via Kereke’s Hospital Resumes Operations, Hopes to Trade out of Debt | ZimEye 18 February 2015
Rockfoundation Medical Centre was placed under final judicial management on Wednesday, amid threats by its major shareholder, legislator Munyaradzi Kereke to sue the Zimbabwe Revenue Authority (Zimra), which he accuses of being part of a political conspiracy to cripple the health service business.
The medical centre, located in the upmarket Mount Pleasant suburb in Harare, was forced to cease operations in 2014 after Zimra garnished its accounts over a $3,3 million tax charge, which was later revised to $1,8 million after the business challenged the amount in court. The firm was placed under provisional judicial management and resumed operations last December.
Zimra has so far collected $900,000 from the company, the court was told on Wednesday.
The hospital’s assets are worth $8,3million while its liabilities total $10,9 million. It also lost some of its property to creditors who obtained writs of execution from the courts to recover debts.
Addressing creditors during a meeting at the High Court, the judicial manager, Budhma Chikamhi said despite the hospital being technically insolvent, it had potential for turnaround and that since reopening, its monthly turnover had increased to $50,000 in February this year from $22,000 last December.
At its peak in 2012, its annual revenue was at $4,2 million before falling to $3,7 million in 2013.
Three of the business units are now running – the trauma centre, radiology and dental unit. The maternity and eye unit will be opened soon, he added.
“We had a number of doctors enquiring to partner with us. One potential investor wants to set up a state-of-the-art cancer treatment centre,” said Chikamhi.
He said the company’s shareholders were willing to offload between 30 to 40 percent shareholding to new investors to create a medium-term cash buffer.
“Even without investors, in the next three to four months we should be fine from our cash flows,” he said.
He said repayment of creditors would take four to five years and that if the creditors opted for liquidation, Capital Bank would get 54,4 cents for every dollar while Tetrad Bank, workers and unsecured creditors would get nothing.
In the end creditors voted to save the company.
Chikamhi said he had approached a bank for a $350,000 loan to pay staff and other creditors while he would negotiate to restructure short-term loans into long-term.
At the meeting, Kereke accused Zimra of politicising the debt issue and inflating figures.
“We need for them to not politicise their work. Let us put the welfare of the country at heart,” he said.
“At the court they sought to misrepresent facts. They thumb sucked and produced $2,7 million. Zimra is not operating professionally, it’s not right to create a false artificial debt,” he said.
“We will be taking Zimra to court as shareholders because they acted to ruin an innocent player in the market and made employees suffer. We are also suing Capital Bank for $2,5 million,” he said.
The meeting had moments of drama, with the CBZ Bank lawyer, Advocate Chiutsi, insisting on addressing the meeting but was blocked by the Master of the High Court, Eldard Mutasa, who stated the bank was not a creditor.
“The fact that you are a potential creditor does not make you a creditor. CBZ hasn’t properly filed its claim. Advocate Chiutsi I respect you as a senior counsel and I don’t want to excuse you from this court,” Mutasa said.
Capital Bank’s representative also insisted on speaking during the meeting although the bank’s application was filed late and could not be considered.
“We don’t want to get into an unnecessary show down. We don’t want to undress each other unnecessarily. I have made my decision and it’s not the end of the world. If anyone is aggrieved you know the procedure to seek recourse,” Mutasa said.
The Tetrad representative wanted to know why the bank as a secured creditor would get nothing at liquidation and was informed that it was based on the assets on which the bank’s claim were secured.
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