High Court cancels Bank of Baroda takeover of Infinity Industrial Park

The High Court has set aside the appointment of two administrators to Infinity Industrial Park Limited, finding that Bank of Baroda Kenya Limited invoked insolvency powers prematurely while a separate dispute over the parties’ competing claims was still pending.

Lady Justice Dr. Freda Githiru Mugambi ruled that the administration of the company amounted to an improper and collateral invocation of statutory insolvency powers.

The ruling followed two applications arising from the bank's appointment of joint administrators to Infinity Industrial Park.

The directors and shareholders of Infinity Industrial Park had challenged the appointment, while the administrators separately sought clarification of an earlier order requiring the status quo to be maintained pending determination of the challenge.

In addressing the administrators' application, the court clarified that its earlier status quo order did not remove them from office at that stage.

The court said the administrators remained in office and the company remained under administration pending determination of the substantive application.

However, they were barred from taking any further steps beyond the position that existed when the order was served on them.

The judge said allowing the administrators to continue taking steps that altered the company's position could have rendered the directors' challenge merely academic.

The court subsequently determined the substantive challenge and set aside the appointment.

At the centre of the dispute was a separate commercial case, HCCOMM No. E322 of 2024, in which Infinity Industrial Park had obtained a default judgment against the bank.

According to the ruling, judgment was entered against Bank of Baroda 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 court noted that the judgment remained in force and that the matter was proceeding to formal proof.

The bank's claim against Infinity Industrial Park was based on a demand of approximately Ksh.2.07 billion.

The court found that the bank's claim against the company and the company's judgment against the bank arose from the same banking relationship, facilities and security.

The judge held that the company's potential claim could equal or exceed the amount the bank claimed was owed to it.

The court held that administration is a collective insolvency procedure intended, among other things, to rescue a company as a going concern or achieve a better outcome for creditors than liquidation.

In the circumstances of the case, the judge found that the bank's claim had not reached a sufficiently certain stage to justify placing the company into administration while the competing claim remained unresolved.

The court stated that an insolvency debt must be due and ascertained and should not depend on the outcome of pending proceedings between the same parties.

Justice Mugambi observed that, once the formal proof proceedings were completed, the amount due to the company could potentially equal or exceed the bank's claim.

The judge therefore held that it could not yet be established with confidence whether Infinity Industrial Park owed the bank anything on a net basis, or whether it was unable to pay its debts.

The court also considered the timing of the administrators' appointment.

The bank appointed the administrators on or about August 10, 2026, shortly after its unsuccessful attempt to reopen the judgment in the separate commercial case.

Justice Mugambi noted that the appointment came barely ten days after the bank's application to set aside the judgment had been dismissed.

The court said there was no evidence before it that the company'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 genuinely expected to emerge from the formal proof proceedings as a net creditor, it could have waited for the debt position to become clear.

Having found the administration unwarranted at that stage, the court set aside and annulled the purported appointment of the two administrators.

The court also declared invalid the purported termination of employees through a notice dated August 11, 2026.

The administrators were ordered to immediately return all company property taken pursuant to the appointment, including title deeds, leases, logbooks, records, keys, devices, passwords, the company seal, statutory registers, bank mandates, contractual documents, physical assets and money.

The Registrar of Companies, Official Receiver and other relevant registries and public authorities were directed to rectify or remove records showing that Infinity Industrial Park was under administration pursuant to the impugned appointment.

The court further issued permanent prohibitory and mandatory orders restraining the respondents from repeating, continuing, implementing or relying on the appointment and requiring restoration of the company's property, rights, management and control.

The company and its directors were also left at liberty to pursue damages, compensation and other consequential relief arising from losses allegedly caused by the administration.