The High Court says People’s Trading Company (PTC) should not be sold to a new investor but its assets worth K1.6 billion should be sold to pay back creditors and the company should be closed.
High Court Judge Masauko Msungama has made the ruling today.
PTC, a company which was incorporated in 1973 and operates retail shops, is owned by Press Corporation Limited but there has been a process to sell the company to Tafika Holding Limited.
PTC Limited lodged a Reorganisation Application with the High Court as part of the sale.
In his judgement delivered today, Judge Msungama noted that the company had a debt of K18.5 billion in form of unpaid rentals and money due to suppliers.
The two parties agreed that PTC would cover K12.5 billion while Tafika would pay back K6 billion to PTC creditors.
While PTC has managed to pay back the K12.5 billion, Tafika is yet to do its part.
Tafika’s chief executive officer Arson Malola submitted a statement to the court saying there are financiers willing to pump money into the company.
However, Msungama said no copies of documents from the said investors were submitted in court and the court did not also get any evidence to show that Tafika has so far pumped funds into the operations of the company.
Msungama also described as irrelevant arguments that the court should grant the reorganisation order on the basis that the company is being sold to Malawians and the importance of the company to society.
“What is important for me is whether the reorganisation order will benefit the interested parties, especially the creditors in this case. I am firmly of the view that it has not been demonstrated to me that the creditors would be better off if the company is placed in a administration through a reorganisation order than they would be if a winding up order is made. I agree with the observation that the company is as good as dead. The creditors would be better off scrambling for the proceeds which may be realised through the sale of the K1.6 billion assets which the company has of now,” said Msungama.
He added that he does not believe a reorganisation order would enable the company’s undertaking to survive or enable an administrator to effect a more advantageous realisation of the assets than would be effected in a winding up.
According to Msungama,making an order winding up the company offers the best for maximising the realisation of the company’s assets for the benefit of its creditors.
“I therefore decline to grant the company the order of reorganisation as applied for.
“I exercise my power under 5.19(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. The official Receiver shall act as a provisional liquidator and shall act as such until such a time that another person becomes liquidator,” reads part of the ruling.
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