East Africa: Restructuring Quarterly Bulletin – April 2024


Economic overview

  • The Cabinet in February approved the privatization of major State-owned enterprises in the hospitality and tourism sector to boost the country’s foreign exchange reserves. This decision includes privatizing the Development Bank of Kenya which has transitioned into a fully operational commercial bank regulated by the Central Bank of Kenya (CBK). To read more, click here.
  • Non-performing loans (NPLs) have reached a historic peak, accounting for 15.5% of the banking sector’s overall lending, as private sector credit expansion slows down. Data from the CBK indicates that the industry’s gross non-performing loan ratio surged to a new high in the 12 months leading up to February 2024, rising from 14.8% in December 2023. This marks the highest level observed since mid-2006. To read more, click here.
  • Fitch Ratings Limited (Fitch), a global rating agency, has maintained a ‘B’ outlook on Kenya’s banks and expressed concerns over high NPLs alongside Moody’s. The two agencies highlight the sector’s vulnerability to public sector debt arrears, leading to deteriorating loan quality despite solid profitability. To read more, click here.
  • East Africa’s retail banks are implementing measures such as loan restructuring to assist borrowers facing economic challenges due to rising interest rates and inflation. Key banks like KCB Group, Co-operative Bank of Kenya, I&M Group, and Absa Bank Kenya are offering assistance tailored to individual customer needs. To read more, click here.
  • The Kenyan shilling has shown remarkable performance with a notable appreciation of 16% recorded so far this year. In February, Kenya successfully raised KES 195.3 billion through new Eurobond notes, aiming to partially fulfil the maturity requirements of the KES 260.4 billion debut sovereign bond set to mature in June 2024. Despite facing a decline against the US dollar by over two per cent (2 %) as of January 30, trading at KES 160.75, the Kenya shilling has since experienced a significant recovery, rallying to KES 130.46 as of 9 April 2024. To read more, click here.

Corporate updates


  • There were six petitions filed for the liquidation of companies by the court in January and February. Additionally, four companies were reported in January and February 2024 to be under administration by direct appointment.
  • SafeBoda, a Ugandan-based ride-hailing and delivery company, is expanding its services to include car-hailing alongside motorcycle rides as it resumes operations in Kenya. SafeBoda’s announcement follows a three-year hiatus due to the Covid-19 pandemic. SafeBoda faces the challenge of regaining market share in Kenya’s evolving transportation sector amidst the rise of electric vehicles and increased taxation. To read more, click here.
  • Access Bank Plc, a Nigerian banking conglomerate recently signed a deal to acquire an entire stake in National Bank of Kenya Limited (NBK) from KCB Group Plc. This move allows KCB to strengthen its core banking operations and realize its investment in NBK, following its expansion into the Democratic Republic of Congo through the acquisition of Trust Merchant Bank SA. To read more, click here.

Distressed companies in the press

  • Old Mutual General Insurance Kenya Limited (Old Mutual) – Old Mutual is facing a liquidation suit as Tropic Air Limited (Tropic Air), a privately-owned air charter company, demands USD 3 million in compensation for an accident involving one of its helicopters in 2022. Tropic Air has issued a 21-day notice to Old Mutual to settle the claim, warning of liquidation proceedings if the payment is not made. To read more, click here.
  • Resolution Insurance Limited (Resolution Insurance) – Resolution Insurance has entered liquidation after attempts to rescue the company over nearly 21 months failed. Long’et Terer has been appointed as interim liquidator by the High Court to manage the process. To read more, click here.   
  • Uchumi Supermarkets Plc (Uchumi) – Cash-strapped Uchumi has halted discussions on its franchising model, which was once seen as a key element in its recovery strategy. Mazars Consulting Limited, which is overseeing the retailer’s Company Voluntary Agreement (CVA) plan, notes a lack of progress on franchising and engaging the government in its economic transformation agenda. While some progress has been made, including settling 82% of old debts, Uchumi’s revenues have fallen far short of projections, indicating the need for effective restructuring efforts.  To read more, click here.
  • Vehicle and Equipment Leasing Limited (VAELL) – VAELL, a company involved in the leasing of industrial equipment, has been placed under administration due to defaulting on payment of debts amounting to KES 1.1 billion. The Official Receiver was appointed as an administrator of the company. To read more, click here.


Recent developments: Case Law

The Mauritius Courts have, through two judgments delivered recently, reinforced the need for and importance of the legislator to bring clarity, and address the vacuum currently existing within the insolvency laws of Mauritius, both in terms of ranking of creditors and restoration of companies following dissolution. A summary of the cases below provides the rationale behind the decisions of the Court. 

  • Heeralall N v The Director-General, The Mauritius Revenue Authority 2024 SCJ 56

Ranking of Creditors

On 6 February 2024, the Court of Civil Appeal (Court) in Mauritius issued a significant ruling in Heeralall N v The Director-General, The Mauritius Revenue Authority 2024 SCJ 56. The case involved the order in which creditors get paid first by Best Flour & Co Limited (Company) under receivership, specifically concerning the registration of charges and privileges on its properties. The Mauritius Commercial Bank (Bank) and the Mauritius Revenue Authority (MRA) both had claims on the Company’s assets.

The Court noted a legislative gap regarding the order of payment for preferential creditors in situations of receivership under section 204 of the Insolvency Act (Insolvency Act). The Court analysed the intent behind section 21L of the Mauritius Revenue Authority Act 2004 (MRAA 2004), which grants the MRA the right to inscribe privileges on debtors’ immovable assets for unpaid taxes. It concluded that the MRA’s privilege under section 21L aimed to enable the MRA to recover the tax owed by a debtor, distinct from recoverable amounts under the Civil Code or other provisions of the MRAA 2004.

The Court determined that the MRA’s privilege would take effect from the date of registration and that the MRA would be entitled to recover taxes for a maximum period of 12 months, with any remaining tax due ranking after the claims of the bank that had registered charges earlier than the commencement of the collection period of MRA. The Court also highlighted the confusion and uncertainty caused by the legislative gap and urged the legislature to address this issue to provide clarity for stakeholders in similar situations.

  • Christopher Peter Van Zyl & Ors v The Registrar of Companies 2023 SCJ 473

Reviving a wound-up company

In  Christopher Peter Van Zyl & Ors v The Registrar of Companies 2023 SCJ 473, an application was filed at the Supreme Court (Court) under Section 320(1) of the Companies Act 2001 (Companies Act) seeking the restoration of a company struck from the register, based on just and equitable grounds. The Registrar of Companies (ROC) opposed the application, arguing that Section 320 of the Act does not allow for the restoration of a company once it has been wound up and dissolved under the Insolvency Act.

The Court agreed with the ROC, noting that if the legislature intended for dissolved companies to be revived, there would have been a specific provision in Section 320. However, lacking Mauritian case law on the matter, the court relied on the New Zealand’s Companies Act and case law, which acknowledges a “negative discretion” allowing restoration unless there are factors against it.

Despite agreeing to the restoration order, the Court cautioned against creating an automatic process for restoring dissolved companies, emphasizing that each application must be assessed individually. Additionally, the Court suggested that the Law Reform Commission consider reviewing the Companies Act to address applications for the revival of dissolved companies.

Contrary to the ROC’s argument, the Court also held that the liquidator of the company did not need to be a party to the application, as they were released from their duties under Section 122 of the Insolvency Act upon the dissolution.


Economic overview

The African Development Bank (AfDB) projects that Tanzania’s economy will grow by 6.1% in 2024. Fiscal deficits in Tanzania have also shown improvement, rebounding faster than anticipated from the effects of the pandemic.

In January 2024, the Bank of Tanzania announced that it would transition its monetary policy to an interest rate-based approach. The adoption of this framework will improve the effectiveness of monetary policy in maintaining low and stable inflation (price stability) and facilitating economic activities. The framework is also in alignment with the country’s commitment to harmonizing monetary policy frameworks in the East Africa Community and other regional economic communities in which Tanzania is a member. The interest rates will continue to be determined by market forces in line with other economic policies of Tanzania. To read more, click here.

In the last three months, we have identified the following trends and developments have been reported in relation to restructuring and insolvency in Tanzania:

Companies in the press

  • Dormant Companies – We observe that the Registrar of Companies continues to wind up defunct companies (dormant companies). For instance, Dynamic Building Limited, Dola Trading Company Limited, Dar es Salaam City Holding Limited, Elac Education Supplies Company Limited, Endala Enterprises Limited, Documentation Information Limited, Electrodes East Africa Limited, to mention a few, which will be wound up the Registrar of Companies after expiration of 90 days from 12 January 2024.
  • East African Cables Plc faces its second insolvency petition in four years, attempting to stave off financial trouble by selling its Tanzanian subsidiary. The persistent cash flow issues not only affect the company but also burden its parent firm, TransCentury Group. Despite banking on asset sales and financial aid from its parent company, the company still faces uncertainty. The parent company’s failed cash call exacerbated EA Cables’ financial strain, leading to overdue loans and administrative actions by creditors. To read more, click here.
  • Tanga Cement Plc, a Tanzanian cement producer listed on the Dar es Salaam Stock Exchange, has obtained an extended 15-month moratorium on its USD 142 million debt to sustain its operations amidst tough competition and high fuel prices. The company aims to restructure and refinance its existing debt facilities to ensure long-term competitiveness and sustainability. This restructuring plan will allow the company’s operational cash flows to support its business activities and stabilize its working capital facilities over time.

    Additionally, the plan aims to protect the Company from the possibility of default and prevent unrealised foreign exchange losses. As part of the plan, the Company has been exempted from making interest or principal payments on the loan for 15 months, until September 30, 2024. To read more, click here


Economic updates

  • The Uganda shilling depreciated sharply in February and March on the back of low supply, increased offshore demand and corporates preparing for the 2024 dividend cycle. The Central Bank raised the Central Bank Rate once again to 10.25% from 10%, aiming to keep inflation within the Bank of Uganda’s medium 5% target while supporting economic growth. The Bank of Uganda projects a gradual recovery in economic growth in the range of 6.0% in the financial year 2023/24. To read more, click here.
  • Private sector credit growth remains subdued, averaging 8.0% from 8.9% the previous quarter, reflecting fiscal crowding out and monetary policy tightening effects. Increasing government financing from the domestic banking sector could result in higher lending interest rates and crowd out the private sector from the credit market, thereby constraining household consumption and private sector investments. To read more, click here.

Companies in the press

  • Advanced Gaming Limited (Advanced Gaming)Advanced Gaming, trading as 1X BET notified the National Lotteries and Gaming Regulatory Board of the closure of its business operations in Uganda. It ceased operations on 2 February 2024.
  • Biyinzika Enterprises Limited (Biyinzika Enterprises) Biyinzika Enterprises, a company that previously controlled about 65% of Uganda’s poultry market share before the COVID-19 pandemic had defaulted on a loan reported to be in the amount of UGX1,864,395,800 and USD 13,745.23. The Company is currently embroiled in civil proceedings to protect its assets from bank foreclosure. To read more, click here.
  • EFC Uganda Limited (EFC Uganda) – EFC Uganda, a microfinance company had its license revoked by the Bank of Uganda (BOU) and placed under liquidation. The BOU announced that the continuation of EFC Uganda’s activities was detrimental to the interests of its depositors due to the institution’s failure to resolve its significant undercapitalization and poor corporate governance. To read more, click here.

Significant case law developments

Ferdsult Engineering Services Limited & Mugisha Ferdinand v Attorney General & Absa Bank Uganda Limited Constitutional Petition No. 18 of 2021

  • The Petitioners in this case challenged Regulation 13 (1) of the Mortgage Regulations No. 2 of 2012, which mandates payment of 30% of the forced sale value of a mortgaged property or the outstanding amount before a sale can be adjourned or stopped. They argued that this regulation violated constitutional rights to equality, freedom from discrimination, a fair hearing, and property ownership. They also contended that it encroached upon judicial power and judiciary independence.
  • However, the Constitutional Court (Court) dismissed the Petitioners’ arguments and held that Regulation 13 strikes a balance between the mortgagee’s right to realize security after default and the mortgagor’s right to contest the legality of events leading to the sale while pursuing remedies. The Court emphasized the contractual nature of the mortgagor-mortgagee relationship, governed by a mortgage deed. The Court affirmed that the Regulation is necessary to protect mortgagees from unnecessary adjournments or stoppage of sales that would result in satisfaction by defaulting mortgagors.

Formula Feeds Ltd v 3 Others v KCB Bank Ltd Supreme Court Civil Appeal No.13 of 2020 & Civil Application No. 7 of 2023

  • The Supreme Court (Court) affirmed that securities issued to secure credit facilities are independent transactions from the credit/loan transaction and that where security is found to be defective or unenforceable, a lender may take steps to recover the outstanding loan amount against the valid securities, and if all securities are defective, a lender may treat the loan as unsecured and recover from the borrower.
  • In this case, a defaulting borrower sought to rely on the Court’s declaration of the mortgage deed securing its borrowing as illegal to render the loan agreement unenforceable. However, it was settled that a mortgage or other security is simply collateral to and independent from a credit facility.


In this section, we highlight some of the key regulatory and corporate developments in the restructuring space around the world. We have collated information on:

    • Spain
    • Germany
    • France
    • Regulatory updates
    • Company updates
    • Case Law update
    • Corporate updates



In the first two months of 2024, Spain experienced a notable surge in insolvency proceedings, totalling 1,516 cases. This represents a significant 48% increase compared to the same period last year. Conversely, dissolutions slightly decreased to 7,871 cases, with a minor 1% drop. There was also a growth in special procedures for micro-companies but the number of restructuring plans declined. The implementation of European Directive 2019/1023 has brought significant changes to the Spanish insolvency system, introducing new procedures tailored to micro-companies and restructuring plans. To read more, click here.


In Germany, insolvency rates are expected to rise and increase by 10 – 30%, in 2024, surpassing pre-pandemic levels. This is due to economic stagnation, high interest rates, rising wages, increased energy costs, and a government budget squeeze. To read more, click here.

  • Continental AG (Continental) – Continental, a German automotive supplier, plans to reduce its research and development (R&D) workforce in the automotive sector by 1,750 jobs by the end of 2025 and reduce spending in R&D to 9% by 2028 as part of a wider restructuring effort The company will implement job cuts gradually and responsibly, considering local conditions, and is exploring potential consolidation of locations in the Rhine-Main region. To read more, click here.
  • Galeria Karstadt Kaufhof (Galeria) – German department store giant, Galeria, has filed for insolvency due to the collapse of its parent company, Signa Holdings, amid a regional real estate crisis. Galeria is seeking a new owner after facing financial difficulties linked to Signa’s troubles. This is Galeria’s third insolvency filing in recent years, with previous filings in 2020 due to the pandemic and in 2022 due to inflation and energy cost increases after the Ukraine war. To read more, click here.


There were 56,290 corporate bankruptcies between January 2023 to January 2024 which is still below the pre-pandemic average of 59,342 from 2010 to 2019. To read more, click here.

United Kingdom (UK)

Regulatory updates

Special administration regime for water companies

The UK government has updated the special administration regime for water companies to allow for their potential rescue. The changes aim to modernise water company insolvency legislation and address industry challenges like high operating costs and significant debts, exemplified by Thames Water’s £18.3 billion debt. The new legislation permits the transfer of a company’s operating business to a subsidiary through a process known as a hive-down, potentially leaving debts behind in the group. It also allows special administrators to propose modified restructuring plans to rescue a company. To read more, click here.

Company updates

In January 2024, there were 1,769 registered company insolvencies in the UK. The insolvencies included 339 compulsory liquidations, 1,294 creditors’ voluntary liquidations (CVLs), 120 administrations, and 16 company voluntary arrangements (CVAs). Whereas, in February 2024, there were 2,102 registered company insolvencies recorded. The number of CVLs has decreased while compulsory liquidation and administration figures have increased. To read more, click here.

  • Arrival UK Limited (Arrival) – Arrival, a British electric vehicle company, is facing financial distress and potential insolvency, according to a report from Sky News. The company has engaged new advisors, including accounting firm EY, to manage contingency planning. Despite previous support from Hyundai, Kia, and UPS, Arrival’s shares slumped by 15% following the report. To read more, click here.
  • The Body Shop – The UK branch of The Body Shop, renowned for cruelty-free cosmetics has entered administration, risking over 2,000 jobs and 200 stores. The move aims to secure the brand’s future following its acquisition from Natura & Co. The decline of major brands in Britain, including Wilko and others, reflects changing consumer demands. To read more, click here.
  • Superdry, like many other retailers, has faced challenges due to inflation and has started closing stores. It announced plans to save £40 million, possibly through a CVA to cut costs further. CVAs allow retailers to exit properties and manage lease obligations. PWC is advising on restructuring options. To read more, click here.

Case Law update

Re AGPS Bondco Plc [2023] EWHC 916 (Ch)

The Court of Appeal overturned a previous High Court decision approving a restructuring plan proposed by the Adler Group, a Luxembourg-based real estate company. This ruling, the first appeal concerning restructuring plans under Part 26A of the Companies Act 2006 (Companies Act), offers clarity on the application of “fairness” in such cases. The Adler Group’s plan aimed to stagger the maturity dates of senior unsecured notes totalling EUR 3.2 billion but was met with opposition from one class of noteholders. Despite this, the High Court sanctioned a “cross-class cramdown” to enforce the plan, prompting an appeal from dissenting noteholders. Cross-clam cramdown is the process by which a dissenting class of creditors/members can be bound by a restructuring plan under Part 26A of the Companies Act if certain conditions are met and the plan is sanctioned by the court.

The Court of Appeal ruled that the plan significantly deviated, without proper reason, from the fair treatment that unsecured creditors would typically get in an insolvency scenario, which would have been the appropriate comparison in this case. It emphasized that any departure from this principle must be justified, especially when considering “cross-class cramdown.” The Adler Group’s argument that the plan reflected noteholders’ commercial expectations was not deemed sufficient.


Company updates

More small businesses filed for bankruptcy in February as some rushed to take advantage of Subchapter V, a favourable provision under the Small Business Reorganization Act 2019 that is set to expire soon. This provision creates a more cost-efficient and streamlined restructuring process for small businesses by modifying certain provisions of Chapter 11 for debtors with claims below a specific debt cap.  The debt cap was increased from around USD 3 million to USD 7.5 million as a response to the Covid-19 pandemic. This debt cap was intended to expire in March 2021 but has since been extended to 21 June 2024.  In February, as many as 213 small businesses filed for Chapter 11 bankruptcy in the US, a 78% increase compared with the same month a year ago, according to bankruptcy data provider, Epiq. To read more, click here.

  • Audacy Inc (Audacy) – Audacy, a prominent radio and podcast giant, announced that it is filing for Chapter 11 bankruptcy protection as part of a strategy to alleviate its debt burden. Audacy possesses an extensive portfolio of radio stations and ranks among the top radio broadcasters in the United States. Through a restructuring plan, Audacy aims to reduce its total debt by 80%, from approximately USD 1.9 billion to around USD 350 million. To read more, click here.
  • Endo International (Endo) – Endo, a bankrupt pharmaceutical company, has received approval from a US bankruptcy court for its restructuring plan and settlements, signalling progress in emerging from bankruptcy initiated in 2022. As part of the restructuring, Endo will pay around USD 600 million in settlements and cease opioid promotion to healthcare providers. To read more, click here.
  • Petersen Health Care (Petersen) – Petersen, a leading nursing home operator in the US, has filed for bankruptcy due to cyberattacks and defaults on government-backed loans aggravating its longstanding financial woes. Despite the bankruptcy, Petersen plans to continue operations while seeking debt restructuring. Petersen operates over 90 nursing homes across three states, with services ranging from elderly care to support for individuals with disabilities. To read more, click here.
  • Enviva Inc. (Enviva) – Enviva, the largest global industrial wood pellet supplier, has filed for Chapter 11 bankruptcy protection to restructure its debt of around USD 1 billion. Despite efforts to meet global demand for alternative energy sources by building wood pellet production plants across the US South, Enviva faces challenges due to unprofitable customer contracts. To read more, click here.
  • Jo-Ann Stores LLC (Joann) – 81-year-old Fabric and craft retailer, Joann has filed for Chapter 11 bankruptcy protection. Despite this, the company has reported that it has secured approximately USD 132 million in new financing and related financial accommodations and expects to reduce funded debt on its balance sheet by approximately USD 505 million. Joann’s stores and website will remain open for business during the restructuring. The bankruptcy process will see Joann’s stock delisted from Nasdaq and transition to private ownership. To read more, click here.


The ongoing downturn in China’s property market is expected to persist, impacting both investment and consumption. However, the likelihood of a broader financial crisis with global consequences appears low. This is due to measures taken by the government to manage mortgage loan deleveraging and mitigate widespread household defaults. Furthermore, the government’s focus on fiscal spending in key infrastructure sectors in 2024 is anticipated to bolster economic growth and provide support to businesses, particularly in Property and Casualty (P&C) insurance. To read more, click here.

Evergrande Group (Evergrande) – A Hong Kong court ordered the liquidation of Evergrande, a significant Chinese property developer, triggering cross-border insolvency arrangements between Hong Kong and Beijing. The case has implications for a 2021 agreement allowing Hong Kong liquidation proceedings to be recognised in certain Chinese cities. To read more, click here.


We note that some cryptocurrency companies have filed for Chapter 11 or had their Chapter 11 restructuring plans approved while others have opted for liquidation as highlighted below:

  • Celsius Network LLC (Celsius) – Celsius, the crypto lender, has concluded its bankruptcy proceedings successfully, preparing to distribute over USD 3 billion to its creditors. Additionally, creditors will receive ownership in the newly established Ionic Digital Inc. mining venture which is anticipated to go public upon receipt of regulatory approval. Settlements were also reached with various US regulatory bodies, including the Department of Justice, the Securities and Exchange Commission, and the Commodity Futures Trading Commission. To read more, click here.
  • Core Scientific Inc (Core Scientific) – Core Scientific’s Chapter 11 restructuring plan was approved allowing the bitcoin mining company to eliminate USD 400 million in debt and potentially emerge from bankruptcy by the end of January 2024. The company expects its restructuring to save USD 60 million on annual interest costs and preserve 240 jobs. To read more, click here.
  • Terraform Labs (Terraform) – Terraform, the founder of the stablecoin TerraUSD submitted Chapter 11 bankruptcy documents in the US in January 2024. Despite this, Terraform has given assurances that it will fulfil all financial commitments to its employees and suppliers during the Chapter 11 process without the need for additional funding. The company also intends to continue its expansion into Web3 offerings. To read more, click here.
  • FTX Trading Limited (FTX) – FTX has abandoned its efforts to restart its crypto exchange and instead opted for liquidation, aiming to repay customers in full. Despite months of negotiations with potential bidders and investors, FTX was unable to secure enough funding to rebuild its exchange. To read more, click here.
  • Additionally, a class action lawsuit was filed by a group of FTX investors against the US law firm Sullivan & Cromwell (Firm). The lawsuit was part of multi-district litigation related to FTX’s collapse and asserted that the Firm’s fees for its bankruptcy work with FTX exceeded USD 180 million, which accounted for about 10% of the Firm’s 2022 revenue. To read more, click here.
  • Genesis Global Holdco LLC (Genesis) – Genesis, a bankrupt cryptocurrency lender, received court approval to sell approximately USD 1.6 billion in Grayscale cryptocurrency trust shares to repay creditors. Genesis is pursuing a liquidation plan that would wind up the company and reimburse customers in cash or cryptocurrency based on the types of currency they deposited. To read more, click here.
  • Open Exchange – Open Exchange (previously known as Coinflex) a cryptocurrency exchange, announced its intention to shut down all its operations in February. The details of its closure have not been revealed. Prior to the announcement, Open Exchange was focused on expanding into the European market amid the implementation of the Markets in Crypto-Assets regulatory framework. This framework, created by the European Commission, is designed to protect investors and promote widespread transformation in the crypto asset sector in European Union countries. To read more, click here.
  • BlockFi – A settlement between crypto lender BlockFi and defunct crypto hedge fund Three Arrows Capital (3AC) has been approved by a bankruptcy court, with the details remaining sealed due to commercial sensitivity. The settlement resolves claims and disputes between the companies, preventing further legal battles. The approval of the settlement enables BlockFi to proceed with distributions from the lending estate to creditors, a crucial step for the company’s recovery. To read more, click here.