Oliver Kazunga, Senior Business Reporter
BUSINESS mogul Mr James Makamba has applied to the High Court seeking removal of his investment vehicle, Kestrel Corporation (Private) Limited, from provisional judicial management.
The corporation was placed under provisional judicial management over a US$2,8 million debt arising from a transaction that involved Empowerment Corporation (EC), which is owned by Mr George Manyere.
Representing Mr Makamba, Scanlen and Holderness legal practitioners filed an urgent chamber application for discharge of provisional order filed at the High Court in Bulawayo on April 3, 2019. In the urgent chamber application for discharge of provisional order, Mr Makamba is cited as the applicant, Kestrel Corporation (private) Limited as the first respondent while Mr Manyere and EC are second and third respondents respectively. Mr Militala of Petwin Executor and Trust Company has been appointed provisional judicial manager. In the urgent chamber application, Mr Makamba’s lawyers argue that:
“The applicant is a member of the first respondent. In terms of section 301 (2) of the Companies Act (Chapter 24;03), the applicant is entitled to apply for the discharge of the provisional order and anticipate the return day.
“A provisional order was granted on March 19, 2019 placing the first respondent under provisional judicial management. There is no basis for the order to have been granted as the applicants therein are not creditors of the first respondent. Furthermore, the first respondent is able to pay its debt.”
Makamba’s lawyers said the order was sought based on an alleged failure by the first respondent to fulfil a share purchase agreement.
“The shares are still owned by the first respondent. If applicants in HC167/19 have a legitimate claim they should apply for specific performance.
“The first respondent has a defence to the claim being made by the applicants in HC167/19. In fact there is pending litigation between the parties in the Harare High Court over the sum claimed. It is thus improper for applicants in that matter to seek an order of judicial management based on the same claim,” Scanlen and Holderness legal practitioners, argued.
Mr Makamba’s lawyers also pointed out that the provisional order may cause irreparable prejudice to the first respondent if the judicial manager proceeds to transfer shares owned by the company without full appreciation of the claims by the second and third respondents.
“The return day is too far. The provisional order must be discharged to avoid unnecessary financial prejudice to the first respondent,” says Makamba.
In November last year, Mr Manyere who is the director of EC approached the High Court in Bulawayo seeking the placement of Kestrel under provisional judicial management. He wanted to recover US$2,75million which he paid Mr Makamba as a deposit for the purchase of 690 000 ordinary shares in EC.
Mr Manyere said the parties signed two agreements of sale for the purchase of 69 percent of Kestrel shares.
According to court papers, Mr Manyere said the conditions set in both agreements have all been fulfilled, including lodging of the balance for payment with Mr Gerald Mlotshwa and Co Legal Practitioners but Mr Makamba continued to avoid completion of the sale of the shares.
In his ex parte application, Mr Manyere alleged that Mr Makamba has, using Kestrel’s control of EC, externalised, through violations of Zimbabwe’s exchange control regulations, hundreds of thousands of United States dollars. He argued that only the placement of Mr Makamba’s firm under provisional judicial management would allow for a proper and objective consideration of all of its affairs, its management, liabilities and obligations.
In his ruling on March 19, at the High Court in Bulawayo, Justice Thompson Mabhikwa granted an order putting Kestrel Corporation (Private) Limited under provisional judicial management. —@okazunga