The High Court of Kenya has ruled against Bank of Baroda Kenya Limited's attempt to take over Infinity Industrial Park Limited through insolvency proceedings. Lady Justice Dr. Freda Githiru Mugambi declared that the bank invoked its insolvency powers prematurely while a separate dispute over competing claims was still pending. This decision followed a challenge by the directors and shareholders of Infinity Industrial Park against the appointment of joint administrators by the bank.
The dispute centered on a commercial case where Infinity Industrial Park had obtained a default judgment against Bank of Baroda on September 8, 2025, for an unspecified amount. Bank of Baroda had applied to have the judgment set aside but was dismissed on July 31, 2026. The court noted that this judgment remained in force and the matter was proceeding to formal proof. Bank of Baroda's claim against Infinity Industrial Park was based on a demand of approximately Ksh.2.07 billion.
The court's decision was influenced by the fact that both the bank's claim against Infinity Industrial Park and the company's judgment against the bank arose from the same banking relationship, facilities, and security. The judge held that the company's potential claim could equal or exceed the amount the bank claimed was owed to it. This situation led the court to conclude that it could not yet be established with confidence whether Infinity Industrial Park owed the bank anything on a net basis.
The administration of a company is intended to rescue it as a going concern or achieve a better outcome for creditors than liquidation. However, Justice Mugambi found that the bank's claim had not reached a sufficiently certain stage to justify placing Infinity Industrial Park into administration while the competing claim remained unresolved. The court emphasized that an insolvency debt must be due and ascertained and should not depend on the outcome of pending proceedings between the same parties.
The timing of the administrators' appointment was also a critical factor in the court's decision. Bank of Baroda appointed the administrators on or about August 10, 2026, shortly after its unsuccessful attempt to reopen the judgment in the separate commercial case. The court noted that there was no evidence that the company's assets were being dissipated or that there was an urgent need to place the company under administration before the competing claims were determined.
Having found the administration unwarranted at that stage, the court set aside and annulled the purported appointment of the two administrators. The court also declared invalid the purported termination of employees through a notice dated August 11, 2026. The administrators were ordered to immediately return all company property taken pursuant to the appointment. Various registries and public authorities were directed to rectify or remove records showing that Infinity Industrial Park was under administration.
The court's ruling had significant implications for Infinity Industrial Park, its directors, and its stakeholders. The company and its directors were left at liberty to pursue damages, compensation, and other consequential relief arising from losses allegedly caused by the administration. The court's decision was seen as a critical intervention in the dispute between Bank of Baroda and Infinity Industrial Park, emphasizing the need for careful consideration of the invocation of insolvency powers in complex commercial disputes.
Key points
- The High Court of Kenya set aside Bank of Baroda's appointment of administrators to Infinity Industrial Park due to premature invocation of insolvency powers.
- The dispute involved competing claims between Bank of Baroda and Infinity Industrial Park, with the bank claiming approximately Ksh.2.07 billion.
- The court's decision emphasized the need for insolvency debts to be due and ascertained, not depending on the outcome of pending proceedings.
