Saturday, October 23, 2021

BCL’s rugged road to liquidation

In the midst of what might go down in history come as the biggest liquidation in the country, perhaps even Africa, the most essential question regarding the placement of BCL in provisional liquidation to which a conclusion must be reached is perhaps whether there is a real opportunity for somebody to come and fix its issues and still make money out of it. 

In the absence of a specified completion date to the expected process of final liquidation, which BCL is yet to enter into, the re-commencement of operations is not an option in the short term and neither will it be a simple process, this is according to the court appointed provisional liquidator Nigel Dixon-Warren. 

When delivering what he termed high level communication to the media last week Tuesday in Selibe Phikwe, Dixon-Warren shared expansively on the process and progress of BCL following the decision by government on October 9, 2016) to declare the companies – BCL Ltd, BCL Investments Pty Ltd and Tati Nickle Mining Company – insolvent. 

BCL is a mining and smelting outfit that commenced its operations in 1956 and began mining copper and nickel in Selibe Phikwe 1963. Today the mining outfit faces two possible options in its future; one that it may not find a buyer, which Dixon-Warren hopes against and two that it finds a buyer to start it up again. 

Dixon-Warren warned, however, that finding a buyer to take on all of BCL will not come easy particularly with all the issues that the mining outfit has. “If you can imagine, selling something like BCL is quite complex,” admitted Dixon-Warren. 

He explained that should all of BCL not find a buyer the other option would be to sell the assets, a process which would be taken over by a specialist auctioneer at their own risk. The auctioneer will at that point offer the final liquidator a certain amount of money for the assets and proceed to sell them.

 “I’m of course hoping we don’t get to that point but it is a realistic possibility,” said Dixon-Warren.    

To arrive at the final liquidation stage, Dixon-Warren articulated the steps which had to be taken starting first with the High Court meeting on February 7, 2017 where the judge who originally accepted the provisional liquidation application would consider if there was any reason not to proceed with final liquidation. 

Dixon-Warren mentioned that to date no application by any party had been made to the courts challenging the placement of BCL provisional liquidation since October 9, 2016. After February 7, 2017, in the absence of applications against provisional liquidation, the final liquidation process commences. What follows next in the winding up process will be the holding of meetings of creditors and the sale of assets. 

The meetings, as explained by Dixon-Warren, are in order for creditors to prove their claims against the companies so as to issue an instruction to the final liquidator such that if at the end of the liquidation process there are sufficient funds realised in the sale of assets they can then receive payment. 

Dixon-Warren said that he presently did not know all of the creditors but would only truly know when they had formally submitted their claims. The first meeting of the creditors is likely to take place in April 2017 followed by the second and last meeting of creditors on a date currently unspecified. 

Dixon-warren said that it ordinarily happens between three to six months after the first meeting but, however, depended on a particular liquidation. It is at these meetings that the creditors will also nominate the final liquidator, which could be the provisional liquidator or someone different. Dixon-Warren said that it was not automatic that he would be appointed the final liquidator. 

The final liquidator’s primary duty will be on permission of the creditors to try and dispose of the assets. Dixon-Warren’s current work as the provisional liquidator is to contribute to that process. Responding to this publication’s question on whether at the time of submitting his report on BCL he would have determined its value he responded by saying that it was really very difficult to know what the assets were worth because at the end of the day assets that were in business were really only worth something when the business was operating and generating profit, which in the case of BCL, had ceased.

 “Often I will value a business not because it has 60 vehicles, or two buildings or the plant and machinery. I will value the business on its ability to generate profit. Now BCL has not been able to generate profit, certainly not in the recent past, so from a valuation business perspective BCL is worth nothing; but the individual assets to the extent that they can be used by somebody somewhere else might be worth something. What we prefer to do is convince interested party that with good management, good efficiencies, there is value here if it can be run properly, and then we can do valuation with a lot of assumptions about how it can be run,” said Dixon-Warren. He added, however, that looking at the historical past of BCL, it’s likely that there’s not a lot of value. 

The offers to buy BCL if made will be considered after the first meeting.  Once interested parties submit their offers, as indicated by Dixon-Warren, a process of shortlisting will begin to select the best offers.  

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