DAC Aviation spared insolvency in fight with sacked workers

Former employees at Kenyan based airline DAC Aviation have been barred from filing an insolvency case against the company for a Sh15.5 million debt.

The employees; Stevenson Ndung’u, Nick Musyoka, John Kavulu, Teddy Mbugua, Moses, David Katungu, Austin Mbalo, Ernest Njenga and Mohammed Said had served the airline with a notice demanding payment for service contracts of Sh3.7 million and $107,780 (Sh11.5 million) within three weeks or face insolvency.

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They claimed the company is disposing-off properties and that is why they sought the protection of the High Court to enforce their insolvency petition.

High Court Judge David Majanja said that the claims were contested by the airline and disputed debt cannot be the subject of a winding-up proceedings on account of the company’s inability to pay its debts.

He ruled that the matter was also labour related and should therefore be handled by the employment courts.

“I find and hold that in so far as the relationship between the Respondents and the Company is based on employment contracts and their claims are disputed by the Company on bona fide grounds, the presentation of the Statutory Demand is an abuse of the Court process,” Judge Majanja said.

“It would therefore be improper for this court to permit the Respondents to circumvent the strictures of jurisdiction in order to have their claims resolved by the High Court exercising insolvency jurisdiction,” he said.

According to one of the employees John Kavulu, they were sacked unceremoniously and or forced to resign and their remuneration not paid to them to date.

The Company says the debt is disputed on substantial grounds including the fact that the claims are excessive and unproven and that the Company suffered substantial loss as a result of serious breaches occasioned by the employees’ conduct and which it intends to counterclaim.

It adds that the claims are matters which ought to be adjudicated by the Employment and Labour Relations Court.

DAC Aviation is owned by Canadian Emmanuel Anassis.It operates about 30 planes in its Kenyan subsidiary alone, based in Nairobi’s Wilson Airport.

The airline has been providing humanitarian air charter services for two decades in conflict areas including Sudan, South Sudan and Somalia and that their business is capital intensive and any minor disruption in the revenue stream has far reaching consequences on its bottom line.

DAC Aviation’s contract with Tullow Oil, its largest revenue generator, was terminated in 2015 after the fall in oil prices. The company, also lost about 20 per cent of its expected income following a decline in the Euro from its contract with the European Commission which was its second-largest revenue-generating contract.

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