Last August, the High Court placed FirstCred, formally known as GetBucks Botswana, under judicial management following a period of financial turbulence with part of the troubles involving the alleged mismanagement of hundreds of millions of pula by former directors.
Documents seen by BusinessWeek indicate that while the judicial managers believe their interventions since last August have stabilised FirstCred, an amount of P258 million owed to the microlender is “probably not recoverable” meaning the company is insolvent.
BusinessWeek is informed that the P258 million relates to two deals entered into by FirstCred in 2021, with one agreement partially completed and the other unfinished.
“As a consequence of this, the judicial managers have determined that there is no prospect that FirstCred can trade out of its financial difficulties,” documents seen by BusinessWeek indicate. “The judicial managers are in the process of seeking a legal opinion as to the options to enforce FirstCred’s contractual rights in respect of these agreements.”
The judicial managers have secured creditors’ approval to dispose of FirstCred "as a going concern" rather than to liquidate the company and sell off its assets piecemeal.
“Although the judicial managers have not yet commenced the formal disposal process, there has been positive interest from third parties with whom they engaged on an informal basis. “The judicial managers will shortly commence the formal disposal process and will request expressions of interest from potential buyers. “Given the quality of the underlying business and staff, the judicial managers intend to dispose of the company as a going concern and use the proceeds of disposal to settle the major creditors in the scheme of compromise process. “The intention is that the trade creditors and any former employees that have not been paid will be settled in full as part of the terms of the compromise,” the documents read.
The judicial managers believe that FirstCred as a business can be viable and continue to operate if the debt is restructured and certain assets are realised.
Meanwhile, no action has yet been commenced against FirstCred’s former directors who are alleged to be responsible for the misuse of bond proceeds, which triggered the microlender’s troubles last year.
In a statement last August as the firm went into judicial management, FirstCred's then-CEO, Dudu Garekwe, laid the blame for the microlender’s troubles at the former directors’ feet.
“The forensic examinations show that P160 million was raised between 2017 and 2019 when the company was operating as Getbucks Botswana and P120 million of these funds was grossly and inappropriately misused and this resulted in its loss,” she said in a statement. “Such was the level of malfeasance that investor funds only spent two days in the then Getbucks Botswana bank accounts before they were taken out of Botswana and spent. “The funds were primarily raised from AS Mintos MarketPlace and from a listed bond on the Botswana Stock Exchange whose investors included ALCB Fund managed by Lions Head and Ecsponent Limited.”
The latest available documents show that the judicial managers are still on the trail of the missing funds.
“This is still being investigated and the judicial managers are seeking a legal opinion as to whether there is any possibilities for recovery that would be in the interests of the creditors,” documents read.
ALCB Fund and AS Mintos Market Place last year petitioned the High Court to liquidate FirstCred in order to recover their funds. The microlender was instead placed under judicial management.
