Creditors of the collapsed United Insurance have asked the High Court to remove a court-appointed liquidator.
Creditors of the collapsed United Insurance have asked the High Court to remove a court-appointed liquidator, whom they accuse of spending Sh151.8 million from the estate without their approval.
They say that no creditor has received payment despite the firm’s assets being sufficient to settle all verified claims.
In an application that escalates a dispute over the management of one of the longest-running insurance liquidations, the creditors are seeking an examination of liquidator Mr Kamal Anantroy Bhatt's conduct and finances nearly two years after his appointment.
United Insurance was placed under statutory management in July 2005 after failing to meet mandatory regulatory requirements, including solvency, liquidity and corporate governance standards, before the High Court ordered its liquidation in July 2024 after finding it could no longer meet policyholders' claims.
The creditors, acting through the Claims Settlement Committee, say that upon his appointment, the liquidator received Sh340.7 million in liquid assets from the Policyholders Compensation Fund in July 2024, together with anticipated interest income of Sh20.7 million.
In addition, they say that the administrator received title deeds to land valued at more than Sh5 billion.
They argue those assets exceeded verified creditor claims estimated at about Sh300 million, yet no distributions have been made. “The assets were held exclusively for the benefit of the company,” say the applicants in the court papers.
They want the court to compel production of bank statements, invoices, receipts, payment schedules and other financial records relating to expenditure of Sh151.8 million.
Also sought is examination of the liquidator under oath, order reimbursement of any unauthorised spending and replace him with the Official Receiver or another qualified insolvency practitioner.
"The liquidator has, without the knowledge, consultation, approval, or sanction of creditors or this honourable court, unilaterally incurred expenditure of approximately Sh151.8 million," the creditors say in their application.
They further contend that "the available liquid assets that had remained were sufficient to satisfy all verified creditor claims in full, yet no distribution has been made."
According to the filings, the disputed expenditure alone exceeded half of all verified creditor claims and was incurred without any creditor receiving payment.
"The expenditure... exceeds all verified creditor claims... by more than fifty per cent... without the distribution of a single shilling to any creditor," the application says, alleging this amounted to "a fundamental breach" of the liquidator's fiduciary duties.
The creditors also accuse Mr Bhatt of excluding them from key decisions during the liquidation. They say he convened only one creditors' meeting in 14 months despite statutory obligations requiring regular engagement and consultation.
The supporting affidavit says creditors have "received not a single shilling" since the liquidator assumed office and have not been informed about the status of claims, asset realisations, or any timetable for payment.
The application further alleges that despite repeated requests, the liquidator declined to provide bank statements, invoices, receipts or vouchers supporting the expenditure.
It also says the court directed him on March 3 this year to respond to allegations raised in related proceedings, but he instead filed a preliminary objection.
The court heard that claims worth about Sh118 million had already been cleared by the verification committee for payment.
Mr Bhatt told the court he required nine months to complete the settlement of outstanding claims.
The court directed the liquidator to convene a creditors’ meeting, continue working with the newly formed technical committees and file periodic progress reports. It also directed that all claims be independently scrutinised before the matter returns to court on July 28, 2026.
The creditors argue that the conduct demonstrates resistance to judicial oversight and justifies his removal under the Insolvency Act.
Their latest application comes after the court recently established two technical committees to verify outstanding claims and improve transparency in the liquidation.
One committee comprises creditors, while the other is tasked with verifying claims before payments are made.
During the proceedings, lawyers for creditors questioned how the liquidation had progressed while claimants remained uncompensated. Some policyholders attended court on crutches and urged the court to accelerate compensation after waiting years for payment.
The court heard that more than 4,000 claims have been verified, although about 1,600 payment applications lack claim numbers, complicating verification.
It also heard that claims worth about Sh118 million had already been cleared by the verification committee for payment.
Mr Bhatt told the court he required another nine months to complete the settlement of outstanding claims.
The court directed the liquidator to convene a creditors' meeting, continue working with the newly formed technical committees and file periodic progress reports.
It also directed that all claims be independently scrutinized to prevent payments on fictitious or unsupported claims before the matter returns to court on July 28, 2026.
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