HARARE – Zimbabwe Fertilizer Company (ZFC) is seeking liquidation of troubled financial advisory company, KM Financial Solutions (KMFS) over a two-year old debt of $500 000, sources familiar with the developments said on Friday.
An official at the fertilizer company who declined to be named, said KMFS which has since been placed under provisional judicial management, guaranteed a fertilizer supply deal which was worth $1,3 million between its subsidiary, KM Insurance Company of Zimbabwe (KMICZ) and ZFC.
KMFS paid $800 000, but is now failing to pay the outstanding balance despite making several payment plans. This prompted ZFC to obtain a writ of execution to attach the company’s property, but could not execute it as KMFS had applied for judicial management.
ZFC, which is the company’s biggest creditor has reportedly since instructed its lawyers to oppose the judicial management and file for liquidation to recover the money owed.
“The company (ZFC) wants to oppose the judicial management and have KMFS placed under liquidation,” said another official.
“(KMFS) is saying most of the farmers did not pay them for the fertiliser but at the same time filed for judicial management,” he said, adding that this was in contradiction of the promise to pay.
KMFS last month said it was planning to raise over $40 million through KMICZ over the next three years to support rural agricultural projects, and that it had already raised $5 million for the programme.
The official said ZFC management is questioning why KMFS would file for judicial management when it had capacity to raise funding for its projects through its subsidiary.
ZFC managing director Richard Dafana declined to comment, but KMFS judicial manager Knowledge Hofisi of Aurifin Capital confirmed the development.
He said he was appointed judicial manager of KMFS by the High Court in April and that ZFC was the company’s biggest creditor.
“I am not able to disclose the amounts, but what I can only confirm is that for example, ZFC is owed $500 000 by KM Financial Solutions,” he said.
“We are still in the process of gathering relevant information to prepare our report in terms of Section 303 of the Company’s Act prior to convening a meeting of creditors and members.”
He said the report would be ready in a week after which a meeting of creditors would be convened.
Responding to whether KMFS had capacity to repay its debt, Hofisi said he would look at the asset base of the company which was owed $1 million by its debtors and was being recovered.
“It is common knowledge that they also secured a huge tender, but I am not be able to go into technicalities. They are almost through in terms of executing that tender,” he said.
— The Source