Long odds of the last lifeboat: Corporate rescue in Zim

By Valentine Muhamba | 1h ago

SINCE Zimbabwe’s Insolvency Act came into force in 2018, only three registered corporate rescue practitioners have successfully concluded major industrial turnarounds. Three. In seven years. In that same period, the mechanism has been invoked by gold mines, a mobile operator, a cement producer, clothing retailers, a cotton parastatal, and now the country’s oldest supermarket chain. The Cold Storage Company is among the few to have exited rescue on solvent terms. The law was designed to be a last lifeboat. The survival rate suggests most of those who board it drown anyway.

In South Africa, whose business rescue framework directly inspired Zimbabwe’s own, the Companies and Intellectual Property Commission’s June 2022 Status Report recorded that of approximately 4 370 companies entering business rescue between 2011 and June 2022, only 19% reached substantial implementation of their rescue plans. In the final quarter of 2023, that figure improved to 36% for companies that completed the process in that period. Zimbabwe publishes no equivalent dataset. What it has instead is the Confederation of Zimbabwe Industries’s three-turnarounds-in-seven-years verdict, and a growing queue of companies for whom rescue is the last stop before liquidation.

OK Zimbabwe and Cottco are the latest additions to that queue. To understand why rescue so rarely works in Zimbabwe, it helps to understand what it is designed to do, and how far the reality falls short.

Corporate rescue is a formal process for rehabilitating a company that is financially distressed but not yet insolvent. The Insolvency Act sets a forward-looking test: a company qualifies if it cannot pay debts within six months, or faces a reasonable likelihood of insolvency within that window. The mechanism’s logic is to intervene before collapse, not after.

Once proceedings begin, a moratorium immediately takes effect: no legal proceedings may proceed against the company or its assets without court approval, creditors cannot seize property, and a registered corporate rescue practitioner assumes management control. Within 45 business days, the practitioner must publish a rescue plan. That plan must either return the company to solvency or produce a better outcome for creditors than immediate liquidation. The moratorium is the mechanism’s most powerful feature. For a company in freefall, it halts the fatal run on assets that typically finishes a distressed business before anyone can attempt a turnaround. Directors who delay invoking rescue when distress is apparent risk personal liability for reckless trading. That provision exists on paper. Its enforcement record in Zimbabwe is thin.

Metallon Gold was once Zimbabwe’s largest gold producer, with five mines at its peak and a JORC-compliant resource base of 8,3 million ounces. By December 2017, it had sold Arcturus to TN Capital, leaving four operational mines. By 2019, most had halted, equipment was being attached by creditors, and workers had not been paid for months. Court-appointed administrators from Grant Thornton and Tudor Consultants assumed control of Mazowe and Shamva in February 2020.

The Supreme Court later found the initial proceedings had not complied with mandatory statutory requirements, rendering earlier applications nullities. Mazowe filed for rescue again years later, citing an estimated US$25 million in salary arrears and a mine that had resorted to selling its own equipment. No sustainable recovery has materialised.

Khayah Cement is the clearest recent counter-example. The former Lafarge subsidiary entered corporate rescue in December 2024, citing an “untenable” business environment.

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A structured investor search produced a US$60 million package from Uganda-based Hima Cement, which creditors and shareholders approved in September 2025, including the refurbishment of Khayah’s Harare plant. Creditor approval is not the same as completed rehabilitation, and refurbishment is ongoing. But the Hima deal is the strongest positive outcome in Zimbabwe’s recent rescue record, and the reason is precise: a product in genuine demand, an intact asset base, and financial rather than structural distress. A buyer could see a viable business beneath the debt. That combination is rarer in Zimbabwe’s rescue caseload than the law anticipated.

Truworths Zimbabwe, the clothing retailer 34% owned by JSE-listed Truworths International, entered rescue in August 2024. It owed creditors roughly US$2 million, a modest figure by rescue standards, but the debt was not the problem. The problem was that cheap imported textiles and an unregulated informal market had made Truworths’ formal pricing model uncompetitive before the first creditor missed a payment. Telecel Zimbabwe entered rescue in October 2025 carrying the same structural logic. Once the country’s second-largest mobile operator, Telecel had 319 548 active subscribers by mid-2025, less than 2% of the mobile market. It operated 17 LTE base stations. In comparison, Econet operated approximately 1 700. The company had not added a single LTE site in the quarter before rescue. Grant Thornton’s practitioners have been direct: Telecel needs approximately US$50 million or it disappears, leaving Zimbabwe with a mobile duopoly. Truworths and Telecel both entered rescue not because they were mismanaged into distress, but because the environment stripped the commercial logic from their business models before rescue proceedings could do anything about it.

OK Zimbabwe entered corporate rescue on February 24, 2026, with Bulisa Phillimon Mbano of Grant Thornton appointed as practitioner. Founded in 1953 and operating 69 stores under three brands, it was the most consequential retail rescue filing in the country’s history. The company raised US$20 million through a rights issue in August 2025 to address a US$30,5 million recapitalisation need. The remaining US$10,5 million was to come from property disposals that never closed. Suppliers owed approximately US$24 million in aggregate responded to payment delays by cutting credit to one or two weeks, then withdrawing. Revenue for the six months to September 2025 collapsed 84% to US$28,26 million. Full-year audited losses for the year-ended March 2025 stood at US$25 million on revenues down 52% to US$245 million.

Herbert Nkala, who chaired OK Zimbabwe through that period before being succeeded by Charles Msipa in December 2025, attributed the collapse to exchange rate instability, supply chain disruption, and rising competition from the informal sector. Msipa’s sworn affidavit supporting the rescue filing went further, identifying the ZiG regime’s exchange rate duality as a structural cause: formal retailers were legally required to price at official rates while informal competitors operated at parallel rates. The regulatory correction that helped TM Pick n Pay recover, the repeal of SI 81A in April 2025, came too late and too narrowly to reverse OK’s supplier crisis.

Cottco and RioZim arrived at the rescue queue by different routes but through the same underlying failure: an accumulation of structural stress that boards addressed too slowly. Cottco entered rescue in May 2026, ahead of the cotton marketing season, with legacy debts compounded by the 2024 El Nino drought that reduced its intake to 9 900 tonnes, well below break-even, until creditors began attaching assets and forced the board’s hand. RioZim, controlling Murowa Diamonds and Renco Mine, faces a fresh court application as of May 2026, saddled with a reported US$76,5 million in debt, including five months of unpaid wages. In both cases, the pattern is the same as Metallon a half-decade earlier: distress that compounded in plain sight, and rescue invoked as a last resort rather than an early intervention.

That pattern points to a problem beyond timing. The practitioner market is thin. Grant Thornton has handled Metallon, Telecel, and OK Zimbabwe. Crowe Zimbabwe took Truworths. Tudor Consultants deputised on Metallon. Practitioners must be registered with the Council of Estates Administrators and IRAZ, assume the legal duties of a director, and be wholly independent of the company. The CZI’s concern is not with who these firms are but with how few of them possess genuine turnaround expertise, as distinct from insolvency administration. Restructuring a living business and managing a controlled wind-down are different disciplines. Zimbabwe has too few people who can credibly do the former, and the 45-day statutory clock does not wait.

The legal standard a plan must meet makes the scarcity of qualified practitioners even more consequential. South African courts have held, in authority treated as persuasive in Zimbabwean proceedings, that a rescue plan must address the actual cause of distress and offer a sustainable remedy, not merely substitute one debt for another. In practice, this means a practitioner must not only negotiate supplier terms and creditor settlements within 45 days, but must identify and credibly address whatever drove the company to distress in the first place. Three conditions make that almost impossible in Zimbabwe’s current environment.

The first is timing. Boards delay. By the time proceedings are filed, suppliers have withdrawn, assets have been attached, and the 45-day window opens onto a business that is already gutted. Late filing is the primary driver of rescue failure. The second is the exchange rate regime. The ZiG devalued 43% in a single adjustment in September 2024 before stabilising. Formal businesses were legally required to price at official rates while informal competitors were not. No restructuring plan resolves that gap, because the plan cannot repeal the regulation that created it. The Reserve Bank of Zimbabwe’s monetary tightening since 2024 has stabilised the exchange rate but simultaneously choked the credit that distressed companies most need. The third is the informal economy’s structural advantage. Formal retail and manufacturing carry regulatory and pricing burdens that informal competitors do not. A rescue plan can rehabilitate a formal business’s balance sheet. It cannot remove the competitive disadvantage that comes with being formal in a predominantly informal economy.

Khayah’s path to creditor approval rested on three things: financial rather than structural distress, a buyer with genuine capital, and an asset base that retained value. Equity Axis observed that companies with vertical integration or a strong franchisor anchor proved structurally more resilient in Zimbabwe’s retail environment. TM Pick n Pay, backed by a South African parent, had supply chain support and creditor confidence that OK Zimbabwe, operating as a standalone domestic retailer, could not replicate. The franchise anchor is not glamorous analysis. But in a market where exchange rate duality, power cuts, and informal competition are baked into the operating environment, it is the difference between a company that can absorb a revenue collapse and one that cannot.

What the failed rescues share is a common failure mode: they arrived too late, carried debt that could not be settled without an investor who was not coming, and operated in an environment that had made their business models untenable before anyone filed a court document. The rescue did not fail at the point of rescue. It failed years earlier, when the conditions that made rescue necessary were allowed to compound unchecked.

The Insolvency Act is competently drafted. The moratorium mechanism is genuinely protective. The problem is that corporate rescue is being asked to resolve crises that are macroeconomic and regulatory in origin, and that a 45-day plan produced by a court-appointed practitioner cannot answer exchange rate duality, informal sector competition, or a capital market too thin to produce investors on demand.

For OK Zimbabwe and Cottco, the outcome depends on whether the structural conditions that caused the crisis recede fast enough for a plan to take hold. For Telecel, it depends on a reported US$50 million investor who may not exist. For RioZim, it depends on a resolution to years of governance failure that no rescue practitioner can compel.

Three successful industrial turnarounds in seven years is not a verdict on the law. It is a verdict on the environment in which the law must operate.

Muhamba is a business analyst, market analyst and the AMH Group Chair’s executive assistant. [email protected]