The Kenyan Court of Appeal has rejected a motion to have Bluebird Aviation (Kenya) (BBZ, Nairobi Wilson) wound up under the country's old Company Act.

In a ruling issued earlier this year, the three-judge court agreed with a High Court ruling that the airline could not be shut down.

“If the winding up petition had been filed before the commencement of the Insolvency Act, the petition would have been properly before the court, even if during its pendency the Companies Act Cap 486 had been repealed,” the Appeal Court ruling published in The Standard, said.

The ruling was in reference to a petition brought in March 2016 by Yussuf Abdi Adan in which he sought for the winding up of Bluebird Aviation Ltd, a company which was incorporated in May 1992, and in which he is a Director with a 25% stake. Adan had claimed that since Bluebird's incorporation, there haven’t been any annual general meetings, that he has been excluded from the management of the company, that he has no details or financial information about the company and that he has never received any dividends as a shareholder of the company. Further, he stated that his co-directors had breached their fiduciary duty to the company, and that they had misappropriated company funds, created a parallel financial system within the company through which revenue from the company business was stashed abroad and, created a number of shell companies into which these monies had been deposited. Adan further claimed that his efforts to see the financial statements and records of the company over the last 23 years had been in vain.

Bluebird, and its other shareholders - Hussein Farah, Hussein Mohamed, and Mohamed Adan - had argued that the relief and remedies sought by Adan under the Companies Act were invalid given the repeal of the Act and that therefore, the Court had no jurisdiction to grant any reliefs. The High Court subsequently ruled that the application was indeed "founded on faulty grounds" which rendered the petition incapable of proceeding.

Adan then appealed the ruling arguing that a section of the Insolvency Act of 2015 that came into effect on January 18, 2016 only catered to companies that were incorporated under the Companies Act of 2015. In their ruling, the appeals judges upheld the High Court decision wherein they disagreed with Adan that the filing of the petition could be deemed as a past event because the company was incorporated under the repealed law.

The Court of Appeals did, however, highlight that Adan could still file an appropriate petition if he intended to pursue the issue.

As previously noted, Farah, Mohamed, and Mohamed Adan had attempted to settle the matter with a USD30 million payment. The offer was, however, rejected as arbitrary and undervalued.