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LCM applies for stay in payment to creditors
By CHARLES MUSONDA
LUANSHYA Copper Mines (LCM) Plc has appealed to the Supreme Court against the Lusaka High Court’s refusal to stay execution of judgement passed in favour of the mine’s creditors.
High Court Judge Prisca Nyambe refused to approve a credit scheme that LCM wanted to use in settling debts owed to creditors.
This is in a case in which LCM petitioned the High Court to approve the credit scheme in which the company wanted to use in settling the creditors’ claims in percentages as it allegedly did not have sufficient liquidity to settle the debts in full.
The petition revealed that LCM was indebted to several creditors and the aggregate debt stood at US$122,687 as at January 31, 2009, and the secured creditors’ amount stood at US$2,150,000.
On March 4, 2009, the court ordered LCM to convene a meeting for its creditors for purposes of considering the scheme and the court appointed LCM managing director Derek Webbstock to act as chairperson.
The meeting was held on April 6, 2009, and Mr Webbstock reported that a total of 84.8 per cent of the creditors voted for the scheme while 14.7 per cent voted against it.
Later on June 24, 2009, the court scheduled a hearing to approve or not approve the scheme, but LCM applied for an adjournment on grounds that documents from creditors had been received late and that the mining firm needed time to study them.
But some creditors present at the hearing raised concern regarding LCM’s conduct and said they had heard rumours that the mine had approached some creditors with offers to pay them certain sums of monies owed to them.
They felt that the assets, which were subject of the credit scheme, were also subject of the sale of the mine to a third party.
On June 25, 2009, High Court Judge Prisca Nyambe ordered that the scheme’s lifespan be extended until final determination of the matter.
In her judgment of July 30, 2009, Ms Justice Nyambe noted that for some inexplicable reasons, LCM chose to rip apart the scheme and contemptuously proceeded to sell the company’s assets to a third party.
“It is clear that the petitioner not only disregarded the court order, which was granted on 25th June, 2009, but also discarded the agreement reached by the petitioner (LCM) and the creditors on 6th April, 2009.
“Looking at the evidence in totality, it seems the company’s idea was simply to delay the hearing of the petition so that in the interim, the petitioner could make arrangements outside the scheme with some creditors to the detriment of others, contrary to the agreement at the court-sanctioned meeting,” Ms Justice Nyambe said.
She further noted that the commercial agreements concluded between LCM and some creditors were devised not to promote equity but to exploit the creditors who opposed the scheme and refused to conclude commercial agreements.
“I find the scheme is, therefore, unreasonable, unfair and the creditors who have opted to enter into commercial agreements with the petitioner have not done so to protect interests of their own class but rather to foster some extraneous interest,” she said.
After the judgment, LCM applied for a stay of execution pending appeal against the judgment to the Supreme Court.
But on August 7, 2009, Ms Justice Nyambe refused to stay the judgment on grounds that LCM could not be trusted to conduct itself within the law pending the appeal as evidenced by the company’s disregard of the June 25 order.