GOVERNMENT-OWNED stationery retailer Kingstons Holdings could soon face an avalanche of lawsuits and writs of execution after the High Court revoked its provisional liquidation status.
By Bernard Mpofu
Kingstons was placed under the management of turnaround strategists in August 2016, effectively blocking its creditors from making claims against the firm.
Among the creditors of Kingstons are the Zimbabwe Revenue Authority, Old Mutual Zimbabwe, and the National Social Security Authority.
High Court judge Justice Edith Mushore on January 28 ordered that the liquidation be lifted after a local firm argued that the company was conveniently using the arrangement to dodge claims.
“The provisional order granted by this court in case number HC 8093/14 placing respondent under provisional liquidation be and is hereby discharged,” Justice Mushore ordered.
Contract Purchase Agency (Pvt) Ltd director Newman Chiadzwa through his lawyers Mutuso, Taruvinga and Mhiribidi applied to the High Court seeking the discharge of Kingstons’ provisional liquidation after the firm had failed to pay him US$84 000 for supplies he had made to the company.
“On 01-11-17 (November 1 2017) the lawyers wrote a letter to first respondent (Kingstons) itself placing it on record that it had become apparent that (Reggie) Saruchera (provisional liquidator) was not in charge of its affairs, which remained under the charge of its original management notwithstanding the provisional order,” the lawyers wrote.
“First respondent did not respond, nor did it refute those charges. Now, applicant has not been able to proceed with its claim and is sure at any rate that it would not be able to execute any judgement which may be granted by the court. The provisional order has neither been confirmed nor discharged and for as long as it exists will be first respondent’s shield from litigation and execution. It is for that reason that applicant now seeks discharge of the provisional order.”
The lawyers, who instructed Advocate Edley Mubaiwa, argued that the provisional order should be discharged because in 2016, Kingstons filed its opposition against the confirmation of the order arguing that it was not insolvent and has a strong property portfolio. The stationery seller also averred that it operates 20 branches in all 10 provinces of the country with an asset base of US$6 million.
“It is also apparent that the provisional order is a façade given that it is equally apparent that first respondent is not being run by third respondent (Saruchera), who apparently has no idea what is happening … Throughout the heckling and negotiations concerning this debt, the first respondent was represented by its original management and not by third respondent. The meeting of 03-04-17 (April 3 2017) was held with its acting chief executive officer and not the provisional liquidator,” the lawyers argued.
Kingstons’ core business is selling books, magazines, newspapers and a variety of educational and other forms of stationery.
It used to enjoy a near-monopoly through its wide network before being thrown off balance by an influx of imports and other local competitors.
Breakneck changes in technology disrupted the firm’s business model.