The appellant was a mining company incorporated in Zimbabwe and a subsidiary of Metallon Corporation Limited (UK). The first respondent, a trade union representing workers in the mining and related industries, applied to the High Court to place the appellant under supervision and corporate rescue proceedings under section 124 of the Insolvency Act [Chapter 6:07]. The first respondent alleged it had locus standi as it represented workers in mining industries and was owed union fees. It claimed the appellant owed employees 13 months' salaries, had not remitted pension fund contributions for six years, had not paid NSSA contributions, and had deducted but not remitted various amounts from employees' salaries. The first respondent notified affected persons primarily through newspaper advertisements in the Herald and Manica Post, and sent emails to some known creditors. The appellant opposed the application, raising points in limine including that the first respondent lacked locus standi, had not proven that appellant's employees were its members, and had not complied with section 124(2)(b) requiring notification of each affected person by standard notice (defined as registered mail, fax, email or personal delivery). The High Court dismissed the points in limine and granted the corporate rescue order.
The appeal was allowed with costs. The order of the High Court placing the appellant under supervision and corporate rescue proceedings was set aside and substituted with an order dismissing the application for corporate rescue with costs.
Section 124(2)(b) of the Insolvency Act [Chapter 6:07] imposes a peremptory requirement that an applicant for corporate rescue must notify each affected person by 'standard notice' as defined in section 2 of the Act (registered mail, fax, email or personal delivery). Notification by newspaper advertisement does not constitute compliance with this peremptory requirement. An 'affected person' entitled to apply for corporate rescue under section 121(1)(a)(ii) includes a registered trade union representing employees of the company in question, not merely a trade union representing workers in the industry generally. Where the legislature has specified in peremptory terms a particular manner or procedure for effecting service or notification, the court has no power to expand that provision to include methods not specified in the statute. Failure to comply with peremptory provisions of the Insolvency Act relating to locus standi and notification of affected persons renders a corporate rescue application a nullity.
The Court observed that corporate rescue is a recent phenomenon in Zimbabwe, introduced by the Insolvency Act [Chapter 6:07] in 2018, replacing the old judicial management regime. The Court noted that corporate rescue is predicated on a broader social justice perspective unlike the old law of judicial management that was based on private corporate interest. The Court emphasized that it is critical that procedures laid down for corporate rescue be complied with to the letter because these proceedings have far-reaching consequences not only on creditors, shareholders and employees of a corporation but on society at large. The Court noted that the statute is specific regarding who may apply for corporate rescue so as to curb abuse of the process by parties who may not have a substantial interest in the rehabilitation of a company or who may only be interested in personal financial gain. The Court referenced its earlier decision in Metallon Gold Zimbabwe (Private) Ltd and Others v Shatirwa Investments (Private) Ltd and others SC 107/21, which dealt with similar issues involving sister companies of the appellant.
This judgment is significant in establishing strict compliance requirements for corporate rescue applications under the Insolvency Act [Chapter 6:07]. It clarifies that: (1) the provisions regarding locus standi and notification of affected persons are peremptory and must be strictly complied with; (2) a trade union must represent employees of the specific company in question, not merely workers in the industry generally; (3) 'standard notice' as defined in the Act means only registered mail, fax, email or personal delivery, and cannot be substituted by newspaper advertisements; (4) failure to comply with these peremptory requirements renders an application a nullity. The judgment emphasizes the importance of procedural compliance in corporate rescue proceedings given their far-reaching social and economic consequences, representing a shift from the more private-interest focused judicial management regime to a broader social justice perspective. The case provides important guidance on the interpretation and application of Zimbabwe's relatively new corporate rescue regime introduced in 2018.