Kingdom Bank liquidator, creditors fall out
Brian Benza | Friday March 11, 2016 18:00
A creditors meeting held in Gaborone last week resolved to relieve Marinelli of his duties and proposed to appoint a new liquidator.
Director of tax services at Deloitte, Terry Brick told BusinessWeek their company is no longer handling the liquidation process and will hand over to the proposed new liquidator, Peter Collins, once he has been endorsed.
“There has been a break down of the relationship with creditors losing confidence in the process. We seemed to disagree mostly on the process of liquidation and less on the estimated recoverability of the assets. They seemed to want to take the liquidation process to Zimbabwe, which is unfeasible since this was a Botswana company. They also want to be consulted at each and every stage, which is not tenable. Creditors are supposed to give the liquidators a chance to do his job,” Brick said.
KBAL, which had no resident depositors based in Botswana, was last May placed under liquidation due to insolvency after an audit uncovered a $18.7 million (P200 million) mismatch between assets and liabilities.
Marinelli was then appointed liquidator the same month but the liquidation process was derailed at a meeting held in November after creditors declined to give him, autonomous authority to sell the assets of the defunct offshore bank.
The KBAL creditors instead, proposed to form a steering committee that would work hand in glove with the liquidator and jointly approve the sale of any assets.
“We seem to have lost trust in the way the liquidator is handling this process,” said Chap Masterson, a spokesperson of the creditors. “The liquidator has not provided us with enough information for us to be able to make informed decisions. It would be imprudent for us to adopt all these resolutions, some of which are too general and open ended.”
Among some of the 29 resolutions that needed to be passed for the liquidation to progress included; authorising the liquidator to collect outstanding debts, institute legal action against debtors, sell immovable assets by public auction and engage lawyers and auditors.
The creditors also declined a resolution for the liquidator to pay himself P348, 500 for the work he has done since his engagement in May. According to Brick, Deloitte’s bill now stands at P600, 000, which the creditors, at last week’s meeting, agreed to settle once the liquidation process with Collins is underway
KBAL depositors and debtors are predominantly in Zimbabwe where the bank originates.
Creditors’ claims that have been accepted by Marinelli so far amount to $15.4 million while the liquidation account currently only holds $200,000. Among some of KBAL assets to be liquidated include KBAL building in Kgale Mews, telecommunications equipment in Harare plus a $11 million loan book, whose recoverability is truncated by geographical challenges as well as Zimbabwe’s depressed economic landscape.
According to the balance sheet compiled by Marinelli in May 2015, KBAL had liabilities to the amount of $19.1 million. On the other side of the balance sheet, the bank owns assets worth a mere $2.4 million with the bulk of that money in the form of advances to customers amounting to $1.8 million. On the best-case scenario, Marinelli however estimated that the recovery rate can rise to 27 percent as the recoverability of the advances to customers and assets held offshore cannot be fully ascertained at present. Information at hand shows that KBAL’s liquidity and solvency matters largely stem from a shareholder dispute at its parent company in Harare, which resulted in the offshore bank losing $17 million in near-cash financial instruments invested in the holding company, Kingdom Bank Zimbabwe (KBZ). KBAL, which was 100 percent owned by Zimbabwean businessman, Nigel Chanakira, was registered in Botswana in 2003 with KBZ, as its parent company and technical partner.
KBZ would later enter into a partnership with Mauritius-based Afrasia, but the business later ran into financial difficulties resulting in a separation between Chanakira and Afrasia.
The $17 million investment made by KBAL in KBZ could not be retrieved due to liquidity constraints in Zimbabwe, resulting in the shareholders agreeing to swap assets. Chanakira was thus bought out of KBZ through 100 percent ownership in KBAL as well as some telecommucations equipment owned by the banking group. The equipment, which KBAL estimates to be worth $10 million, has however been written down to zero value by the temporary managers or $1 million in the best-case recoverability scenario. At an auction held four years ago in Harare, telecoms equipment attracted an offer price of $78 million although no deal went through. The liquidators have also written down KBAL’s loans and advances to customers worth $11.6 million to $1.7 million due to recoverability uncertainties.