The High Court has set aside Bank of Baroda Kenya Limited’s appointment of two administrators to Infinity Industrial Park Limited, ruling that the lender invoked insolvency powers prematurely while a separate dispute over competing financial claims remained pending.
Lady Justice Dr Freda Githiru Mugambi found that the bank’s invocation of insolvency powers amounted to an improper and collateral use of the statutory process because the amount ultimately owed between the parties had not been established.
The ruling followed a challenge by Infinity Industrial Park’s directors and shareholders, while the administrators separately sought clarification of an earlier order requiring the parties to maintain the status quo.
Justice Mugambi clarified that the earlier order had not, at that stage, removed the administrators from office. They remained in place pending determination of the substantive challenge but were barred from taking further steps that altered the company’s position when the order was served.
The judge said allowing them to continue taking actions that changed the company’s position could have rendered the challenge academic.
The court subsequently determined that the insolvency process could not stand in the circumstances.
At the centre of the dispute was High Court Commercial Case No. E322 of 2024, in which Infinity Industrial Park had obtained a judgment against Bank of Baroda.
Judgment was entered against the bank on September 8, 2025. The bank later applied to have the judgment set aside and to be allowed to defend the case, but that application was dismissed on July 31, 2026.
The bank’s claim against Infinity Industrial Park was based on a demand of about Sh2.07 billion.
However, the court noted that Infinity also had a claim against the bank arising from the same banking relationship, facilities and security.
Justice Mugambi said the company’s potential claim could equal or exceed the amount the bank claimed was owed to it.
The judge therefore found that it could not yet be established whether Infinity Industrial Park owed the bank anything on a net basis or whether it was unable to pay its debts.
The court held that an insolvency debt must be due and ascertained and should not depend on the outcome of pending proceedings between the same parties.
The timing of the insolvency action was also considered.
Bank of Baroda moved against the company on or about August 10, 2026, shortly after its application to reopen the earlier judgment was dismissed.
Justice Mugambi found no evidence that Infinity’s assets were being dissipated or that there was an urgent need to place the company under administration before the competing claims were determined.
The judge observed that if the bank expected to emerge from the proceedings as a net creditor, it could have waited for the debt position to become clear.
The court therefore annulled the two administrators’ appointment and declared invalid the purported termination of Infinity employees through a notice issued on August 11, 2026.
They were ordered to immediately return company property taken following their appointment, including title deeds, leases, logbooks, records, keys, devices, passwords, the company seal, statutory registers, bank mandates, contractual documents and money.
The Registrar of Companies, Official Receiver and other relevant authorities were directed to remove or rectify records showing that Infinity Industrial Park was under administration pursuant to the disputed action.
The court also issued permanent orders requiring restoration of the company’s property, rights, management and control.
Infinity Industrial Park and its directors remain at liberty to pursue damages, compensation and other consequential relief arising from losses allegedly caused by the administration.
