HWANGE Colliery Company Limited (HCCL) workers have petitioned the High Court to save the coalminer from imminent collapse by placing the company under judicial management, the Zimbabwe Independent can reveal.
According to court papers filed by Bulawayo-based lawyer, Dumisani Dube of Mathonsi, Ncube Law Chambers, the company is saddled with current liabilities of US$209 786 705, with chances of recovery seemingly very slim owing to what the workers claim is poor management at the company.
The application, filed under case HC154/16, if granted, is likely to have far reaching implications on the coalminer whose tentacles and footprints can be traced to the London, Johannesburg, and the Zimbabwe Stock Exchanges.
In an affidavit filed by four workers, Casper Kombana Ndlovu, Luka Katako, Simeon Tembo, and Charles Ncube, representing other hundreds of workers at Hwange Colliery, the applicants argue that judicial management is the only way to save the ailing coal miner from further collapse.
They argue that there is need for professionals to come in and manage the entity as the current crop of managers had failed absolutely to rescue the company from murky waters.
Reads part of the affidavit filed by the four: “The Company is progressively sliding towards bankruptcy and its viability as a going concern is under serious threat. In the last thirty months, employees including myself and fellow Applicants have not been paid and are owed salaries amounting to approximately US$55 414 098.”
“As employees, creditors, shareholders, and members of the company, the Applicants are statutorily entitled to apply for the placing of the company under Voluntary Judicial Management as contemplated in Section 299 (1)(a) of the Companies Act (CH24:03) and as such, they have the locus standi to institute these proceedings and seek the relief sought herein.”
The workers further argued that management had failed to act in a manner that would save the company from collapse, hence their decision to approach the courts.
The affidavit further stated that in 2015 alone, the company registered a loss of about US$20 million as compared to the losses it recorded in the preceding year amounting to about US$7,5 million- a development workers say shows the collapse and failure of alarming corruption levels and mismanagement at the company.
“As at 2014, the company had a turnover of US$72 031 451 and operating at a loss of US$51 540 220 and total current liabilities of US$209 786 707.
“…The company is currently indebted to statutory creditors amounting to US$119 604 483. Outside these normal statutory payments, trade creditors are owed US$37 249 720. Added to these, there are loans owing to the PTA Bank and India Exim Bank of US$3 717 819 and US$31 717 819, respectively,” reads the workers’ affidavit.
It was brought to the attention of the court that the company not only owes financial institutions but also owes some individuals. Individuals creditors have in the past recovered funds from the company after approaching the courts.
The workers also launched an assault on the company’s most and much publicised recent acquisition of equipment and machinery from India and Belarus which government believed was new and would spur production at the company.
“Reads the affidavit further: “Moreover, management has failed to do due diligence and purchased used equipment from India for “new open cast operations”. The complicity is also noted in Ventyx (Proprietory) Limited, Abb South Africa. In this matter, the managing director has consented to judgment of US$1 278 063.15.”
The workers also allege there has been flagrant violation of corporate governance frameworks, with management awarding contracts for jobs to the detriment of the company.
They also claim that a cocktail of issues, if not prevented by the court courtesy of the granting of the order could lead to the total collapse of the company.
“It is submitted, that from the above, it is very clear that through mismanagement, corruption, and lack of appropriate skills, and the lack of will to turn the company around, the company has been unable to pay its debts and becoming a successful concern. Coupled with numerous litigation, and the possibility of more, the real issue is that the company’s liquid reserves and all its net asset value exceed its debts by far. However, if placed under judicial management, the company can become a viable concern and be able once again to satisfy its obligations.
“The Honourable Court is therefore urged to exercise its power and discretion in terms of section 299 (1)(a) of the Companies Act (Chapter 24:03 and place the company under judicial management in order that the judicial manager may turn around its fortunes so that it becomes able to settle all its debts,” further reads the affidavit.'