High Court grants Tradepower liquidation order

Thulani Ndlovu Sunday News Correspondent
BULAWAYO-BASED retail and wholesale enterprises Tradepower (Pvt) Ltd and Chitrin Family Investment which owe creditors close to $3,5 million are set to close shop after the High Court granted them a provisional liquidation order to wind down operations.The companies voluntarily applied for liquidation after a cluster of creditors issued final demands or summons, a move that would have forced the enterprises to sell the company’s assets to pay off creditors.

Majority shareholder and director of the two companies Mr Raphael Howard Chitrin told the High Court through a founding affidavit that the reason for failing to service debts, was a sharp drop in business and profitability, attributed to massive closure of companies in Bulawayo over the past few years and job losses which have had an adverse effect on disposable income.

Mr Chitrin decried the anti -competitive business environment in the country caused by “super chain markets with organic link to South Africa who enjoy generous lines of credit not readily available for local companies”.

“Competition from major supermarket chains operating in Zimbabwe with affiliation to sister companies in South Africa and elsewhere has meant that the bulk of Tradepower merchandise which normally used to fly off the counters are now readily available from our competitors who stock the same goods at artificially low prices; specifically marked down at source in order to kill off local competition in Zimbabwe,” alleged Mr Chitrin.

“Anti-competitive behaviour which has seemingly largely gone unregulated in Zimbabwe has seen several high profile supermarkets and retail outlets which until recently were thriving in Zimbabwe either going under judicial management or filing for bankruptcy altogether.”

Tradepower, the flagship business unit of the Chitrin family, which carries on the business of retail and wholesale from various premises situated in Bulawayo and Victoria Falls, owes trade creditors in excess of $1 500 000, according to court papers.

Mr Chitrin also revealed that due to dismal trading conditions, the last five years were the worst in the company’s history having forced Tradepower to close down some outlets in Harare and Bulawayo.

“If one studies the 2014 figures by comparison to the figures for the previous two years, 2012 and 2013 it is clear that there has been an alarming decline in performance,” noted Mr Chitrin.

The major creditors of the Chitrin companies are Central African Building Society (CABS) and AfrAsia Bank (formerly Kingdom Bank) who are owed more than $1,5 million which they advanced to the enterprise as loans.

“The loan amounts were applied in good faith and with bona fide objective of supporting the operations of Tradepower and in order to make it more competitive. The bulk of the amounts advanced went towards retiring old debt and therefore did not benefit Tradepower operations directly which on its own is an indication of the debt trap which the applicant finds itself in,” said Mr Chitrin.

Tradepower, which has also not paid taxes to Zimra for months, in June defaulted on its loan repayments with both AfrAsia Bank and CABS. The arrears with CABS were $61 860 and those with AfrAsia Bank stood at about $92 000, attracting interest at penalty rates of between 40 and 50 percent per annum.

The businessman added that the loans advanced by the two banks were now delinquent and not capable of being serviced from the monthly incomes from the companies.

He also said the interest rates levied by the banks were prohibitive.

Mr Chitrin said he did everything he could to try and save the companies, literally working himself to actual physical collapse and hospitalisation.

“Strenuous efforts were applied firstly towards disposing Tradepower as a going concern and realising some immovable assets by placing them under estate agents . . . I have also suffered a major health scare and endured hospitalisation. All this resulted from the considerable stress and exhaustion involved in all efforts applied trying to secure a settlement for all our liabilities.

“I no longer have the same energy reserves that I had 10 years ago and the doctors have strongly advised me to retire,” summed Mr Chitrin.