The High Court has rejected an application by Rupsa Sacco seeking to liquidate the Kenya Union of Savings and Credit Co-operatives (Kuscco) over an unpaid Sh108.8 million debt.
Kuscco owes Ruiru-based Rupsa Sacco Sh108.8 million.
The court ruled that Kuscco, being registered as a co-operative society, cannot be wound up through a creditor’s petition under the Insolvency Act.
The court also referred to the Co-operative Societies Act, which provides that ‘no co-operative society shall be dissolved or wound up except by an order of the Commissioner for Co-operative Development.’ It struck out the liquidation petition.
The ruling came after Rupsa Sacco failed to recover money deposited in Kuscco. The once-giant Kuscco cited liquidity challenges for non-refund of the Rupsa Sacco cash.
The debt dispute arose from fixed deposits that Rupsa Sacco placed with Kuscco from 2018, which matured in January 2024 but were not refunded in full. While Kuscco acknowledged the debt during tribunal proceedings, it cited severe liquidity challenges uncovered during inspections in late 2023.
Rupsa, formerly known as PCEA Ruiru Sacco, filed the liquidation petition on March 17, 2026, relying on the Insolvency Act. It said Kuscco owed it Sh108.8 million under a Co-operative Tribunal decree issued on April 29, 2025.
Rupsa said Kuscco’s assets were proclaimed on January 21 after warrants of attachment were issued. The court later granted Kuscco a 30-day stay on January 30, but Rupsa said no payment was made during that period.
Kuscco responded to the liquidation petition with a preliminary objection, arguing that the court lacked jurisdiction because the union is a co-operative society, not a company under the Insolvency Act.
It relied on Section 95 of the Co-operative Societies Act, which excludes the application of the Companies Act and Insolvency Act to co-operative societies except where expressly provided for under the law.
‘The liquidation of a cooperative society is governed exclusively by the Cooperative Societies Act, which provides a complete and self-contained statutory code for the winding up of cooperative societies by the Commissioner for Cooperative Development,’ Kuscco’s lawyer said.
Read: Twist as sacco moves to block State-picked Kuscco liquidators
He submitted that ‘the provision is clear and unequivocal in excluding co-operative societies from the application of the Insolvency Act.’
The court found the objection raised a pure question of law. ‘I am unable to agree with the petitioner’s contention that determination of the objection would necessitate a mini-trial,’ the court said.
The court held that Kuscco’s corporate personality did not make it a company for purposes of the Insolvency Act, because it was registered under the Co-operative Societies Act rather than the Companies Act.
‘The mere fact that a co-operative society is, therefore, a body corporate cannot bring it within the definition of a company in the Insolvency Act,’ the court said.
It further found that liquidation under the Co-operative Societies Act follows cancellation of registration and is distinct from liquidation under the Insolvency Act.
‘Those matters may be relevant to the exercise of powers under the Co-operative Societies Act, but they do not create jurisdiction under the Insolvency Act,’ the court said, upholding the preliminary objection.
It concluded: ‘Consequently, this Court has no jurisdiction to entertain the petition as presently presented or to make a liquidation order against the respondent under the Insolvency Act.’
The decision does not establish that Kuscco is solvent. The judge expressly said the court was not determining whether Kuscco had failed to pay its debts, whether it was balance-sheet insolvent or whether liquidation should ultimately occur.
Rupsa had alleged that Kuscco had liabilities of about Sh17.7 billion against assets of Sh5.2 billion, leaving a Sh12.5 billion deficit. It also said 177 sacco creditors were owed Sh6.17 billion.
The Kenya Financial Stability Report also reported Kuscco liabilities of Sh17.7 billion against assets of Sh5.2 billion and said the financial distress had affected member saccos.
Kuscco’s separate liquidation under the Co-operative Societies Act had already begun. The Commissioner cancelled Kuscco’s registration on August 31 after members resolved on August 28 to dissolve the union, citing liquidity challenges.
On September 23, Commissioner David Obonyo appointed Waithaka Ngaruiya of Waithaka and Associates as liquidator for up to one year, replacing three State Department officials previously appointed to handle the process.