Struggling RioZim gets relief from asset seizure

Diversified mining giant RioZim Limited has temporarily fended off the attachment of its assets, after a local firm, Curechem Overseas, had successfully secured writs of execution over an outstanding debt.

The reprieve comes as RioZim, which has an interest in gold, coal and diamonds, navigates its uncertain future, having recently entered corporate rescue proceedings following an application by its workers two weeks ago.

Curechem had obtained an execution order in a case filed in 2023, targeting RioZim’s assets, including furniture and vehicles.

However, the planned seizure has been halted, with RioZim’s lawyers successfully arguing for a temporary suspension based on the initiation of the corporate rescue process.

While the formal court order for corporate rescue has not yet been officially granted, legal provisions in Zimbabwe deem a company to be under corporate rescue once the application is filed.

This crucial legal step aims to protect the company’s assets from being stripped by shareholders or management during the often-lengthy court process that precedes the granting or rejection of the application.

“Reference is made to the above matter and the writ of execution served on our client (RioZim) on the 15th of May 2025,” RioZim’s lawyers, Coghlan, Welsh and Guest, wrote to Mboko T.G Legal Practitioners, the attorneys representing Curechem, last week Friday.

“We wish to inform you that corporate rescue proceedings were initiated against our client on April 28, 2025, by the Zimbabwe Diamond and Allied Workers Union under case number HC 1945/25.

“Given that CRP have been initiated it is key that we advise you of the mandatory statutory provision of section 126 of the Insolvency Act [Chapter 6:07], which provides for a general moratorium on all legal proceedings against a company undergoing such proceedings.

“In light thereof, we request that by close of business today you instruct the sheriff of the High Court to immediately suspend any action against our client including but not limited to the removal of its attached property slated for May 20, 2025, as it is under such moratorium pending completion of the CRP.”

The lawyers assert that this statutory provision is mandatory and expect no opposition.

They warned that if a letter suspending the execution was not received by the end of Friday last week, they would file an urgent chamber application to stay the execution and seek costs from Curechem.

In response, Curechem’s attorneys confirmed on Monday that they were informed of the corporate rescue proceedings and that, following engagement between the parties, they agreed to temporarily suspend the scheduled removal of RioZim’s properties.

Curechem is reportedly among several creditors struggling RioZim has failed to pay, underscoring the widespread debt issues plaguing the mining conglomerate.

Represented by the Zimbabwe Diamond & Allied Minerals Workers Union and two employees from its subsidiaries, RioZim workers contend failure to implement corporate rescue, a process aimed at reviving financially distressed companies by providing a temporary moratorium on legal proceedings to allow for the development and implementation of a solvency plan.

Court documents reveal that RioZim faces severe liquidity issues, with current liabilities exceeding current assets by approximately ZiG1,04 billion and total liabilities surpassing total assets by ZiG 149,2 million as of June 30, 2024.

The company is struggling to meet financial obligations, including US$5,5 million and ZiG 9 million in regulatory and contractual commitments, prompting the Zimbabwe Revenue Authority to suspect financial impropriety and demand its asset register.

Critical services like electricity have been cut off at the Renco Mine due to a US$4,7 million debt, and RioZim also owes US$5,6 million in outstanding salaries and faces numerous labor disputes.

Given the company’s negative equity of ZiG 149,2 million and declining performance, including a drop in gold production despite global price increases, the situation is unsustainable and necessitates intervention to prevent collapse. Furthermore, RioZim faces significant legal challenges, including criminal charges from the tax authority and the Mining Industry Pension Fund, a US$30 million commercial dispute, and a US$55 million debt to an associate company.

RioZim’s audited financial statements by Forvis Mazars in Zimbabwe highlight a material uncertainty regarding the group’s ability to continue as a going concern, a concern echoed by previous auditors, Ernst & Young Chartered Accountants, as far back as December 2021, who also noted significant compliance issues with International Financial Reporting Standards.

An independent technical report from May 2024 further underscores RioZim’s challenges, detailing the declining status of its mineral assets, with a significant portion of its gold and chrome mines (including Cam and Motor, Dalny Mine, One-Step, and Maranatha) currently under “care and maintenance,” while only Renco Mine (gold) and Murowa Diamond remain operational, contributing to the company’s financial instability and reinforcing the urgency of corporate rescue efforts.-herald