Archer Clothing to convene second creditors, members’ meeting

Acting Business Editor
BULAWAYO-based firm Archer Clothing Manufacturers will next week convene a second creditors’ and members’ meeting to hold discussions on the scheme of arrangement. A scheme of arrangement entails the presentation to creditors by the provisional liquidator different options available that they can choose to facilitate the settlement of amounts owed and adopting an effective turnaround strategy for the company.

Archer Clothing Manufacturers is one of the ailing entities in the city recently placed under provisional liquidation due to operational constraints.

“The second meeting of creditors and members will be held at the High Court on the 28th of February 2014 at 9AM for the purposes of voting on the scheme of arrangement,” said the company.

Last year, the company gave its creditors up to mid September to lodge their claims with the liquidator. This was in pursuant to subsection (2) of Section 220, of the Companies Act (Chapter 24:03).

Shortage of working capital, obsolete machinery, power challenges and cheap imports remain the major constraints crippling the viability of industries in Bulawayo. The clothing and textile sector has been the hardest hit.

Economic woes have continued to mount in Zimbabwe despite the liberalisation of the economy in February 2009 with more than 20 companies in Bulawayo having been put under judicial management while more than 10 others faced liquidation.

In 2010, Archer Clothing scaled down operations, laying off 270 contract workers and 210 permanent employees due to operational constraints.

Economic commentators have urged Bulawayo firms under judicial management or facing liquidation to merge or source new investment in order to remain afloat.

And it has been observed that placing companies under judicial management lays a good foundation for their turnaround.
However, the prerequisites for the turnaround requires the competence of the judicial manager to effect the turnaround strategy and the entity must have substantive assets (although with inadequacy of cash resources) and that creditors are patient in awaiting debt settlement.