The Cold Storage Company (CSC) business rescue practitioner Vonani Majoko has been removed from position for failing to come up with a turnaround strategy.
The High Court ordered the removal of Mr Majoko following
an application by Boustead Beef.
The UK-based investor, Boustead Beef, entered into a
25-year joint venture agreement with the Government in January 2019 to revive
CSC, but the parties jointly filed for corporate rescue in December 2020 after
some creditors sought to file for liquidation.
Mr Ngoni Kudenga, of BDO Chartered Accountants was
initially appointed corporate rescue manager before he was disqualified on the
basis that he was conflicted.
Mr Kudenga was disqualified by Rose Dube (Additional
Master) because of his previous association with Lands, Agriculture, Water,
Fisheries and Rural Development Minister Dr Anxious Masuka.
Mr Kudenga is the president of Zimbabwe Agriculture Society
while Dr Masuka was the chief executive prior to his appointment.
Mr Majoko was then appointed CSC interim corporate rescue
manager. Boustead cited Mr Majoka as the first respondent and the Ministry of
Lands, Agriculture, Water, Fisheries and Rural Development was cited as second.
“Vonani Majoko is hereby removed as corporate rescue
practitioner for the Cold Storage Company with immediate effect,” said the High
Court in a July 7, 2022 ruling.
In its court application, Boustead said Mr Majoka had become unsuitable to act as Corporate
Rescue Practitioner for the Cold Storage Company as he had been incompetent,
and failed to perform his duties.
“He failed to cause the corporate rescue plan to be
published within forty-five business days after the date on which he was
appointed.
“He failed to consult with creditors, other affected
persons, and the management of the Cold Storage Company (Private) Limited and
thereafter prepare a corporate rescue plan for consideration and possible
adoption.
“He failed to convene and preside over a meeting of
creditors and any other holders of a voting interest for the purpose of
considering the corporate rescue plan.”
Boustead said due to the absence of the corporate rescue
plan, Mr Majoko “is not aware of all the material assets of the company, as
well as knowledge on which assets were held as security by creditors when the
corporate rescue proceedings began.”
Boustead said the corporate rescue proceedings were not
permanent as they were a measure for the temporary supervision of a financially
distressed company to bring it back to viability.
“It has been over twelve months since the first respondent
was appointed Corporate Rescue Practitioner for the Cold Storage Company
(Private) Limited.
“During this time, the first respondent has not paid any
attention to his duties and obligations as Corporate Rescue Practitioner. His
actions are defeating the objectives of corporate rescue.”
Corporate rescue involves, inter alia, temporary
supervision and management of the company by a corporate rescue practitioner, a
temporary moratorium (relief) on the rights of creditors against the company,
and the development of a plan to rescue the firm.
CSC had enjoyed a monopoly since 1937 when it was formed.
But the Government deregulated the industry in 1992, which resulted in serious
competition from private players, plunging CSC into a viability crisis
following sharp decline in cattle throughput.
A year later, the company had lost 50 percent of its market
share to private players.
The Government did not foresee the implications of
liberalising the industry as CSC had not been financially capacitated to stand
competition from private players.
Since 1992, CSC largely survived on EU exports and had a
US$15 million revolving payment facility with the bloc.
The facility was discontinued after the EU suspended imports
in 2001 following an outbreak of foot and mouth disease.
CSC had an annual quota of 9 100 tonnes and used to earn at
least $45 million per year from the EU export quota.
Efforts by the company to enter Asian markets did not
succeed after some food safety standards concerns were raised.
The company, which owns four abattoirs used to employ 1 500
permanent workers and an average 700 casual workers, making it one of the
biggest employers in the country. Herald
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