The High Court has suspended a gazette notice by the Commissioner for Co-operative Development, which appointed three officials to liquidate the troubled Kenya Union of Savings and Credit Co-operatives (Kuscco).
This follows a petition by a Ruiru-based sacco for the State-appointed officers to be dropped and replaced by an independent insolvency practitioner.
The court temporarily suspended the gazette notice until September 28, when the judge will determine whether it has jurisdiction to hear a dispute filed by Rupsa Sacco Society Limited.
“In the meantime, a stay order suspending the gazette notice is hereby issued, pending the determination of the issue of jurisdiction,” the court said.
Rupsa NWDT Sacco Society Limited, which says it lost Sh108.8 million following the collapse of Kuscco, challenged the decision to place the union under liquidation.
The sacco moved to court in March 2026 seeking to wind up Kuscco, and the court subsequently issued preservation orders over the union’s assets.
However, on August 28, a special general meeting resolved to dissolve Kuscco. Three days later, on August 31, the Commissioner for Co-operative Development published Gazette Notice No. 13997, purporting to dissolve the union and place its entire estate in the custody of appointed liquidators.
The notice also authorised three individuals to take custody of Kuscco’s properties, books and documents.
Rupsa has challenged the move, arguing that the commissioner’s actions raise questions about regulatory independence and conflict of interest.
“The continued appointment of a senior officer from the Office of the Commissioner for Co-operative Development to executive office within Kuscco Limited, while the commissioner's office exercises regulatory oversight over that institution, raises an ongoing constitutional and statutory question concerning conflict of interest, public trust and regulatory independence,” Rupsa said.
The Ruiru-based sacco further argued that the commissioner did not seek the court’s permission or apply to lift the existing preservation orders before publishing the gazette notice.
“The issue before the court is not whether the commissioner may regulate co-operative societies. He plainly exercises statutory powers. The issue is whether an administrative act may confer upon persons the power to take custody and control of property which is already the subject of subsisting preservatory orders of this honourable court,” the Sacco said in submissions filed in court.
Rupsa argued that the commissioner cannot invoke public interest in the regulation of cooperatives to justify defying a court order.
“An administrative notice cannot do indirectly what a party is prohibited from doing directly. The court’s order does not become optional because the proposed disobedience has been printed in the Kenya Gazette,” the Sacco argued.
The sacco said that Kuscco is not solvent and that the dispute is not an ordinary regulatory disagreement, citing liabilities of approximately Sh17.7 billion against assets estimated at Sh5.2 billion.
It further claimed that Kuscco is indebted to 177 creditor saccos to the tune of Sh6,166,460,317.
“The preservatory orders placed the respondent’s (Kuscco) estate under the court’s protective supervision. The Gazette Notice purports to remove that estate from the court’s supervision and place it in the hands of the commissioner’s appointees. That is not regulation. That is interference,” Rupsa argued.
The sacco also questioned the qualifications of the three appointed liquidators, arguing that none is identified in the Gazette Notice as an authorised insolvency practitioner.
Court documents state that Section 65(3) of the Co-operative Societies Act requires a person carrying out a liquidation to be an authorised insolvency practitioner.
Rupsa urged the court to intervene urgently to preserve Kuscco’s estate and maintain the status quo, pending the hearing and determination of its petition.
“The circumstances warrant the urgent intervention of this honourable court to preserve the respondent's estate, maintain the status quo established by the subsisting orders, and prevent any further steps pursuant to Gazette Notice No. 13997 pending the inter partes hearing and determination of the Petition,” Rupsa said.
