Lebanese construction firm, Zakhem International faces bankruptcy suit over failure to pay Sh536.7million to local subcontractor
The payment for the works undertaken by the Azicon Kenya Limited has been delayed since March 2019 when the firm was issued with a completion certificate recommending payments after completing the installations in 2018.
A Lebanese construction firm, Zakhem International is facing a bankruptcy law suit after failure to pay Sh536, 750, 626 to a local firm it sub-contracted to do electrical, instrumentation and telecommunications installations after it was given a tender for the Kenya Pipeline Company (KPC) line replacement project.
The payment for the works undertaken by the Azicon Kenya Limited has been delayed since March 2019 when the firm was issued with a completion certificate recommending payments after completing the installations in 2018.
The letter acknowledged the full and satisfactory completion of the subcontract works but Zakhem International did not pay the debt despite having been paid the whole amount by KPC.
The foreign firm had only paid Sh839, 725, 845 and the balance remained unpaid prompting Azcom Kenya Limited to sue for the debt in 2019 and won in court – in Civil case number E276 of 2019.
Zakhem International was ordered to pay the debt by the court within 14 days but only paid a paltry amount of the debt.
The court had taken notice that Azicom Kenya Limited had proved that Zakhem International had received full payment from KPC and still declined to pay within the required 14 days upon receipt of the full payment.
Zakhem was served with a 21 days’ insolvency demand notice on January 14, 2025 for payment of the debt on January 17 and the insolvency proceedings went on before Justice Lawrence Mugambi who dismissed Zakhem International Construction Limited’s attempt to stop being auctioned.
The judge noted that from affidavits of the two company’s managers, it was evident that the company had been paid by the KPC and they had withdrawn a case against the KPC – HCCCE322 of 2019 – Zakhem International Construction Limited versus Kenya Pipeline Company Limited.
“The suit was withdrawn because the KPC settled pending amounts owed to Zakhem International,” stated Mugambi.
“It is therefore (Azicom Kenya Limited’s) reasonable conclusion that, by failing to comply with the subject served statutory demand herein; (Zakhem International) is unable to pay its debt and is therefore consequently liable to be liquidated.”
The judge dismissed the company’s application challenging the order to pay the debt after a demand was served on them on January 14, 2025.
Mugambi said KPC does not hold any money for Zakhem International according to affidavits of the company’s director Ibrahim Zakhem and official, Nelson Nyanduwa.
This therefore means that Azicom Kenya Limited is at liberty to auction the company in compliance with the law.
