BARAK Fund SPC Limited, a firm that claims it is owed close to US$14 million by Makomo Resources has approached Zimbabwean courts demanding the expulsion of the coal miner’s corporate rescue practitioners, claiming they have defied court orders to carry out a forensic investigation.
Makomo, one of Zimbabwe’s biggest coal miners exploiting the resource in the country’s north western claims, slipped into corporate rescue in 2021.
But confidential documents obtained by the Zimbabwe Independent revealed Barak wanted the Master of High Court to remove Grant Thornton Chartered Accountants, as corporate rescue practitioners, claiming the firm’s actions had led to the loss of US$13,5 million.
The documents claimed Grant Thornton paid out US$2,8 million to Makomo’s creditors.
But Barak’s claim was classified as “contingent claim”.
A contingent claim is another term for a derivative with a pay-out that is dependent on the realisation of some uncertain future event.
The legal tussle has sucked Barak’s legal advisors, Titan Law, which said in a June 26, 2024 letter to the High Court its client had suffered massive losses under the arrangement.
“In November 2021, it is Barak SPC Limited Fund that applied for the corporate rescue of Makomo Resources Private Limited in Bulawayo High Court,” Titan Law said in a letter titled “Request for Removal and Replacement of Corporate Rescue Practitioner: Makomo Resources Limited.”
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“From June 2023 to date, a total of US$2,8 million and ZWL107 million has been paid in dividends to creditors of Makomo Resources. Barak Fund SPC has not received any payment, as its claim is termed a “contingent claim” by the corporate rescue practitioners.
“From October 2023 to date, the corporate rescue practitioner has ‘failed to comply with a lawful demand of the Master’ by failing to conduct an investigation into the matter as ordered by the Master on 3 October 2023. Their failure continues to severely prejudice Barak SPC Limited from receiving payment towards its debt,” the letter alleged.
The Independent has also obtained a letter written to Grant Thornton by the Master of High Court last year, instructing the chartered accountancy firm to carry out the forensic investigation.
“We are in receipt of a set of documents in support of the claim by Barak Fund SPC Limited,” the letter said.
“We believe you were also furnished with the same. We wish to advise that we have perused the voluminous bundle of documents bearing what are said to be supporting vouchers.
“In light of the above observation, we direct that a thorough investigation led by the corporate rescue practitioner be conducted to determine the true nature of the claim,” the Master of High Court said.
Subsequently, Titan Law responded to the Master on August 5, indicating that the corporate rescue practitioners continued to defy the High Court.
“By reason of the excessively dilatory conduct of the corporate rescue practioners in carrying out the Master’s demands, our client continues to be financially prejudiced. It is quite apparent from the above-mentioned letter that the instruction from the Master has been wilfully disobeyed.”
However, Makomo’s legal representative, Wintertons rejected Barak’s demand to expel Grant Thornton.
Wintertons claimed the corporate rescue practitioner was being ‘intimidated to act in a manner ‘wholly inconsistent’ with its statutory duties.
Makomo’s lawyers further stated Barak’s request lacked legal basis.
“It has not been demonstrated that the corporate rescue practioners have failed to perform their duties satisfactorily or to comply with any lawful demand by the Master. The basis upon which the request is made is demonstrably untenable as set herein under,” Wintertons wrote.
In a report created for creditors by Grant Thornton seen by the Independent, the corporate rescuer practitioners claimed they were financially hamstrung to carry out an investigation.
“The Master of High Court in a letter…demanded for an investigation to be undertaken to determine the basis upon which the debt arose and …in light of new information submitted to the Master.
“Investigations have started albeit at a slow pace. The reason being, the lack of financial resources.
“As agreed with approved creditors, the exercise cannot be expedited at the expense of other creditors,” the report reads.
Prior to that, the rescue managers, in another creditors’ report, claimed they would be staggering debt payments while working on plans to mobilise funding.
Strategies put in place to mobilise funds included liquidating a Zimbabwe Power Company debt and sale of industrial coal mined by “South Mining.”
Makomo is one of the major suppliers of coal at Hwange Power station.
Documents also showed Makomo was still owing Zambia Railway Limited US$349 103
The same documents indicated that Makomo, while under judicial management, had settled some of its debt obligations to creditors that include the Export Credit Guarantee Corporation, Tiger Wheel and Tyre, Klipom Enterprises Private Limited and Mainline Mega Private Limited.
