Former Mbire legislator, David Butau (Zanu PF), has been issued with summons by Alliance Insurance Company, which is seeking to recover over $400 000 advanced to him as a loan.
Source: Butau sued over $400 000 debt – NewsDay Zimbabwe July 15, 2016
BY CHARLES LAITON
Butau committed himself as surety and co-principal debtor in respect of a $300 000 loan that was extended to the principal debtor, Ele Resources (Pvt) Ltd, being financial guarantees in favour of Hwange Colliery Company.
In its declaration filed alongside the summons, Alliance Insurance Company said the agreement was signed on September 25 last year.
However, the insurance firm said after Ele Resources defaulted on its obligations, it was automatically entitled to seek payments from Butau in his capacity as surety and co-principal debtor.
“The interest applicable to the said facility of $300 000, which upon default by the principal debtor, the plaintiff (Alliance Insurance Company) has to pay in addition to the facility referred to above amounts to $71 250,” it said.
“On September 25, 2015, the plaintiff also extended a loan in the sum of $38 768 to the defendant. The defendant acknowledged his indebtedness to the plaintiff in respect of the said amount by virtue of the signed agreement.”
In terms of the clause 2.2 of the said agreement, Butau undertook to extinguish his indebtedness in respect of the debt through monthly payments of $100 000 commencing November 30 until full settlement of the debt.
“To date, despite demand, and in breach of the surety mortgage bond and the agreement, aforementioned, the defendant has refused, neglected and/or failed to pay the amounts mentioned herein,” the insurance firm said.
“In terms of clause 16 of the surety mortgage bond, the defendant agreed to pay the costs of registration of the surety bond in the event of his breach and the said costs amount to $10 630,43.”
Butau entered his appearance to defend notice on June 29 this year.