Stakes are high that creditors of People’s Trading Centre (PTC), which is undergoing liquidation, are going to lose a great deal following revelations that the company’s assets are far below its liabilities.
In the ruling of the company’s reorganisation case in the High Court’s Commercial Division, it came out that the company has assets worth around K1.6 billion as opposed to debts of over K6 billion.
In an interview, corporate law expert James Kaphale said property of the company, which is subject to a valid fixed charge, must be used first to satisfy the debt which is secured by the charge beginning with the costs and expenses of the liquidation, claims by employees such as wages, overtime pay, holiday pay, severance allowance and compensation for unfair dismissal, tax, duty or rates payable to government and unsecured creditors.
“Creditors are wrapped in accordance with how much the company owes them. I understand the creditors will be meeting the liquidator soon to consolidate who is owed what and how much they are going to share the money that would be realised from the sale of the assets.
“…however, the employees are safe since they will be the first to be compensated as Section 34 of the Employment Act provides for the protection of wages and other employee entitlements during insolvency,” Kaphale said.
On Monday, a provisional liquidator for the case published that the first creditor’s meeting to discuss appointment of liquidator will be held on November 14 2022 in Blantyre.
“Take notice that a Winding up Order of Peoples Trading Centre Limited was made on October 7 2022 and that the Official Receiver was appointed as a Provisional Liquidator of the Company to act as such up to and until such a time that another person becomes liquidator of the company and is capable of acting as such. The Provisional Liquidator is mandated to take custody and control of all the property belonging to the company.
“To entitle you to vote at the creditors meeting, proof of debt and proxies must be lodged at the office of the provisional liquidator, not later than 16:00pm on November 9 2022,” the notice reads.
A representative of PTC workers, Robert Njema, said they are in constant talks with the top management of the company who have assured them of recovering their emoluments during the liquidation.