CSC under corporate rescue
GOVERNMENT has moved to avert the liquidation of the Cold Storage Company (CSC) by placing it under a corporate rescue plan in terms of the Insolvency Act while facilitating its revival.
CSC has been struggling to sustain profitable operations over the past years and faced the risk of liquidation as creditors demand their dues.
Mounting debts and accusations of poor management and alleged corruptions among other factors, dragged the company into insolvency, with increased risk profile making it difficult to attract fresh investment or working capital.
Experts attribute insolvency to several factors such as corporate governance failures, imprudent financial management, adverse changes in external factors, internal constraints such as inadequate funding or old equipment, loss of key suppliers, customers or personnel.
The corporate rescue model, also known as business rescue or judicial management is thus, part of the Government’s effort to facilitate proceedings towards rehabilitation of the distressed company, which was once a key exporter of beef products to the European Union.
Mr Ngoni Kudenga of BDO Zimbabwe Chartered Accountants has since been appointed as the corporate rescue practitioner for the ailing giant beef processor.
“All stakeholders, creditors and debtors of Cold Storage Company P/L, please be advised that the Ministry of Lands, Agriculture, Water and Rural Resettlement filed an application in the High Court of Bulawayo, HC1779/20, and obtained an order to place Cold Storage Company P/L under a corporate rescue plan in terms of the Insolvency Act (Chapter 6:07) Section 124,” said the ministry in a public notice yesterday.
“Mr Ngoni Kudenga of BDO Zimbabwe Chartered Accountants has been appointed as the corporate rescue practitioner.”
The ministry has directed all interested stakeholder, creditors and debtors to engage with Mr Kudenga for any queriers.
Formerly CSC, the Bulawayo-headquartered firm now called CSC-Boustead Beef Zimbabwe, last year secured Boustead Beef (Pvt) Ltd, a United Kingdom investor who has committed to inject a minimum of US$130 million over five years for the revival of operations, refurbishing industrial assets such as ranges, feed-lots and residential properties.
However, Lands, Agriculture, Water and Rural Resettlement Minister, Dr Anxious Masuka, has said that it was difficult to viably implement the deal as creditors were threatening to attach CSC assets while former employees had reportedly destroyed critical documents.
CSC creditors include urban councils (Harare, Bulawayo and Chinhoyi), National Social Security Authority (NSSA), and the Zimbabwe Electricity Transmission and Distribution Company, are demanding immediate settlement of the arrears.
Citing the Insolvency Act (Chapter 6:07), financial and legal analyst, Mr Godknows Hofisi, says the corporate rescue plan provides temporary supervision of the company and of the management of its affairs, business and property. This also involves temporary moratorium (relief) on the rights of claimants against the company or in respect of property in its possession, and the development and presentation, if approved, of a plan to rescue the company by restructuring its affairs, business, property, debt and other liabilities and equity.
A corporate rescue practitioner is a professional who is registered with the Estate Administrators Council of Zimbabwe.
In Zimbabwe corporate rescue is regulated by the aforementioned Insolvency Act. Previously this was regulated by the Companies Act (Chapter 24:03), which was repealed and replaced by the Companies and Other Companies Act (Chapter 24:31). A corporate rescue practitioner derives general powers mainly from Section 133 of the Insolvency Act.
