MASERU — MKM liquidators have warned of tough times ahead amid fears the company’s directors could seek to throw spanners into the liquidation process.
The liquidators told the Lesotho Times on Friday that they are expecting repeated attempts to derail the process “because of MKM director Simon Thabe-ea-khale’s hostility to the process”.
The spokesperson for the joint provisional liquidators, Noline du Preez, said some shareholders were already challenging the consolidation of all MKM assets and the appointment of David Roberts and Chavonnes Badenhorst as liquidators.
Roberts and Badenhorst are from Webber Newdigate and St Clair Cooper law firms in Bloemfontein, South Africa, respectively
The liquidators acquired a High Court order in May to consolidate assets belonging to MKM Marketing, Star Lion Gold Coin Investment (Pty) Ltd, Star Lion Group Ltd and Star Lion Insurance Ltd that had been operating illegally.
Du Preez said the litigation was the first of many legal challenges to come.
“All such attempts will be fully dealt with, unfortunately at the expense of creditors whose money will be used to pay lawyers,” Du Preez said.
“There is a counter application for a new consolidation order in case the existing one falters,” she said.
“The bottom line is that the circumstances justify a consolidation of the estates to be treated as a single economic entity, failing which the cost of administration will be much higher. Unnecessary time and money will be spent trying to unravel
what was actually run as a single business.”
Du Preez said legal proceedings would be necessary “in relation to investigating assets outside Lesotho, recovering assets in Lesotho, resolving disputes with some shareholders and creditors, addressing the question of directors’ liability,
commissions of inquiry and so forth.”
Apart from legal challenges, the liquidators say they are facing a colossal task of establishing how much each creditor is owed in order to raise enough money to pay them.
“Creditors can only be paid if it is clear how much is owed to each and if the estate has enough money to pay,” Du Preez said.
She said it will be difficult to find out how much each creditor is owed because MKM did not keep proper books of its accounts.
The liquidators will have to launch a claims verification project, analyse obtained information and seek legal advice on the correct legal quantification for every creditor.
The claims verification project is supposed to run between November and December so that by January next year all systems will be ready, Du Preez said.
Another major challenge is that “the assets are probably worth much less than the liabilities.”
“Many assets must be traced and it is impossible to say how successful that exercise will be. The expense incurred in the complex administration including the claims verification will reduce the amount available for creditors,” she said.
“It is impossible at this stage to estimate the dividend which creditors may get.
“If MKM had kept proper books, the liquidators could use those books for purposes of preparing or investigating creditor claims. But now estate money must be used to investigate and reconstruct the books,” Du Preez added.
MKM was shut down by the Central Bank of Lesotho in November 2007 for operating banking and insurance businesses without licences.
At that time auditors said only M100 million of the M400 million invested by nearly 500 000 could be traced.
The company lost its four-year legal battle last month when the Court of Appeal confirmed that the High Court ruled that the company should be liquidated in May.
