Fidelis Munyoro Chief Court Reporter
Hardware group PG Industries is seeking the intervention of the High Court to authorise its scheme of arrangement to resolve its negative equity and liquidity challenges. The scheme of arrangement had been delayed following intervention by one concurrent creditor, Jones Holdings (Private) Ltd, which is opposed to the scheme.
Through its lawyer, Advocate Thabani Mpofu, instructed by Mr Zvenyika Chidyausiku of Dube, Manikai and Hwacha law firm, PG on Monday implored the High Court to sanction the scheme.
Arguing the matter before Justice Amy Tsanga, Adv Mpofu said PG Industries had met statutory requirements for the scheme of arrangement to go ahead.
He said the majority of creditors who are owed $21 million had given the scheme the thumbs-up because it made business sense.
“Applicant (PG) asserts therefore that the views of the majority creditors should bind the minority creditors such as Jones Holdings,” argued Adv Mpofu.
He said Jones Holdings attended the meeting which agreed on the scheme of arrangement, but decided not to vote for or against the scheme. The other creditors, he argued, carried the day in voting for the scheme with the requisite numbers and majority in value.
“The respondent’s opposition has been capricious, ill-founded, without proper legal basis and for purposes of obtaining a preference which clearly is not due to it in terms of its legal rights in seeking an unintelligible form of relief . . . ”
Jones Holdings, which is being represented by Mrs Linda Cook of Atherstone and Cook, moved for the court to withhold the sanction, citing several flaws.
In its counter submissions, Jones Holdings argued that PG Industries sought authorisation of the court for a scheme which incorrectly classified the former as a concurrent creditor when in fact it is a secured creditor.
“The decision was passed at a meeting which, as a result of the misclassification of respondent (Jones Holdings), was not properly convened and constituted,” argued the company.
The PG’s scheme, the firm said, was grounded on misleading, inaccurate information to equip the court to make an informed decision. By treating the respondent as a concurrent creditor, PG proceeded on a false premise in devising the scheme.
“The false premises render the scheme irrational and oppressively unfair to respondent.”
Justice Tsanga reserved judgment to a later date. PG entered into the scheme of arrangement in March last year but it is yet to be registered with the High Court following an intervention by Jones Holdings.
Under the scheme, PG plans to restructure its balance sheet with various lenders and creditors, restructure its business to improve efficiencies and raise the fresh capital.