News / National
High Court blocks RioZim from selling assets
2 hrs ago |
69 Views
The High Court has barred resources group RioZim Limited, currently under corporate rescue, from selling its assets as a legal dispute with workers continues.
High Court judge Justice Regis Dembure dismissed RioZim's application to appeal an earlier order preventing the disposal of mines and other key assets, saying the company had "no legal leg to stand on." He cited that the mere filing of an application with the Registrar of the High Court initiates corporate rescue proceedings, restricting a company from freely selling assets, restructuring, or evading creditors without court oversight.
RioZim's lawyer, Thabani Mpofu, argued that the board should be allowed to make operational decisions while awaiting the appointment of a rescue practitioner. "This board is alive; the provisions of section 127 should not prevent it from making necessary operational decisions to avoid financial distress," he contended.
However, the Zimbabwe Diamond and Allied Minerals Workers' Union, which brought the case, opposed this argument. "The company cannot just choose which legal provisions apply to its convenience during its financial turmoil," said lawyer TL Mapuranga. Justice Dembure sided with the union, ruling that RioZim's application was "without merit" and ordered the company to pay legal costs.
The ruling comes as RioZim faces pressure over more than US$37 million in unpaid wages and benefits owed to its employees. Over 200 workers recently won an arbitration award, but enforcement has been delayed because the company is under corporate rescue.
In a related judgment, Justice Catherine Bachi Mzawazi noted that corporate rescue temporarily freezes all lawsuits to allow a financially distressed company to be rehabilitated, typically within three months. "The respondent tactfully sought refuge from the law at the detriment of the employees' rights… yet the law is the law nonetheless," she remarked.
Corporate rescue, she explained, is intended as a lifeline to enable companies to make a financial turnaround and meet their obligations.
High Court judge Justice Regis Dembure dismissed RioZim's application to appeal an earlier order preventing the disposal of mines and other key assets, saying the company had "no legal leg to stand on." He cited that the mere filing of an application with the Registrar of the High Court initiates corporate rescue proceedings, restricting a company from freely selling assets, restructuring, or evading creditors without court oversight.
RioZim's lawyer, Thabani Mpofu, argued that the board should be allowed to make operational decisions while awaiting the appointment of a rescue practitioner. "This board is alive; the provisions of section 127 should not prevent it from making necessary operational decisions to avoid financial distress," he contended.
The ruling comes as RioZim faces pressure over more than US$37 million in unpaid wages and benefits owed to its employees. Over 200 workers recently won an arbitration award, but enforcement has been delayed because the company is under corporate rescue.
In a related judgment, Justice Catherine Bachi Mzawazi noted that corporate rescue temporarily freezes all lawsuits to allow a financially distressed company to be rehabilitated, typically within three months. "The respondent tactfully sought refuge from the law at the detriment of the employees' rights… yet the law is the law nonetheless," she remarked.
Corporate rescue, she explained, is intended as a lifeline to enable companies to make a financial turnaround and meet their obligations.
Source - newsday
Join the discussion
Loading comments…
