiate liquidation of the debtor business. But those legal tools require that the owed amount is not in good faith disputed.

• Insurers like Kenindia operate under regulation by the Insurance Regulatory Authority (IRA), which monitors solvency, obligations, and compliance with demands from clients or guarantors.

Law, Policy, & Process

• Relevant Legal Provisions:

  The Companies Act and statutory demand procedures allow a creditor to issue a demand for payment. If the demand is not met, and no valid defence exists, liquidation can be sought. However, courts often refuse liquidation where there is a bona fide dispute over the debt.

• Role of the Court:

  The Commercial Court assesses whether the statutory demand is valid, whether the amount claimed is genuinely owed or disputed, and whether the debtor is solvent. The court’s discretion includes weighing “balance of convenience” when granting or restraining liquidation.

• Regulators’ Oversight:

  The IRA had been involved, including being asked to issue directives related to claims. There is mention in court that Nakumatt’s administrator was aware of certain directives.

Voices & Stakeholders

• Kenindia Assurance: Argues that Nakumatt’s demand includes amounts that are not due, or are adjusted improperly (e.g. reduction of commercial paper interest). The insurer claims its financial position is strong and that liquidation would unjustly harm its business and policyholders.

• Nakumatt Administrator (Peter Kahi): Maintains that Kenindia has violated obligations — including paying premiums and obeying regulatory directives — and has improperly withheld funds. Kahi is challenging adjustments made by Kenindia.

• Justice Rhoda Rutto: Delivered the ruling blocking liquidation, citing the need for peaceful resolution of contested debts and evidence of solvency.

Evidence & Data Box

Risks, Implications & Scenarios

• Legal Precedent: Courts may continue to block liquidation attempts in similar cases where debt is disputed, strengthening requirements for proof of debt in statutory demands.

• Financial Stability & Trust: If insurers are forced into unwanted liquidation drives, it could undermine public confidence, particularly among policyholders.

• Operational Disruption: For Nakumatt, failure to collect dues or enforce debts may worsen its already fragile financial position.

• Regulatory Scrutiny: The IRA and courts may be called to tighten rules around claims, disputes, and timeline for resolving such debt disagreements.

What We Don’t Know Yet

• The exact breakdown of each component of the Sh181 million: how much is from premiums, how much from rent, how much from commercial paper.

• Whether an appeal will be filed by Nakumatt’s side or whether Kenindia will push for costs or damages.

• The impact of this ruling on other creditors of Nakumatt and whether similar disputes exist with other insurers.

• How this case affects other businesses that may be under administration or facing similar disputes over owed amounts.

Timeline

• 2017-11-08: Nakumatt allegedly authorised Kenindia to settle claims for insurance premiums for 2017-18.

• 2018-02-12: Nakumatt appointed an administrator.

• 2018: Kenindia moved to block liquidation by Nakumatt.

• 2025-09-23: Commercial Court delivers ruling restraining liquidation proceedings.

What to Watch

• Whether Nakumatt will revise its demand or pursue alternate legal approaches (e.g. negotiation, mediation).

• Any statements or interventions by the Insurance Regulatory Authority (IRA) to clarify what directives were issued, what correspondence existed.

• How this ruling might influence court handling of other insolvency or liquidation bids in Kenya.

• Potential for policy or regulatory reforms to avoid protracted debt disputes in the insurance sector.

Editor’s Note:

This article is based on court filings and reporting by The Standard and TNX Africa. Whenever possible, direct quotes and legal documents have been used.