Running a business in Kenya has never been easy—and in today’s economy, it’s even tougher. Many companies are facing mounting debts, cash flow issues, and relentless pressure from creditors. But that doesn’t always mean the business has failed. In some cases, all it needs is time and legal breathing room to recover.
That’s where a Company Voluntary Arrangement (CVA) comes in.
What Is a CVA?
A CVA is a legal tool under the Insolvency Act, 2015 that allows a financially distressed but viable company to propose a structured repayment plan to its creditors. Instead of closing shop or going into liquidation, the company gets an opportunity to reorganize its debts while continuing to operate.
The CVA is supervised by an independent professional—usually a licensed insolvency practitioner or the Official Receiver—and once approved by creditors, it becomes legally binding on all of them.
A Real Example
One of our clients, a mid-sized logistics company, was overwhelmed by operational debts, supplier demands, pending statutory obligations, and penalties from delayed loan payments. Despite this, the business had steady clients and strong long-term prospects. What it lacked was time—and protection from enforcement.
Creditors were threatening court action. A few had already started the process of auctioning the company’s assets. The directors were under immense stress and feared that even one aggressive move could force them to shut down a profitable operation.
How a CVA Helped
With our support, the company filed for a CVA. It proposed:
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A temporary moratorium to freeze all legal and recovery actions.
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A plan to repay creditors gradually from future revenue.
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A reduction or freezing of excessive penalties and interest.
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A commitment to full transparency under the supervision of the Official Receiver.
Once the proposal was filed, the court granted interim protection. This stopped creditors from executing or filing fresh claims, giving the company room to breathe. Within weeks, the business stabilised operations and began honouring the restructured payment plan.
What the Law Provides
Sections 621 to 628 of the Insolvency Act, 2015 lay out the legal framework for a CVA. If a company is unable to pay its debts but can show viability, the court can approve a CVA to:
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Stop enforcement.
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Restructure debts.
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Ensure all creditors are treated fairly.
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Keep the company alive while protecting jobs and investors.
Should You Consider a CVA?
If your business is struggling with temporary financial strain but still has strong fundamentals, a CVA could be the best way forward. It helps you avoid insolvency, preserve your brand, and satisfy creditors—without resorting to costly litigation or forced liquidation.
Talk to Us
At Harry Karanja & Company Advocates, we guide businesses through debt restructuring and insolvency procedures with strategy, precision, and empathy. Reach out today to explore how a CVA might give your company a fresh start.