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Debt collection firm exits Sh113m bankruptcy
The company’s exit from administration, which has taken place in six months, has been enabled by a voluntary mix of debt-for-equity conversion by a majority of the creditors as well as re-profiling of obligations by a small portion of the creditors.
A debt collection company whose clients include banks and digital lenders has been saved from a Sh113.2 million dispute after inking an agreement with its creditors and exiting administration.
Collection Africa Ltd, a non-performing asset resolution and debt recovery firm, was placed under administration on September 29, 2025 by Rubicon Landing LLP after failing to honour payment obligations for Sh113.2 million raised through a private placement to select creditors.
Rubicon Landing LLP placed Collection Africa Ltd under administration in its capacity as the security trustee for the creditors, implying it was legally tasked with holding and managing collateral, in this case cash and receivables, on behalf of creditors.
The company’s exit from administration, which has taken place in six months, has been enabled by a voluntary mix of debt-for-equity conversion by a majority of the creditors as well as re-profiling of obligations by a small portion of the creditors.
Under insolvency law, voluntary arrangements take place where creditors to a distressed entity enter an agreement for satisfaction of their claims other than full payment.
Collection Africa’s total outstanding indebtedness as at September 30, 2025 stood at Sh113,215,080.
“The restructuring of secured creditors claims could be carried out through the following options. Option one is converting existing debt claims into a prorate portion of new ordinary shares in the company," documents filed by the Administrator, Philip Onyango, state.
"Option two is an extension of the date of maturity of the existing indebtedness. Option three comprises 50 percent of the principal and 100 percent of the interest due as at the approval of the agreement and a cash payout of the balance within six months."
Secured creditors with debt valued at Sh58.8 million agreed to convert their claims into a portion of new ordinary shares in the company while those holding debt to the tune of Sh20 million elected to extend the date of maturity of their claim by 36 months, with interest payable through quarterly coupons.
Unsecured creditors holding debt of Sh11.9 million elected to convert an undisclosed portion of their claims into ordinary shares within the company while those holding claims to the tune of Sh22.5 million chose to have cash payout of 25 percent of their principal within six months.
The voluntary debt-for-equity swap and re-profiling of creditors’ obligations took effect following failure by creditors to register the requisite quorum at a meeting convened by the administrator on December 31, 2025.
Filings by the administrator show that Sh72 million debt is earmarked for conversion to equity of which Sh60 million is attributable to secured creditors while Sh12 million to unsecured creditors.
Creditors were also expected to vote on a proposal to inject fresh capital to the tune of Sh120 million into the business but failed to do so due to the quorum hitch.
“Following implementation of the voluntary arrangement between the company and its creditors, the administrator has determined that a better overall outcome for the creditors has been achieved than if the company proceeded to liquidation, consequently achieving the objectives of administration as envisaged under Section 522 of the Insolvency Act, 2015,” documents filed by Mr Onyango state.
Administration is designed to ensure a company’s affairs, finances and property are managed so that it remains a going concern with a view to realising a better outcome for the company’ s creditors than if the company were to be taken through liquidation.
