Lobatse High Court Justice Mercy Garekwe has dismissed with costs an application in which Capital Management Botswana (CMB) directors sought to have the liquidation of the troubled company rescinded.
Rapula Okaile and Capital Management Africa, represented by its director Tim Marshland, who is also a director of CMB launched a case seeking to intervene in the liquidation proceedings filed by the Non-Bank Financial Institution Regulatory Authority (NBFIRA) and to oppose the said liquidation proceedings.
The directors also sought to rescind and have the final wind up order issued on the 18th of September 2018 set aside. Okaile and his business associate also denied the very basis on which the winding up of CMB is premised, that it is insolvent and that it is unable to pay its debts or that its liabilities exceeds its assets.
Rapula and Marsland insist that CMB is solvent as it owns a block of flats whose market value is P14 million. They also argued that even if CMB was insolvent, it can be restored to solvency within a reasonable time more that NBFIRA has failed to provide sufficient grounds justifying the liquidation application.
Rapula and Marsland further stated that CMB has cash to pay rentals arrears and that it has no employees after they were dismissed by the Statutory Manager.
Justice Garekwe found that the failure by Okaile and Marsland to join the liquidator and the creditors was fatal to the rescission application. “The liquidator and the other creditors were entitled to have the opportunity to oppose this application if so advised. They have the right to properly advise themselves on whether or not the Applicants have prospects of success to defeat the grant of liquidation (winding up) order,” she said. The judge said setting aside a winding up order is an extraordinary step that should be rarely granted as it involves the possibility of an insolvent company trading against which may have adverse effect of posing an obvious risk to the general public and creditors alike.
Justice Garekwe said Okaile and Marsland had failed to show that CMB was solvent. She said if it was solvent, then why did CMB under the stewardship of Okaile resolve to surrender its license to NBFIRA and why did it resolve to close down its business. She said a solvent company would not have taken such a drastic action. She said Okaile and Marsland as directors of CMB were running the company before it was placed under statutory management. She said “they did not need a third party to tell them how to run their business adding that what sort of cash to inject into business, how and when.”
The judge also stated that to operate an asset management company such as CMB, Okaile and Marsland were faced, on day to day basis, with decisions of managing millions of Pula entrusted on them.
“At that level, one expects the directors to be savvy on issues of fianc├® and management of huge sums of funds. The excuses they seek to make now cannot pass muster,” said Garekwe.
Justice Garekwe said Okaile and Marsland had failed to meet the paramount requirement of showing that CMB was solvent. She said the liquidation orders as granted were premised on evidence that the company was insolvent and such evidence was placed before the court.