Judicial management fictitious: Court. . .Merlin-Merspin saga cleared

13 Dec, 2018 - 00:12 0 Views
Judicial management fictitious: Court. . .Merlin-Merspin saga cleared

The Chronicle

Oliver Kazunga, Senior Business Reporter
THE High Court in Bulawayo has ruled that Merlin (Private) Limited, which is under judicial management, is a fictitious and non-existent company and does not in any way affect the status of Merspin Limited.

The two Bulawayo-based textile firms are owned by Maydeep Investments, which is owned by prominent city businessman, Mr Delma Lupepe.

According to recent court papers filed at High Court in Bulawayo case number 2724/18, Justice Martin Makonese ordered that the provisional order granted on the 8th of November 2018 be and is hereby confirmed in the following terms:

“It is hereby declared that the judgment of the court in HC 2353/11 placed Merlin (Private) Limited under judicial management and does not in any way affect the status of Merspin Limited.

“Merlin (Private) Limited be and is hereby declared a fictitious and non-existent company,” ruled Justice Makonese.

“The respondent be and is hereby ordered to pay costs of suit on an attorney-client scale.”

In an interview, Maydeep Investments executive director Mr Danisa Nkomo welcomed the court order saying it opens up opportunities for Merspin to seek investors.

“The High Court has finally come up with a decision, which decision is a right decision after such a long time and it’s unfortunate that a lot of people have suffered in the process, shareholders and creditors have suffered.

“As shareholders we have lost our assets in the process, which were not necessary to actually lose those assets. This Court order opens up investors because as shareholders we can engage potential investors into the company without this cloud of fake judicial management.

“And also other investors locally can now be reached because they wanted us to first of all clear this legal issue and this order clears it that Merspin Ltd is not under judicial management and therefore it can engage its creditors, investors and other stakeholders and make a way forward,” he said.

Mr Nkomo said of the two entities Merspin was the operating company while Merlin was dormant.

He said the shareholders’ vision was to resuscitate Merspin while Merlin would remain closed until such a time they will seek re-listing on the stock exchange.

Mr Nkomo said because Merlin was not trading, it did not have creditors unlike Merspin, which had judgments with shareholders working on clearing the liabilities to attract investors into the company.

Asked about how Mr Cecil Madondo of Tudor House Consultants got involved in the matters as the judicial manager he said:

“Merspin Ltd was under judicial management in 2004 and Madondo was the judicial manager. He then sold the company to us despite the fact that he says it ‘traded out its debts,’ which is a lie.

“Actually, he paid all the creditors and the shareholders and then we acquired 100 percent shareholding through Maydeep Investments, our special purpose vehicle.

“And when we acquired the company, we realised on the onset that this company needed serious recapitalisation because the machines were having constant breakdowns.”

Mr Nkomo said they then approached local banks seeking funding to import spares from Germany and Italy but their efforts were adversely affected by the harsh economic climate that prevailed in 2008.

When the country demonitised the Zimbabwe dollar and adopted a multi-currency system in February 2009, Merspin like any other operating company in the country at that time, also suffered working capital constraints, leading to its closure in 2010.

This, Mr Nkomo said, was after Merspin workers approached the High Court without management knowledge to apply for the company to be placed under judicial management and in the process placed Merlin, which is non-existent, under judicial management.

“So, Madondo then gets a certificate and with that certificate, he purports to be acting as a judicial manager of Merspin and he annexes the word ‘Merspin’ to his company’s name to say Merlin Private Ltd trading as Merspin when the order was very clear that he is a judicial manager of Merlin.

“For him to rein in Merspin I don’t know where he got it from and all along he has been misrepresenting the creditors and other stakeholders that he is a judicial manager for Merspin Ltd,” he said.

“So, this whole thing went on from 2011 to 2018 and our position, as Maydeep Investments, we have always said that Madondo has no business in Merspin Ltd or Merlin Ltd.”

Mr Nkomo said the High Court ruling was the way forward.

“I don’t think there is any challenge because on what locus standi (right to appear in court) will Madondo challenge the ruling? I understand he is applying to put Merspin under judicial management but he is neither a creditor nor a stakeholder,” he said.

Contacted for comment, Mr Madondo said, “We went to the High Court and we’ve made an appeal against that court order to the Supreme Court, which suspended that court order and that was more than three weeks ago. And I can send that one to you.”

However, efforts to get the aforesaid Supreme Court documents from Mr Madondo since Monday were unsuccessful despite the several promises that he made in that regard.

Early this year, Mr Madondo told this paper that Merlin had re-opened following the implementation of a business rescue strategy involving immediate injection of $2.1 million minimum working capital by one of the firm’s creditors.

In January, the company also flighted an advert seeking to dispose of some of its non-functioning equipment through an auction sale.

— @okazunga

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