News / National
CABS sues National Blankets over $852k loan
04 Oct 2018 at 00:52hrs | Views
LOCAL financial institution, Central Africa Building Society (CABS) has sued struggling National Blankets Limited over a five-year-old bank loan amounting to $852 496.
National Blankets has been under judicial management since 2012 due to viability concerns. It received a $500 000 loan facility from the CABS under the Distressed and Marginalised Areas Fund (Dimaf), in 2013 but the money failed to change its fortunes.
The company, among the second city's most iconic and oldest, and appeared to be on its way out of the woods when in 2014, creditors agreed that all debt be converted to equity at the rate of 50 cents per ordinary share. The creditors, however, were not keen on putting new money into the company.
In 2013, the firm sold off some of its property to the National Social Security Authority (NSSA) and settled its debt to the now defunct Capital Bank and service providers such as Bulawayo City Council a combined total of $2,6 million.
Through its lawyers, Scanlen and Holderness, CABS filed summons on October 1, 2018. National Blankets is yet to respond to the litigation.
"On September 10, 2013 the plaintiff (CABS) granted the defendant (National Blankets Limited) a banking facility for a total sum of $500 000 at the defendant's instance and request. It was a term of the agreement that the funds would be applied towards the purchase of raw materials for the defendant," the bank said in its submission to the High Court.
"In terms of the agreement, an establishment fee of 1% of the facility amount was payable upon the facility being accepted by the defendant. It was a term of the agreement that the sum advanced would be repaid by monthly instalments of $27 244,96 with effect from February 1, 2014.
"It was a further term of the agreement that interest would accrue on the loan at the rate of 10% per annum or such other prevailing rate applied by the plaintiff from time to time, such interest being capitalised monthly. It was also a term of the agreement that in the event of default, the total sum then outstanding would immediately become due and payable."
CABS is also seeking an order to attach and sell a piece of land situated in Bulawayo which National Blankets offered as security the loan.
"As security for the sum advanced the defendant passed a mortgage bond in favour of the plaintiff over the following immovable property, a certain piece of land situate in the district of Bulawayo. The defendant breached the agreement by failing to pay the monthly instalments in accordance with the agreement between the parties," the bank said.
CABS also said since National Blankets has breached the terms of agreement, it is liable to pay the financial institution's cost of suit at a high scale.
"In accordance with the agreement, the defendant is liable to pay plaintiff's cost of suit on a legal practitioner and client scale and collection commission in the event of legal action being taken to recover any sum due and payable. The plaintiff pray that the immovable property which is subject of the surety mortgage bond be declared to be specially executable."
National Blankets has been under judicial management since 2012 due to viability concerns. It received a $500 000 loan facility from the CABS under the Distressed and Marginalised Areas Fund (Dimaf), in 2013 but the money failed to change its fortunes.
The company, among the second city's most iconic and oldest, and appeared to be on its way out of the woods when in 2014, creditors agreed that all debt be converted to equity at the rate of 50 cents per ordinary share. The creditors, however, were not keen on putting new money into the company.
In 2013, the firm sold off some of its property to the National Social Security Authority (NSSA) and settled its debt to the now defunct Capital Bank and service providers such as Bulawayo City Council a combined total of $2,6 million.
Through its lawyers, Scanlen and Holderness, CABS filed summons on October 1, 2018. National Blankets is yet to respond to the litigation.
"On September 10, 2013 the plaintiff (CABS) granted the defendant (National Blankets Limited) a banking facility for a total sum of $500 000 at the defendant's instance and request. It was a term of the agreement that the funds would be applied towards the purchase of raw materials for the defendant," the bank said in its submission to the High Court.
"In terms of the agreement, an establishment fee of 1% of the facility amount was payable upon the facility being accepted by the defendant. It was a term of the agreement that the sum advanced would be repaid by monthly instalments of $27 244,96 with effect from February 1, 2014.
"It was a further term of the agreement that interest would accrue on the loan at the rate of 10% per annum or such other prevailing rate applied by the plaintiff from time to time, such interest being capitalised monthly. It was also a term of the agreement that in the event of default, the total sum then outstanding would immediately become due and payable."
CABS is also seeking an order to attach and sell a piece of land situated in Bulawayo which National Blankets offered as security the loan.
"As security for the sum advanced the defendant passed a mortgage bond in favour of the plaintiff over the following immovable property, a certain piece of land situate in the district of Bulawayo. The defendant breached the agreement by failing to pay the monthly instalments in accordance with the agreement between the parties," the bank said.
CABS also said since National Blankets has breached the terms of agreement, it is liable to pay the financial institution's cost of suit at a high scale.
"In accordance with the agreement, the defendant is liable to pay plaintiff's cost of suit on a legal practitioner and client scale and collection commission in the event of legal action being taken to recover any sum due and payable. The plaintiff pray that the immovable property which is subject of the surety mortgage bond be declared to be specially executable."
Source - newsday
