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Marvo survives liquidation

Business
STRUGGLING Bulawayo firm Marvo Stationery Manufacturers has survived liquidation at least for now after workers gave the judicial manager more time to secure funds to turn it around, it has emerged.

STRUGGLING Bulawayo firm Marvo Stationery Manufacturers has survived liquidation at least for now after workers gave the judicial manager more time to secure funds to turn it around, it has emerged.

BY MTHANDAZO NYONI

In May this year, judicial manager Chrispen Mwete of C Mwete and Company said the company needed to raise $1,5 million within 90 days to escape liquidation.

However, the three months’ grace period lapsed last month with Mwete failing to secure the needed funds.

Workers reportedly agreed that he should continue scouting for financiers than to have the company liquidated as that would not benefit them.

“Workers agreed that the 90-day period, which lapsed last month, be extended. They said if we go for liquidation, they will not benefit anything as the company’s machinery is obsolete,” Mwete said.

However, according to workers, after Mwete had got the blessing from workers not to liquidate the company, he sent the entire workforce on unpaid leave with effect from September 1.

A letter signed by Mwete on August 18, 2015 indicates that he indeed sent workers on unpaid leave.

“I have sought legal opinion and also conversed with the Deputy Master of the High Court and both parties agreed that in those terms, as judicial manager I was still accumulating debt and that was not acceptable by law,” Mwete said in the letter.

“With this in mind, I called a meeting with the workers’ committee in the presence of your trade union representative, where we had a consensus that the only logical thing to do was for the leave to continue, but unpaid with effect from the 1st of September 2015.” He said employees who were due for pension would not return to work should the company reopen.

“We are in the process of discussing with the pension houses so that we get the pensions reinstated. The issue of company reopening is subject to availability of funds,” Mwete said.

He said workers’ representatives would be approaching his office at least once a month to check on the company’s progress.

A report prepared by Mwete in April indicated that Marvo Stationery directors swindled the company of more than $150 000, leaving it insolvent.

The report also indicated that the directors had failed to account for over $100 000 from the Distressed Industries and Marginalised Areas Fund loan.

Mwete’s report revealed that of the $750 000 loan given to Marvo in 2012, $437 000 was used to settle a debt with ZB Bank which in his view was total abuse of the loan which was meant for working capital and not to transfer risk from one bank to another.

Mwete said at the time of applying for judicial management, debtors stood at $124 334 and of this amount, $78 000 was not collectable and considered to be a bad asset, leaving the company with $56 334 likely to be turned into cash.

“It is important to note that while the contract document says the company was sold on the 1st of March 2013, the signatures are on the 14th of March 2013. The sellers continued to run the company until September 2013. As a result, part of the money was used to pay a CABS loan which had been applied for by the old shareholders and directors,” the report reads.

Marvo, which was established in 1966 and employed 600 people at its peak, has struggled to compete with imported stationery largely because of its obsolete machinery.

It owes its 103 workers in excess of $200 000 having gone for 20 months without salaries.