ZAMBIAN Airways, in receivership, owes three banks a total of US$5.9 million (about K28 billion) in secured loans.
And the National Airports Corporation Limited (NACL) has disputed the appointment of a receiver of Zambian Airways’ assets and undertakings.
The defunct airline also owes its employees K3.4 billion in salary arrears.
This is according to the company’s receivership manager Sipho Phiri, in his affidavit in support of summons to stay the default judgement passed in favour of the NACL.
This is in a case where the Lusaka High Court passed the default judgement early this year after Zambian Airways failed to defend itself against legal proceedings commenced by NACL.
The case was scheduled to come up on Monday, September 14, 2009 for inter-parte hearing of the stay of execution, which Judge Prisca Nyambe ordered in June this year.
However, the case could not take off as Ms Justice Nyambe was committed to other official business and adjourned it to October 1, 2009.
Early this year, Ms Justice Nyambe ruled in favour of NACL, which was claiming over US$2 million from Zambian Airways in unremitted passenger service charges, parking fees, ground, navigation and air handling charges.
In his affidavit in support of summons to stay execution of the default judgement, Mr Phiri said the three banks Zambian Airways owes are Investrust Bank (US$1,484,336.18), Intermarket Bank Zambia Limited (US$1,440,620.93), and Development Bank of Zambia (US$3,014,006.68).
Mr Phiri said the employees are owed a total of K3, 408,356,930.50.
He said after the default judgement, Investrust Bank Zambia Plc appointed a Mr Kieran Day of Kenya as receiver over all assets and undertakings belonging to Zambian Airways.
Mr Phiri said this was by reason of a floating charge and debenture to secure the US$1,484,336.18 loan.
“The plaintiffs (NACL) have tried to execute the default judgement when they know that the defendant company (Zambian Airways) is in receivership. They have sought to proceed with the matter against a company in receivership without leave of any court,” Mr Phiri said.[quote]
And Zambian Airways lawyer Ngosa Simachela said since the company is in receivership, as at April 2, 2009, its assets no longer belong to the defunct airline but to the receiver.
Ms Simachela said the sheriffs have since seized Zambian Airways vehicles in execution and reliance on the attachment order, which Ms Justice Nyambe granted to NACL.
“Before the appointment of the receiver, the assets remained in the ownership of Zambian Airways and were freely disposable without reference to secured creditors. The appointment of the receiver completely assigns the company’s property to the creditor…” Ms Simachela said.
She said allowing NACL to execute the judgement will disadvantage Zambian Airways’ secured creditors and favour NACL, which is an unsecured creditor.
But NACL company secretary Elita Mwikisa has disputed the appointment of the receiver, saying the appointment came after the Lusaka High Court had granted her organisation the attachment order over Zambian Airways’ assets.
The order restricted the airline from accessing, interfering with or disposing of any asset included in the order.
Ms Mwikisa said in her affidavit in opposition to inter-parte summons for stay of execution that by the time Ms Simachela was filing her affidavit, she did not have instructions from both Zambian Airways management and the alleged receiver.
“Evidence of appointment of the alleged receiver for Zambian Airways could not be produced before this court as the lawyer who purported to act for the receiver had not filed and indeed did not have in her possession relevant documents relating to the alleged appointment of the receiver,” Ms Mwikisa said.
She said documents attached to Ms Simachela’s affidavit did not prove that the named person (Mr Day) was appointed as receiver.
“The particular goods and chattels of the defendant (Zambian Airways)…were not and are not affected by any subsequent crystallisation of any floating charge in respect of which a receiver was appointed…” she said.
Ms Mwikisa said bailiffs who partially executed the default judgement, by seizing motor vehicles belonging to Zambian Airways, perfected the order of attachment.
{Zambia Daily Mail]
Yangu tata……who the hell was managing this company?
What about the post and Mumembe?? You mean they dont have any part in this ZA? Our smart president told us that Mmembe stole $30 million which by all means would be paid back . Why is it that its only ZA that owes? WHAT A PRESIDENT YOU HAVE IN ZAMBIA.
Just leave them alone. The money Miti, Kapoko, Kafupi Jacob Titus Mpundu Chiluba Fredrick and the others have stolen is a lot more than that. Kafupi even has the audacity to come and say he wants his money back.
Kambongolo!!!! M’membe and the post and the Nchito brothers were just running that company,if at all they owe its not in their individual capacity and the court can n will not handle them as individuals but as ZA directors:
If a company is in financial difficulty, a secured creditor or the court may put the company into receivership, it will not put its directors on receivership*
If you are an employee who is owed money for unpaid wages, superannuation, annual leave, sick leave, long service leave, retrenchment pay or other benefits, you are a creditor of the company. You may be entitled to some or all of what you are owed in priority to the company’s other creditors.
The receiver’s role is to:
•
collect and sell enough of the charged assets to repay the debt owed to the secured creditor (this may include selling assets or the company’s business)
•
pay out the money collected in the order required by law, The receiver’s primary duty is to the company’s secured creditor. The main duty owed to unsecured creditors is an obligation to take reasonable care to sell charged property for not less than its market value or, if there is no market value, the best price reasonably obtainable. A receiver also has the same general duties as a company director.
The receiver has no obligation to report to unsecured creditors, including employees, about the receivership.
tough going! is this the $30m Fred Mmembe owes RB?
PA ZED ITS NORMAL
The problem with our president is that he is a motor mouth,he will say anything to excite the masses and when he goes home and analysts look hard at his statements he goes mute,quiet foolish to say the least….he said M’membe and the post owe zambian people 30million quid just for political mileage without even understanding how a company in receivership operates
So what? There are many other organisations that owe banks. This is boring news….
Smoothcriminal (#4,#5) walikwata amano. U r brilliant. I will support u even wen u r wrong.. lol! I have no better words to appreciate yo brilliance and understanding of the matter.
What about these other airlines that owe NACL billions of kwachas? This corruption fight is selective and targeted. I am sure NACL is being instructed by the powers that be!!!!!
Thank you we can now know the truth nothing but the truth
#9 Shimushinda. You are right. When Chambeshi Metals and Luanshya Mine went down no noise was made. UBZ, Contract Haulage etc are under recivership its all zzzz. But because ZA has something to do with the Post alot of cacophony is being made by empty tins.Ata
Goodmorning
Disaster strikes again. I’m asking myself how long they knew the truth but kept on operating beyond their capacity limits? Living on borrowed money so to say. This is typical of so many companies before they are finally go down the drain.
Zambian Airways now Zambezi…bushe kanshi tamwaishiba?
#14 its really difficult to project and see what the future holds for any business,its all about taking risks,do you think if they knew that it was going to come to this they would have continued to borrow money from banks,its called Cashflow projections,there are tones and tones of companies that have gone into receivership all because they didnt forsee future…people pls try to google some of this infor instead of just dreaming up senseless blogs COYS
I will come and give my view after studying the case. As for now it is adjourned.
This Zambian Airways story brings me and my family bad memories about how we lost £3000 worth of tickets to the then Zambia Airways in November 1994 when from nowhere it went into liquidation. We were to fly home for a holiday when we were informed by the London office of Zambia Airways about the bad news and that the aircraft we were to board had already been impounded here in London. I know these problems can happen anywhere but Zambia has a very shameful and disgusting record. I will never fly on any plane bearing the Zambian name and flag not even on a free ticket. The name Zambia is synonymous with scandal and mismanagement.
Stochastic variables.
Well explaned number4 and 5. Atleast we can read educative blogs like this. However, What is the the level of priority for the receiver when dealing with workers. I ask that coz its like workers have to wait for other creditors to be settled before they are paid. It reminds me on how us Zambians have been taken for granted. Our employers sometimes will tell us to forgo our salaries in the name of sacrifice. We have to demand our pay on time before the receiver comes then?
If the company can borrow such amounts, then Zambian Airways still has funds hidden somewhere. tell us the truth.
#19
More like, deterministic variables.
#22. Yes, more like %K and %D. You have to be very watchful in order to remain afloat.
Thats not a lot of money i know a couple of pople that works at the banks (board level) that would make that sort of money in a couple of years. My bf gets about £80 000 a year, but you will never hear me talk about money issues, although we just about can afford anything . Thanks
14 Smooth Criminal. I agree with your succint distinction between Limited company and Directors when it comes to liabilities of the companies. However, i feel it worth mentioning that Directors of Companies do have a certain level of personal responsibility and may be prosecuted in thier own right. We do not have sufficient information in this case to say wether that is the case. With regards to your comments about cashflows and Taking risks, i agree that a certain level of risk is inherent in business, but risks should be calculated and anticipated – risk management! Whether or not a business is viable has little to do with cashflow but profitability. Liquidity is required short term, but its all about returns greater than debt.
If it is proved that ZA was incompetently managed, their may be a case of disbarring the directors so that they never ever become directors of a company again. Which means that Mmembe and others may have to remain ’employees’ for life. But that doesn’t mean that they may not have the same perks. So, there is nothing really that anyone can do to ‘hurt’ them. All in all, this fight between individuals in Zambia is detracting from the real developmental issues that we must tackle. Let us draw a line under these issues and MOVE ON as ‘ONE Zambia, ONE nation.’
Interesting how this Zambian Airways always comes out at opportune times. Is Magande and his team giving them sleepless nights.
#24-Simon-business operations such as ZA exposes the company to foreign exchange, interest rate, credit and liquidity, and fuel price risks. The policy of any organization is to minimise the negative effect of such risks on cash flow, financial performance and equity. you talk about calculating risk,how do you do that, the fuel prices went up at some point because of the war in iraq,that was not anticipated,they had to borrow money to stay afloat. risk management means a systematic and predictive way of recognising, analysing and managing the opportunities and threats associated with operations. Continuity plans have to be put in place in case of the realisation of risks, particularly as far as strategic and significant financial risks are concerned,hence borrowing more from banks
Just like #19 mentioned (STOCHASTIC variables) even if the initial condition (or starting point) is known, there are many possibilities the process might go to, but some paths are more probable and others less. determinstic or random process
bakabweshefye ulupiya banyinenwe imishino.
Smooth Criminal, If a risk analysis shows that there is a probability of Interest rate, Exchange rate, or Fuel price (economic risk) inherent in the business model, the prudent thing would be to impliment strategies which hedge against the risk, or simply transfer the risk. In an economy such as our’s, it does not take a genius to know that these risks are high, but we always think we are immune. A common way of transfering the risk is insurance. Or in the case of interest rates or exchange rates, interest rates swaps, forward contracts, or money market contracts, or matching. The list is endless. Borrowing more money from the bank is not a solution, in the case of ZA, it introduced liquidity risk as well as exchange rate risks
If the credit crisis has taught us anything on risk management its that mathematical models do not work as well as a common sense approach. Fuel price increases could have been anticipated. Some hedge fund managers did and they made a killing! A war does not occur overnight, and if the managers had monitored their environment (News etc) and identified pipeline risks (most likely to materialise) then they could have planned for the eventuality of fuel price rises. It is possible to lock into todays fuel price for supply in 10 yrs time at a fee. This is the practise as it should be as oppossed to theory.
Ba Mushota mwaliba petty kwena yee.
Ummm! mushota,its coz its your boyfriends money thats why we dont hear you say nuthn,how about working for yours,learn some new tricks of .s.u.c.k.i.n.g (deepthroat),otherwise he might get fed up and dump you then you are back from whence you came from
Simon,put yourself in the same position that these directors found themselves in,you wouldnt wake up from slumber and close shop because your deterministic risk analysis is not favourable,you try to use some other ventures,either by bringing in an equity partner or better still seek financial bailout in form of loans and go ahead with the venture untill such a time when you cant even craw the you shout for help like general motors did in the states,thanks for a well researched and mind provoking analysis BIG UP!
I usually see no need to comment on the topics on LT, but I do read the comments just to get people’s views.
But I think its work pointing out that uyu witya Mushuta is absolutely simple minded. She cant contribute a sentence without being petty and/or egoistic. Uushumfwa patunono…
These are normal Business transcation which does not need any sensible govt to call ofr enquiry esp when they refused to save the company. How many Airlines owe money to govt for airport packing and landing fees, How many does not owe Banks for various operational financing..ow many do not owe fuel companies… No wonder Allen West went under and that Bank owned by Rupiah..Rupiah has no buisness Sense
This is not news. How many companies have gone under since shorty took office. ? Bad debt period.
Smooth criminal, big up to you bro. Its nice to have intelligent discussions. Mushota, get a life, you embarrase other women who earn your keep. So you think your husband earns a lot at 80K? Must be some small board.
Iwe mushota ninshi namano yalishota; do you think we give a s***t wat yo Bf gets.
What do u expect? Anyway I thought it was even more say a cool $60 million ….
M’membe talks about prudence in management. There was no prudence in ZA management. Corruption is taking things that do not belong to you. Nchito should have Task Force prosecute directors for diverting NACL monies that they collected. Nchito is master of getting fake receiverships to escape debts. A case in point is National Milling Company- a fake receivership made them escape their debts and left workers stranded. There is need for ZA to explain clearly where all this money went.
KA MUSHOTA EVERY TIME I READ YOUR COMMENTS YOUR ARE TALKING ABOUT YOUR BOYFRIEND MONEY, CLOTHING, HOLIDAYING. I THINK YOU ARE SUCKING HIM BIG TIME. FYOONSEE WA SHOOTA SINCE CHILD HOOD, IAM SURE U HAVE BEEN A GOOD PARASITE. THATS UNITED KINGDOM FOR YOU, IN IT?
The company went under due to mismanagement. The lawyer took over the day to day running of the airline just because he was the owner well we have the results. Should be a lesson to all who try to venture into business. Accountants and those who do Business Admin don’t do it for show. They learn to run businesses, I beg to be educated whether in Law they also learn how to run businesses. If you want to create an empire enlist the help of experts. If you want a kantemba do it yourself, like Nchito did to Zambian Airways. Take a look at how Zambezi airlines is organised. MD’s cv leaves you shocked at how we have such qualified and experienced Zambians.
DELETED POSTER RISK BEING BANNED
How has the amount come to down RB ‘s $30m