The Master of the High Court has defied a resolution by the defrauded Bluthorn Fund Managers creditors not to appoint Nigel Dixon as liquidator for the company.
In a move that raises eye brows, the Master has unilaterally decided to appoint Dixon as the Provisional Liquidator.
Dixon replaces Christopher John Bray, who announced his decision to step down at a recent creditors meeting. Following his resignation, Bray suggested Dixon as his preferred candidate for substantive liquidator but the creditors rejected the suggestion, citing the latter’s controversial dealings with the government particularly over the liquidation of BCL mine in Selebi Phikwe.
Dixon raked in tens of millions for his services. It is mainly against this relatively huge bill that creditors expressed their reservations about the idea of working with Dixon.
Following the meeting, the Master was tasked with finding a replacement for Bray pending a follow up meeting where a substantive liquidator shall be appointed.
It came as a shock to Bluthorn creditors that the Master would appoint the very same individual against whom they had just made a resolution to reject as a candidate for substantive liquidator.
Dozens of investors have been fleeced of P211 million in what has now turned out to be a possible Ponzi scheme.
While most of the investors were open to the idea of Bray continuing as the substantive liquidator, the provisional liquidator expressed his desire to step down at a recent meeting convened by the Master. He then recommended Dixon as the “only” suitable candidate for the job.
In an interesting turn of events the company under liquidation, Bluthorn Fund Managers (BFM), seeks to challenge the liquidation. They seek to challenge the Non-Bank Financial Institutions Regulatory Authority (NBFIRA)’s powers to place them under liquidation.
The company filed an urgent application with the High Court recently seeking a stay of liquidation.
The application has been filed pending the company’s appeal of an earlier High Court order granting NBFIRA leave to pursue their petition to liquidate the fund management company over the P211 million allegedly fleeced from investors.
Following an application by NBFIRA the High Court earlier this year (February, 2021) ordered that BFM be placed under liquidation. The Master of the High Court was directed, subject to the provisions of section 381, 382 and 445 of the Companies Act respectively, to appoint Bray as the Provisional Liquidator and hold office until the appointment of a substantive liquidator who was to be appointed at the first meeting of the company’s creditors.
One of the creditors, Botswana Sectors of Educators Trade Union (BOSETU) who invested P21 million in BFM, have filed a notice of opposition through their lawyer Kabo Motswagole of Motswagole & Company. The Union’s Secretary General Tobokani Rari has deposed an affidavit in support of their application for joinder.
Rari says as a verified Creditor of BFM, BOSETU has undoubted interest in the proceedings whose ultimate effect is to suspend the ongoing Liquidation proceedings. “There hasn’t been a formal suspension of the Liquidation proceedings by the 1st Respondent/Applicant (NBFIRA). In fact, as the date of the First Meeting of the Creditors on 20th May 2021, there was no Order of the Court suspending the said Liquidation process,” Rari says.
“Whilst they occur through an earlier decision of the Court, Liquidation proceedings are a separate and independent process which is led by the Master and the Liquidator. Any concern with the liquidation proceedings has to be directed to the Master of the High Court by way of a Judicial Review of her Quasi-Judicial authority, not by way of a Stay Application.”
BOSETU Secretary General says there is also doubt as to whether the NBFIRA has any capacity to institute the current proceedings in that liquidation is already undergoing and all its powers are reposed in the Liquidator following an earlier decision of the Court.
“The above factors are all reasons why I think the above Honourable Court ought to allow the Applicant to participate in the current proceedings.”
NBFIRA appointed Peter Collins as the statutory manager for BFM in 2020. The decision followed an inspection conducted at the company where many issues were raised relating to non-compliance with their license.
Some of the defrauded investors include district councils with investments ranging from P20 million to P140 million each. There were also individuals with investments between P500, 000 and P2 million each.