The Commercial Division of the High Court of Malawi on Friday ordered that Peoples Trading Centre (PTC) should be liquidated and closed completely without an option of a takeover by another investor owing to its high state of debts.
Presiding judge Masauko Msungama has also ordered that the official receiver should act as a provisional liquidator and shall act as such until such time that another person becomes a liquidator and is capable of acting as such.
Msungama made the judgment in a case where one of company’s new directors, Lloyd Laxton Enos Malola, applied for an order of company reorganization on the ground that PTC is unable to settle its debts or that it is liable to be wound up unless it is granted an order to reorganize itself to settle the debts.
Malola prayed to the court that in the prevailing circumstances, PTC should reorganize itself and fully resume trading in order to generate revenue to be used to settle its debts and remain solvent.
Furthermore, the concerned parties asked the court to appoint Hastings Bofomo Nyirenda to be the administrator of PTC and grant the company a moratorium of up to 12 months or such other duration as the court would consider to be just, proper and equitable for the company to settle its current liabilities and make such other order as the court considers just, proper or equitable to prevent the company from becoming insolvent and liable to be wound up.
But in is ruling delivered on Friday, Msungama declined to grant the company the order of reorganization.
“Consequently, there is no need for the appointment of an administrator of the Company. Like my brother judge in Cotton Ginners, I exercise my power under S.19(c) of the Insolvency Act and treat the application as if it was a winding up petition of the Company.
“I order that the company be wound up. It is pertinent to mention at this stage that by virtue of the provisions of S.27 of the Insolvency Act, an automatic moratorium kicked into effect the moment the Company filed its papers in respect of the application for an order of reorganization,” said the judge in his ruling.
“There is, therefore, as we speak, a stay of proceedings against the Company which will continue to be in effect until the determination by the court of this application. If at the end of the day it is the court’s decision to throw out this application, it will be in order for the court to consider if it is appropriate, in the circumstances, to order a winding up of the Company.
“On the other hand, if the court decides to grant the application, it will be necessary to make an ancillary order appointing someone to be the administrator of the Company for an initial period of 6 months.
“In the course of hearing the application, it came out clearly that as opposed to the debts of over MK6 billion, the Company has assets worth just around MKl.6 billion. There is, therefore, absolutely no doubt at all that the Company, as it is now, is not capable of paying its debts,” he added.
PTC was incorporated as a limited liability company on 2nd May, 1973, and was wholly owned by Press Corporation Limited (PCL).
Earlier this year, PTC was sold to Tafika Holdings Limited. At a time the company was being sold, it was neck deep in debts in excess of MK18 billion.Follow and Subscribe Nyasa TV :