adminCapital as the final judicial manager of the collapsed textile firm’s after shareholders and creditors rejected liquidation.
Mr Militala had recommended the company be placed under liquidation after failing to raise working capital.
The liquidation would have resulted in the loss of more than 2 000 jobs.
In the court papers filed last Friday, Mr Militala is arguing that the appointment of Mr Hofisi was flawed.
Mr Militala says he, the creditors and companies under David Whitehead Textiles were not served with papers confirming the placement of the company into final judicial management.
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 only on condition the company will be subsequently relisted on the ZSE.
Capital and reserves would increase by US$8 million while liabilities decrease by the same amount, thereby strengthening the company’s balance sheet. Workers would be guaranteed job security while other creditors, such as suppliers of goods and services, would continue doing business with the company.
Aurifin is also proposing the sale of the company’s non-core assets to raise working capital.
Debt-equity could be mobilised but this may be difficult, because of the liquidity challenges facing the economy.
At the moment, David Whitehead will score low marks on credit rating because of its well-documented challenges. It is envisaged that production would start at the spinning division in Kadoma.
Spinning involves the conversion of cotton lint into yarn that could be sold on the local and export markets.
Other production divisions such as weaving, dyeing and hosiery require intensive refurbishment of machinery and equipment before resumption of production.
It is then expected that proceeds generated from the spinning division in Kadoma would be used for the refurbishment of machinery at the weaving, dyeing, and hosiery divisions in Chegutu over an estimated period of six months.
Online Reporter