adminKudakwashe Pembere Business Reporter
MCDOWELLS International could be thrown into liquidation after judicial manager Mr Winsley Militala recommended the assets of the money lending firm be sold to pay off creditors.
Presenting his report to a room full of creditors at the High Court on Wednesday, Mr Militala said “in view of the foregoing, current trade performance and the cancellation of the lending license, I recommend that the company be liquidated and have all assets sold.”
Hundreds of creditors endorsed Mr Militala’s recommendation that the company be placed under liquidation. They also proposed that Mr Militala be the liquidator of the company.
The meeting was conducted in two court rooms as people could not fill one court room.
McDowells, whose licence has since been revoked by the Reserve Bank owes about US$9 million to over 12 000 creditors including, banks, churches and insurance companies. Total deposits taken by the company amounted to US$16 million and 2,2 million rand.
Total amount withdrawn by depositors amounted to US$13 million and 1 million rand. Total interests paid out was about US$5,2 million and 320 408 rand, said Mr Militala.
“At least US$13 million was withdrawn by the depositors while a total interest of US$5,2 million was paid out. This figure is disappointing because at some instances, some creditors would receive their money without getting receipts. We are going to follow up and retrieve the money that was paid out to the few persistent creditors,” he said
He said since he took over, he realised that the company had no capacity to settle its debts.
“In addition to the cancellation of the license, it would appear that the company’s business model was unsustainable,” said Mr Militala.
“The asset base of the company and its subsidiary as reported to the judicial manager upon assuming office had insufficient capacity to generate enough cash flows to settle the company’s debts.
“In the absence of the said capacity, reliance was largely placed on the enrolment of other depositors in order to fulfil promises made to earlier depositors,” he added.
Mr Militala added that the extent of McDowells indebtedness as a result of deposit taking stood at US$4 million as at September 2013. He said, based on the records presented to him by the shareholders in McDowells, he discovered an amount of US$9 million.
The creditors also heard that the shareholders Mr Member Chipamba and his wife Ms Linda Dewa had assets worth over US$13 million including Lees Inn Hotel in Masvingo which is the remaining profit generating asset. Other assets are include residential stands in Bulawayo and Masvingo while investigations done so far revealed that there are some properties in South Africa worth US$6 million.
He also said from the valuations done, Lees Inn hotel’s market value was US$2,2 million while the forced sale value would be US$1,4 million. The gross replacement cost of the hotel is US$5,8 million.
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