Scheme of Arrangement obsolete says Hwange. . . creditors’ opposition ‘illegal’

21 Dec, 2018 - 00:12 0 Views
Scheme of Arrangement obsolete says Hwange. . . creditors’ opposition ‘illegal’

eBusiness Weekly

Tawanda Musarurwa
Triple-listed coal producer Hwange Colliery Company Limited (HCCL), has said the company’s creditors cannot challenge its placement under reconstruction as the Scheme of Arrangement has been “completely” overtaken by events.

The statement comes in light of comments last week by chairperson of the Scheme of Arrangement Andrew Lawson that Hwange creditors were opposed to Government intervention in the company’s affairs.

HCCL entered into a High Court-sanctioned creditors’ Scheme of Arrangement in May 2017, which was essentially anchored on increased production and sales.

The Scheme of Arrangement temporarily starved off the bane of judicial management until the company defaulted on payments to employees and creditors. As at January 2018, HCCL had a legacy debt amount of $352 million, of which $70 million was in outstanding salaries owed to employees, $110 million to statutory creditors, $54 million to banks and $180 million to trade creditors.

And at the end of October 2018, Government — through the Ministry of Justice, Legal and Parliamentary Affairs — took the decision to put the coal miner under administration in terms of the Reconstruction of State-indebted Insolvent Companies Act. The Reconstruction Order placed HCCL under the management of an administrator, Bekitemba Moyo of DBF Capital.

“On the strength of the original court order sanctioning the scheme and in order to protect creditor’s interests, and in my capacity as the trustee of the scheme, I have filed an opposition to the Minister’s application,” said Lawson.

He added that he would soon convene a creditors meeting to map a way forward.

But HCCL have countered the Scheme’s chairperson, saying his statements no longer have any basis.

“The Reconstruction Order was made subsequent to the Scheme and has overtaken the Scheme in its entirety.

“Mr Lawson presided as chairman of scheme meetings held on 26 April 2017, and his role was discharged upon presentation of his report to the High Court on 3 May 2017 and registration of the scheme in terms of section 192 (3) of the Companies Act thereafter.

“He has no capacity to take any further action thereafter and all he now seeks to do is unlawful,” said Moyo.

The new administrator said Lawson could face a law suit.

“Confirmation of the Reconstruction Order is a statutory process in terms of the Act. Mr Lawson sought to oppose this in a separate capacity, which in any event has nothing to do with his obsolete role as scheme chairperson.

“The confirmation process is sub judice, and during this time, Hwange operates as normal under the powers of the administrator. Mr Lawson has not been authorized to represent the company in any form or manner, nor to proceed as he has done. To this end, he risks civil and criminal liability.”

According to the Reconstruction Act, every disposition of the property, including rights of action, of the company and every transfer of shares or alteration in the status of its members, made after the commencement of the reconstruction, shall, unless the administrator otherwise orders, be void.

HCCL is listed on the Zimbabwe Stock Exchange and is currently suspended.

The company also has secondary listings on the Johannesburg Stock Exchange and the London Stock Exchange.

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