BY CHARLES LAITON
Capital Bank Corporation has been provisionally wound up after the financial institution failed to service its debts amounting to over $25 million.
The decision by the High Court followed an application by the National Social Security Authority (NSSA), which petitioned the court, seeking an order to have the bank liquidated despite resistance by the bank’s major shareholder Renaissance Financial Holdings.
According to the court papers, the circumstances leading to the latest development are that Capital Bank was incorporated as a merchant bank in or about 2001, but around 2009 its performance, as a viable company, began to nosedive for various reasons, leading to its placement under recuperative curatorship by the Reserve Bank of Zimbabwe (RBZ) in June 2011.
In his judgment delivered on January 30 2019, High Court judge Justice Owen Tagu said NSSA injected $24 million into Capital Bank sometime in 2011, but the financial institution failed to deliver and, instead, continued to face a plethora of problems, prompting the authority to approach the court for recourse.
“Coming to the application, it is clear that the first respondent (Capital Bank) is woefully insolvent for the following reasons; the accounts of the first respondent show that in 2012 the first respondent suffered a loss of $25 152 193. In 2013, the first respondent suffered a loss of $13 108 771,” Justice Tagu said.
“Its capital and reserves are negative $20 397 174. During that period the first respondent had a total outstanding liabilities in excess of $35 307 656.
“Currently, the first respondent has a negative share capital in excess of $25 000 000. Clearly, this shows that the first respondent is not able to pay its debts and this constitutes a firm ground to found an order for winding up.”
The judge also ruled that one John Chikura, from Deposit Protection Corporation will be the bank’s provisional liquidator while the bank’s liquidation matter would be resolved on March 13 this year.