Winding up bid against Danish Breweries gets High Court nod – Business Daily
The High Court has allowed an application to liquidate Danish Breweries Company East Africa Ltd. PHOTO | POOL
The High Court has allowed an application to liquidate Danish Breweries Company East Africa Ltd by a German firm over a loan of Sh298 million (2.3 million euros).
Justice David Majanja dismissed an application by the beer maker and distributor that sought to quash a demand by the German firm, Erro Immobilienverwalttungsgesselschaft GMBH (Erro GMBH).
The beer distributor opposed the demand saying the company was solvent but Justice Majanja noted in the ruling that the failure of the company to act on the demand and pay was evidence of the insolvency.
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“Once the creditor has exercised its statutory right to issue such a demand, the burden falls on the debtor to show that it is not insolvent or is in a position to pay its debts,” said the judge.
The judge said a debtor was given an opportunity to show why the creditor should not be allowed to liquidate the company but failed to discharge the burden.
Evidence presented in court was that Danish Breweries was issued a convertible loan in August 2019, which was to be repaid at an interest rate of eight percent per annum over a period of two years.
The loan matured but the debtor failed to repay the money prompting ERRO GMBH to issue the statutory demand. A statutory demand is normally issued when a company is unable to pay its debts.
The debtor opposed the demand through its director Kirunyu Kimani who said the company was able and willing to pay the debts and the demand should be quashed.
He said the creditor did not prove that the convertible loan was issued to it and the statutory demand was being used to exert pressure on it to admit to the debt.
The creditor opposed the application saying that the debtor has not responded to the statutory demand.
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Section 384 of the Insolvency Act provides that a company is taken to be unable to pay its debts if a creditor serves the company with a written statutory demand and the company fails to pay the debt within 21 days or to secure the debt.
The court asserted that there were no sufficient reasons for the setting aside of the statutory demand and allowed ERRO GMBH to file a liquidation proceeding within 90 days.
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