James Makamba Nzvee’d KwaAmato! By Own Employees
26 May 2023
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By A Correspondent | The Communications and Allied Workers Union (CAWUZ) has requested that the James Makamba found, Telecel Zimbabwe, a provider of mobile phone services, be placed under corporate rescue, a localised version of bankruptcy protection. The Master of the High Court has supported this request, paving the way to what might end up being a historic take over by a company’s employees and their colleagues.

Nzvee kwaAmato! tycoon, overtaken by own employees

The High Court Master must submit a report in support of or against the application during the corporate rescue filing process, but the judge retains the final say.

The third-largest mobile telecommunications company in the nation was put under corporate rescue in October 2022 by CAWUZ in an effort to prevent possible liquidation.

CAWUZ represents the workers who are owed large sums of money in unpaid salaries. Being owed money in unpaid subscriptions makes CAWUZ itself a creditor.

The application’s premise is that the company is in financial distress because it has neglected to make its debt payments. It is argued that despite the company’s apparent financial difficulties, there are still some solid chances that it will be saved from impending failure. In order to prevent the company from going out of business, CAWUZ further argues that it needs to be managed and supervised by a corporate rescue specialist who must create a rescue plan to revive its operations.

The candidate for corporate rescue practitioner is Mr. Knowledge Hofisi of Aurifin Capital. Telecel, according to CAWUZ, has allegedly been in danger of failing for a while. It has been shown that this indicates the company is insolvent because its liabilities exceed its assets. According to the market performance of the company’s rivals, however, its financial difficulties “are not insurmountable.”

Telecel, CAWUZ argues, despite insolvency, still enjoys some “realistic prospects of recovery if accorded an opportunity to do so.”

Additionally, CAWUZ has looked into the “inexhaustible” commercial opportunities in the telecoms industry and used “this to demonstrate that the company has reasonable prospects of being rescued and of being a successful concern again.”

However, Telecel opposed the motion and disputed, among other things, CAWUZ’s locus standi to file the High Court application. It argues that because CAWUZ is not an affected person under the statute, it lacks the legal authority to file the application.

Even though Telecel claimed it was not in financial trouble, V Gapara, Master of The High Court (Additional Master)-Insolvency and Minors, noted that this did not seem to refute the fact that the business had been ignoring its debts and was still obligated to pay them. Mr. Gapara argued that it was obvious the company was in financial trouble from the founding documents, including the most recent financial records.

“The records show a company whose liabilities exceed its assets,” said Mr Gapara.

“It is thus, from a balance sheet standpoint, insolvent. This much does not seem to have been disproved by the company which…seems to suggest that the true value of its assets can only be ascertained after a firm of chartered accountants it engaged completes its asset revaluation exercise. There is no indication that the exercise has been completed and that the report has been released,” Mr Gapare added.

He argued corporate rescue was the only viable option for saving the company. He argued that while Telecel was in financial distress, it enjoyed reasonable prospects of being rescued.

“Should the court decide, in the circumstances; that corporate rescue proceedings are the most appropriate remedy to cure the company’s financial distress, enabling it to pay off its creditors and steering it back to a state of commercial viability, the Master has no objections against the appointment of Mr Knowledge Hofisi to the position of corporate rescue practitioner for Telecel.”