The Official Receiver v Africell Uganda Limited (Company Cause 7 of 2021)

Observed later treatment

No later-treatment classification is recorded for this judgment.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

Holding

A petition for winding up under the Insolvency Act 2011 must satisfy the court that the company is unable to pay its debts within the meaning of section 3 of the Act. Where the petitioner produces no proof of existent debts and the only creditor complaint raised at filing was settled before the hearing, the court cannot appoint a liquidator under section 92(2). A company's announcement of business closure does not itself establish grounds for compulsory liquidation absent evidence of inability to pay debts.

Outcome

Petition for winding up dismissed for failure to establish inability to pay debts

Facts

Africell Uganda Limited, a telecommunications company with nominal share capital of UGX 262,934,860,000, published a notice in September 2021 that it would close operations in Uganda by 7 October 2021. The company had not commenced formal winding up procedures. At a meeting on 23 September 2021, the Respondent assured the Official Receiver that it was solvent and settling all liabilities. On 7 October 2021, Bank of Uganda notified the public that the Respondent would cease mobile money services. The Petitioner received a letter from Nangwala, Rezida and Company Advocates raising concerns about fund availability on the Respondent's accounts and alleging that on 7 October 2021, the Respondent transferred USD 272,000 from its Citi Bank account (leaving USD 2,400 balance) in defiance of a court order freezing its accounts in Miscellaneous Application No. 1226 of 2021. The Respondent maintained it was solvent and conducting its exit according to Uganda Communications Commission guidelines. The Petitioner admitted at hearing that the single creditor complaint raised at filing had been settled after the petition was filed.

Issues

1. Whether the Petitioner has grounds for an order for insolvency.
2. What are the available remedies?

Orders

• Petition dismissed.
• No order as to costs.

Rules and key headnotes

Legislation cited (10)

• Insolvency Act 2011 s.3
• Insolvency Act 2011 s.57(a)
• Insolvency Act 2011 s.91
• Insolvency Act 2011 s.92
• Insolvency Act 2011 s.92(1)(l)
• Insolvency Act 2011 s.92(2)
• Insolvency Act 2011 s.93(2)
• Insolvency Act 2011 s.254
• Insolvency Regulations 2013 r.85
• Insolvency Regulations 2013 r.86

The original judgment as reported. Read the original PDF before relying on any passage.