Latest News Editor's Choice


Business / Companies

AirZim facing liquidation

by staff reporter
21 Jan 2012 at 23:17hrs | Views
The struggling national airline Air Zimbabwe is now facing possible liquidation after the High Court placed it under judicial management.

This follows a court application by the parastatal's employees represented by Mr Caleb Mucheche of Matsikidze and Mucheche Legal Practitioners.

The application was made in terms of Section 299(1) as read with Section 207(1) of the Companies Act (Chapter 24:03) which provides for creditors to make an application for a struggling company to be placed under judicial management.

Air Zimbabwe Holdings, Air Zimbabwe and the Master of the High Court were cited as first, second and third respondents respectively while National Airways Workers' Union and Air Transport Union were the applicants. In granting the order last Friday, the court considered that Air Zimbabwe had acknowledged it was facing viability challenges. Last week, AirZim chief executive officer Mr Innocent Mavhunga wrote to President Mugabe informing him of the viability constraints.

The court appointed Mr Shepherd Chimutanda of STC International Certified Chartered Accountants provisional judicial manager.

The court order, which will soon be published in a Government Gazette, automatically transfers all powers to Mr Chimutanda and bars the AirZim board, led by Mr Jonathan Kadzura, from interfering with the parastatal's affairs.

The Master of the High Court granted a certificate for the provisional judicial management order with costs.

"I certify that due security has been found for the payment of all fees and charges necessary for the prosecution and all the provisional judicial management proceedings in the above matter until a judicial manager is appointed, and if no provisional judicial manager is appointed, all fees and charges necessary for the discharge of the applicant from judicial management," said the Master of High Court.

"I also confirm that Shepherd Chimutanda is not disqualified from taking up appointment as provisional judicial manager in terms of the Companies Act, and that I have no objection to his appointment as such."

In an interview yesterday, Mr Mucheche said the order was long overdue adding that it was a prelude to AirZim's liquidation.

He said the parastatal had since January 2009 failed to pay salaries and the court order was the way forward. AirZim owed its employees about US$35 415 000 as of December 2011.

"Since the court has appointed a judicial manager it means that this is a prelude to liquidation. The judicial manager will now move in and the current AirZim board will have to step aside," said Mr Mucheche.

"The judicial manager will assess if AirZim is still a going entity, but as the way things stand all is not well he is likely to recommend liquidation. That is the process. Whenever a judicial manager comes in, the next step is liquidation."

In his arguments, Mr Mucheche said mismanagement resulted in the parastatal failing to pay debts and become a successful business concern.

He said it violated Section 12A(6) of the Labour Act (Chapter 28:01) by failing to pay salaries of employees. Air Zimbabwe owes millions of dollars to the Zimbabwe Revenue Authority, National Social Security

Authority, medical aid society and pension scheme, among other obligations. One of the parastatal's Boeing 767s was last month impounded at Gatwick Airport in London by American General Supplies over a US$1,2 million debt for services rendered.

However, the Boeing 767-200 was released after the Government moved in to pay the debt. A Boeing 737-500 was also seized by a South African company and was only released after Zimbabwe paid US$500 000. Last week, Mr Mavhunga wrote to President Mugabe about the mounting problems. In a letter to the President, which was used as part of mitigatory factors in court, he said efforts to raise funds were not yielding results.

"We wish to advise that the non-payment of salaries and other statutory obligations for the period in question has not been deliberate, but rather a manifestation of underlying viability challenges that our company has been experiencing where we have even suspended international and regional flights with domestic flights having become erratic," reads part of the letter signed by Mr Mavhunga and dated January 16, 2012.

Source - Sunday Mail

Subscribe

Email: