• Following this decree, the company ceases to issue policies or enter into new contracts.
• Liquidation of a company completely eliminates the roles of the owner and directors and operates without their input.
Invesco Assurance Company has been placed under liquidation through a court order issued on February 6, Insurance Regulatory Authority has said.
In a statement on Friday, the IRA said the court has already appointed an Official Receiver as the provisional liquidator
"Following this decree, the company ceases to issue policies or enter into new contracts. The Policyholders Compensation Fund will compensate the affected claimants as provided for in section 179 of the Insurance Act Cap 487 Laws of Kenya," IRA said in a statement.
A company is liquidated when it slides into insolvency and is unable to meet financial obligations to its creditors.
The main aim is to sell off the company’s assets and repay dues to all creditors.
The liquidation of a company completely eliminates the roles of the owner and directors and operates without their input.
This differs from when a company is placed under receivership where the owner maintains a limited role in the debt restructuring process.
A receiver is appointed by a specific secured creditor of the firm whereas a liquidator may be appointed by the court, shareholders or company creditors.
A company can also choose to voluntarily go into liquidation by winding up operations while its assets are still higher than liabilities.
The liquidation of the Invesco Assurance Company followed an Insolvency Petition No. E155 of 2019.
The company was sued by ten claimants over failure to offset Sh9 million payout despite a court order.
Principal Magistrate S.K Mutai had directed the insurer to pay Saleisio Kinyua Njagi, Gregory Mwaniki Karunga, Alisa Njeri, Jackleah Wangari, Nyaga Nthia, Alice Kageni, Emmaculate Wanjiru, Juliet Muthoni, Venessa Kambi and Nancy Muthomi a sum total of Sh 9,007,570.50 plus costs and interests.
The ten were awarded the amount by the High Court after the judgement was entered against the insurance firm on March 26, August 23 and September 11, 2019, respectively.
They said Invesco had previously issued them with cheques it knew would bounce due to insufficient funds.
"As at the date of this petition, it has failed and refused to pay or make reasonable payments of the decretal sums since the date of the decree as well as the statutory notice dated April 2, 2019," petitioners told the court through a lawyer their lawyer.
The petitioners told the court they believed the company's assets could liquidate the sum due to them in full.