KUSCCO Centre, Nairobi. [Courtesy]
A secretive Sh17.7 billion restructuring plan has put KUSCCO under fresh legal scrutiny days before the High Court is expected to rule on an insolvency petition threatening the SACCO union’s future.
The proposed restructuring, which includes the creation of a new entity known as the Kenya Federation of Savings and Credit Cooperatives (KEFESCO) Ltd has triggered an urgent application by its creditors led by RUPSA Regulated NWDT SACCO Society Limited seeking court intervention.
RUPSA wants the High Court to determine whether KUSCCO can reorganise its membership and affairs while preservation orders issued in March remain in force arguing that the changes could affect members’ rights and could frustrate Sh6.1 billion claims before the insolvency dispute is determined.
The SACCO, which has filed an insolvency petition against KUSCCO, placed the new developments before the Milimani Commercial and Tax Division through a supplementary affidavit by its Treasurer Edward Ngarega Gacheru and an urgent letter by its advocates.
In the affidavit, Gacheru says KUSCCO has 177 member SACCO societies with confirmed liabilities of more than Sh6.16 billion.
He argues that the membership base is a key economic asset because it generates subscription revenue, deposit flows and other activities that sustain the organisation.
“Transferring that membership to a new entity would strip the Respondent of the asset base that any liquidator would need to administer the estate and pursue recoveries for creditors,” Gacheru said.