Gold mining giant, DGL says no to corporate rescue

Nyashadzashe Ndoro

Chief Reporter

Bulawayo headquartered gold mining company, Duration Gold Limited has filed an application with the High Court of Zimbabwe to oppose a corporate rescue application filed by Fawcett Security Operations (Private) Limited against Forbes and Thompson (Private) Limited, its subsidiary.

DGL, the ultimate controlling shareholder of Forbes and Thompson, argued it was not served with the application, rendering the proceedings premature and irregular.

"The reason why the Applicant seeks to be granted leave in the matter is that the Applicant, including its current and related parties, are a significant creditor of the 2rd Respondent accounting for more than 80% of the debts owed by the 2nd Respondent and yet the 1" Respondent did not serve it with the application for corporate rescue.

"Without service and notice we have not had an opportunity to oppose the relief sought in the corporate rescue proceedings, prior to the pleadings being closed and the matter being set down. I am advised that it was irregular for the 1st Respondent to set down the matter without serving all interested parties as is required in the Insolvency Act [Chapter 6:07]. The set down of the main matter was therefore premature on that basis," the applicant noted.

The company has denied being unable to pay its debts, citing significant investments and commitments to revive operations. It also cited that all the creditors that the 2nd Respondent has, none of them supported the application by the 1st Respondent.

DGL said creditors are also opposed to corporate rescue because it is an expensive process.

"It is denied that the Applicant is unable to pay its debts as and when they fall due, justifying its placement in corporate rescue. As the record will reflect, this allegation has only been made by the Applicant, who as the notice of opposition by the 2nd Respondent advises, has an ulterior motive in the matter. Of all the creditors that the 2nd Respondent has, none of them have supported the application by the 1st Respondent.

"If anything, all creditors are against such an application as they know and appreciate and appreciate that: Corporate rescue is an expensive exercise, with unnecessary payments made to a corporate rescue practitioner in circumstances where there is no need for him or her to manage the affairs of the Company;

"Corporate rescue will negatively affect the efforts of shareholders and the board in raising and or attracting fresh capital into the business," the company stated.

In its application, DGL said it has invested US$6,947,525 in Forbes and Thompson and committed an additional US$13,250,000. This funding supported working capital and a restart plan developed with external consultants. The plan is aimed to restore mining operations and profitability.

According to DGL, the key aspects of the restart plan include a small-scale mining project that is already generating revenue and cash flow, payments to creditors, with US$272,384 settled since the application, resolution of disputed claims and comprehensive plan to revive the mine's operations.

DGL is seeking leave to file its opposing affidavit after the closure of pleadings. It has requested the court to set aside the corporate rescue application.