Mr Alex Mashingaidze
was suspended from running Westwood following a High Court application by Reign
Logistics seeking his suspension pending the determination of the main
application for his permanent removal from running the company as the rescue
practitioner.
The corporate rescue procedure is designed to provide
struggling businesses unable to meet debt payments but which are potentially
viable with a lifeline to recover from their financial distress and thereby
avoid the drastic consequence of liquidation.
The process sees a
corporate rescue practitioner appointed to superintend the rescue process of
the sinking company. He is required to develop a corporate rescue plan and
ensure its successful implementation to rehabilitate the company.
In that capacity he runs the distressed business entity’s
operations and affairs with the clear mandate to salvage the company from its
precarious situation.
In this case,
evidence was clear that Mr Mashingaidze was involved in the financial affairs
of Westwood and Justice Happias Zhou granted the relief sought against him.
Pending the final determination of an application to have
Mr Mashingaidze permanently removed as the corporate rescue manager, he was
ordered in this interim judgment to stop exercising his duties as corporate
rescue manager for Westwood and not to interfere with the business operations
of the company in any way.
To sustain its case,
Reign Logistics, which was represented by Mr Frank Nyangani, produced evidence
that Mr Mashingaidze was being copied documents pertaining to the financial
affairs of Westwood.
“There is, therefore, clear evidence of the first
respondent’s involvement with the affairs of the company for which he was
appointed corporate rescue practitioner,” said Justice Zhou. In opposing the application, through his
legal counsel Mr Claudio Nhemwa, Mr Mashingaidze submitted that he did not know
why the correspondence was being copied to him.
He further submitted that his business partner, Mr Dereck
Chikura, who was involved in the financial affairs of Westwood, is in the
mining business.
But for the judge that was enough.
“His mere association with the company and or a person who
is involved with the company disqualifies him,” said Justice Zhou.
“A reasonable and informed third party with the knowledge
of the facts established would not accept that the first respondent (Mr
Mashingaidze) is not compromised. The facts disclose that he is compromised.”
The law authorises the setting aside of the appointment of
a corporate rescue practitioner on the grounds that he is not independent of
the company or its management.
Mr Blessed Ngwenya argued the matter for Mr Chikura. Herald
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