The High Court in Kampala has found that Port Bell Supermarkets Ltd cannot pay its debts and given greenlight for its liquidation. This means the company’s remaining assets will be sold to settle existing debts.The Petition arises from insolvency proceedings concerning Port Bell Supermarkets Limited, a private company limited by shares that was previously placed under administration pursuant to the provisions of the insolvency Act, Cap 108.The Petition was presented by Allan Luwaga, the Administrator of the Company, seeking orders that the Company be declared unable to pay its debts, that it transitions from administration into liquidation, and that he be appointed Liquidator thereof.The Petition was brought under sections 2, 92, 142, 143, 154(l), and 176(l) and (2) of the insolvency Act, Cap 108, together with sections 13 and 38 of the Judicature Act, Cap 16, section 98 of the Civil Procedure Act, Cap 282, and the relevant provisions of the insolvency Regulations, 2O13.At its core, the Petition invited the Court to determine whether the statutory objectives of administration have been exhausted and whether the financial position of the Company is such that liquidation has become inevitable.The Court was called upon to assess whether there remained any realistic prospect of rescuing the Company as a going concern or achieving a better outcome for creditors through continued administration, or whether the interests of creditors and the orderly administration of justice required the Company to be placed into liquidation.BackgroundDocuments before Court shows that Port Bell Supermarkets Limited was incorporated in Uganda in October 2016 and carried on business as a supermarket enterprise. Over time, however, the Company encountered severe financial difficulties resulting in the accumulation of substantial indebtedness to numerous creditors, including trade creditors, financial institutions and other stakeholders.The evidence further reveals that, as the Company’s financial position deteriorated, insolvency proceedings were commenced under Company Cause No. 21 of 2025.To preserve the business and maximize returns to creditors, the Company was placed under administration, a statutory insolvency mechanism designed to afford financially distressed companies an opportunity for rescue, restructuring or rehabilitation before liquidation becomes necessary.An Administration Deed was subsequently executed in August 2025 and Ronald Mutumba was appointed Administrator. Following his resignation, the shareholders of the Company, by resolution dated 10 October 2025, appointed Allan Luwaga, a licensed insolvency practitioner, as the incoming administrator. Upon assuming office, the Petitioner was directed by Court to scrutinize the administration process undertaken by his predecessor, account for the affairs of the Company, prepare comprehensive reports on its financial position and convene meetings with creditors.The reports subsequently filed painted a grim financial picture. The Petitioner concluded that the Company was unable to meet its financial obligations and that its liabilities substantially outweighed its assets. The evidence before Court indicates that the Company’s indebtedness stood in excess of UGX 10 billion while its remaining assets were either of negligible value, damaged, expired, or otherwise encumbered by a floating charge in favour of Diamond Trust Bank, the principal secured creditor.During the administration process, several creditors’ meetings were convened and extensive consultations undertaken among stakeholders. The Court also directed the Petitioner to harmonize reports filed during administration, undertake stock validation exercises, receive and respond to creditors’ memoranda and furnish Court with a consolidated position regarding the Company’s affairs.The stock verification exercises conducted pursuant to Court orders revealed that a significant portion of the Company’s stock had either expired or deteriorated.The remaining merchantable stock was valued at a fraction of the Company’s outstanding liabilities and was itself subject to the rights of the secured creditor. The reports further indicated that the Company possessed no meaningful income stream, recoverable debt portfolio or unencumbered asset base capable of satisfying creditor claims or supporting a viable restructuring process.In light of those findings, creditors increasingly expressed the view that the administration process had achieved its practical limits. Consequently, creditors’ meetings held during the administration resolved that the Company should transition into liquidation. The position was reaffirmed at a stakeholders’ meeting convened pursuant to directions of Court, at which creditors resolved not only that the Company be liquidated but also that the Petitioner be appointed Liquidator.Following those resolutions, the Petitioner formally returned to Court seeking orders for liquidation. It is that Petition which Court determined.Legal representationThe Petitioner, Allan Luwaga, Administrator of Port Bell Supermarkets Limited, was represented by M/s Escala Advocates.Upon considering the Petition, the Affidavit in Support, the reports filed during the administration process, the resolutions of creditors and all the material placed before Court, in a judgement delivered on June 24, 2026, Hon. Justice Collins Acellam of the High Court Civil Division, said that the Petition raised a single issue for determination, namely:Whether Port Bell Supermarkets Limited should be placed into liquidation and whether Allan Luwaga should be appointed liquidator.The material on record shows that the Company’s liabilities stood at approximately UGX I0,001,804,190 while the only remaining merchantable stock was valued at UGX 1O,453,477.”The disparity between the Company’s liabilities and realizable assets is not merely substantial; it is overwhelming. Such a financial position is wholly inconsistent with the prospect of commercial rehabilitation,” said Justice Acellam.Secondly, he added ”Secondly, the evidence demonstrates that the administration process did not culminate in a viable administration deed capable of restoring the Company to financial viability. The record shows that the Administration Deed executed during the administration process lapsed upon expiry of the prescribed period.”The Judge also found that there was no evidence that continuation of administration would produce a more advantageous realization of assets than liquidation. The stock verification exercises conducted pursuant to Court orders revealed that the bulk of the Company’s stock had expired or deteriorated, leaving only a limited quantity of merchantable stock.The Court further noted that the administration process was not conducted in a perfunctory manner.Justice Acellam said he found no legal or factual basis upon which the Court should depart from the statutory position contemplated under section 15 a (2) of the Act.”For those reasons, this issue is resolved in favour of the Petitioner,” Justice Acellam.The post Court Finds Port Bell Supermarkets Unable To Pay UGX10bn In Debts, Orders Its Liquidation appeared first on Business Focus.