HIGH Court judge, Justice Lebohang Molete, has ordered that the assets of the MKM Star Lion Group should be released into hands of the company’s creditors.
This will enable the creditors to set up a company that is empowered to repay creditors who invested their funds with MKM before it was shut down by the Central Bank of Lesotho (CBL) in 2007.
Justice Molete’s order, which is delivered on 20 July this year, comes barely a month after the creditors petitioned the government and opposition parties to help them in their fight to get the CBL to pay them the millions of maloti they lost when the apex bank closed MKM in 2007.
The creditors also demanded to be paid the “full amount of money we had with MKM at the time of its liquidation”.
They claimed that their investments had since matured from the time MKM was shut down and “we are awaiting payment and (other) pay-out money from our burial policies”.
The creditors’ demands for payments followed a promise by MKM Director Simon Thebe-ea-Khale that his company would start repaying the creditors in September this year.
Prior to this promise, Mr Thebe-ea-Khale and some of his investors had instituted an urgent court application seeking that the provisional liquidators be stopped from implementing an order of the court issued by Justice Molete on 19 April 2018.
Justice Molete had ruled in April that the meeting of creditors should be held on 23 July 2018 and that 23 June 2018 was the last date for lodging of claims of creditors wishing to attend and vote at the meeting.
However, Mr Thebe-ea-Khale and some of the investors lodged an urgent court application to stop the provisional liquidators from going ahead with the 23 July meeting.
And in his court ruling last Friday, Justice Molete said the processes of convening the 23 July meeting of creditors had reached an advanced stage when “the process was interrupted and stayed by the application of the urgent applicants granted on the 18th June 2018”.
“The urgent applications and other investors in their group have strong views and wish to petition the court and the government to assist them to achieve the setting aside the winding up and putting all MKM assets in a company that is fully controlled by the creditors, without provisional liquidators on their attorneys, so that the new company controlled by creditors may…claim back all MKM assets and buildings and claim repayment in full of all amounts invested in MKM.”
Justice Molete therefore varied his initial 19 April order to provide for among other things the appointment of a new chairperson of the in place of Adv Salemane Phafane KC who become unavailable to perform the duties of chairman.
He said the new chair must “urgently convene a new meeting of the intervenors (creditors with the right to attend and vote) as represented by their duly authorised representatives”.
“Within one month of the meeting to be convened by the new chairman he/she shall report to this court on the wishes of creditors as expressed at the meeting, when the court will be asked on an urgent basis to consider the report and sanction the arrangement…to provide for the setting aside of the liquidation of the MKM companies on such terms and conditions as the court may deem fit after considering the wishes of creditors,” Justice Molete concluded.
MKM Star Lion Group was shut down in November 2007 by the Central Bank of Lesotho (CBL) on the grounds that the company was illegally operating banking and insurance businesses.
A CBL-commissioned investigation conducted by South African firm, PricewaterhouseCoopers, also revealed that of the M400 million invested by depositors, MKM — comprising MKM Marketing Ltd, Star Lion Group Ltd, Star Lion Insurance Ltd and Star Lion Gold Coin Investment (Pty) Ltd — could only account for M100 million in assets that included buildings and vehicles.
However, Mr Thebe-ea-Khale recently insisted that his company only owed its creditors M64 million and not the M400 million as stated in the PricewaterhouseCoopers report.