D. Whitehead ruling expected today

of the collapsed textile company.

Last week, former David Whitehead provisional judicial manager Mr Winsley Militala filed an urgent chamber application challenging the appointment of Mr Knowledge Hofisi as final judicial manager.

In the court papers filed last Friday, Mr Militala argued that the appointment of Mr Hofisi was flawed. Their heads of arguments were heard yesterday after the Supreme Court ruled that the matter was urgent.

Mr Militala is arguing that he, the creditors and companies under David Whitehead Textiles were not served with papers confirming the placement of the company into final judicial management.

The High Court had appointed Mr Hofisi of Aurifin Capital as the final judicial manager of collapsed textile firm David Whitehead after shareholders and creditors rejected liquidation.

Mr Militala had recommended the company be placed under liquidation after failing to raise working capital. The liquidation of David Whitehead could have resulted in more than 2 000 workers losing their jobs.

Mr Hofisi’’s rescue plan received substantial support from the majority of creditors and shareholders who then voted for the final judicial management.

Creditors owed about US$6,5 million voted for final judicial management which represented 56 percent of the vote, while 46 percent with total claims of about US$5,5 million voted for liquidation.

Shareholders with 590 million shares or 75 percent of the issued share capital voted for final judicial management. The firm was, for the second time, placed under judicial management in December 2010, having gone through the same reconstruction between 2005 and 2008 under Dr Cecil Madondo of Tudor House Consultancy. According to the plan, Aurifin is proposing “a scheme of compromise” to avoid liquidation.

The report says workers and other creditors, who are owed about US$8 million, would be persuaded to convert part of their debt into equity, but on condition the company will be subsequently re-listed on the ZSE.

In his report, Mr Militala said various capital-raising initiatives were pursued to rescue the company, in recognition of its national significance, but none could materialise. He noted the DWT problems worsened at the peak of hyperinflation in 2008, when the former ZSE listed company was seeking to raise capital.

Access to capital was a “virtual impossibility” as banks had minimal funds to lend. The little funding available was on a short-term basis which was not aligned to DW trading cycles.

Despite funding challenges, Mr Militala noted there were some policy shortcomings. The board did not come up with “credible” strategies to protect the business.

Although the services of external consultants were enlisted, nothing was done in relation to implementation of the resolutions — until the collapse of the company.

The former ZSE-listed company was once one of the country’s biggest employers, sustaining thousands of livelihoods directly and indirectly. DW requires US$3,5 million for plant refurbishment and US$2,6 million as initial working capital.