The High Court recently passed a decision (Bank Of India (U) Limited Vs NC Beverages Limited And Uganda Revenue Authority (Civil Suit 0009 of 2021) highlighting the priority of a secured creditor in the winding up or liquidation of a company. The court further checked the actions by the Uganda Revenue Authority (“URA”) of seizing and disposing secured assets before they can be realised by a secured creditor on commencement of insolvency proceedings.

Background

The Coronavirus (COVID-19) has had a significant impact on businesses in Uganda and the world over, with governments having to enforce lockdown measures to contain the spread of the virus. In Uganda, statutory instruments were published by the Ministry of Health directing certain places of business to remain closed and prohibiting movement of public transport and private cars for approximately 56 days, leading to interruptions in business operations, a reduction in consumer demand and low cash flows to meet expenses and debts owed to creditors.