Zimbabwe Diamond & Allied Minerals Workers' Union v Riozim Limited and Others

The applicant is a trade union representing employees in the diamond mining industry. The first respondent, RioZim Limited, is a public company listed on the Zimbabwe Stock Exchange. On 28 April 2025, the applicant filed an application to place the first respondent under corporate rescue proceedings in terms of section 124(1) of the Insolvency Act (Case No. HCH 1945/25), which remained pending. On 21 July 2025, the first respondent published a cautionary statement announcing it was in final stages of negotiating transactions involving the disposal of some of its mining assets and non-core assets to address liquidity challenges. On 23 July 2025, the applicant filed this urgent chamber application seeking an interdict to prevent the first respondent from proceeding with the proposed asset disposals pending determination of the corporate rescue application. The applicant alleged the disposals violated the moratorium provisions under sections 126 and 127 of the Insolvency Act and would result in the Corporate Rescue Practitioner inheriting a shell if the corporate rescue application succeeded.

• Whether there was valid opposition before the court given the alleged dissolution of the board of directors under section 130(2) of the Insolvency Act
• Whether the matter was urgent
• Whether the application was fatally defective for providing incorrect dies induciae
• Whether the applicant had locus standi to bring the application
• Whether the applicant and deponent had authority to institute proceedings
• Whether the applicant complied with the notification requirements under section 124(2)(b) of the Insolvency Act
• Whether the requirements for a temporary interdict were satisfied
• The proper interpretation of section 130(2) regarding dissolution of the board during corporate rescue proceedings
• The proper interpretation of sections 126 and 127 regarding moratoriums on disposal of company property during corporate rescue proceedings
• Whether disposal of mining assets and non-core assets constitutes disposal 'in the ordinary course of business' under section 127(1)(a)(i)

The court granted the interim interdict, barring the first respondent's board from proceeding with the contemplated transactions and actions contained in its cautionary statement published on 21 July 2025, pending confirmation or discharge of the provisional order.

Section 130(2) of the Insolvency Act, which deems the board of directors dissolved during corporate rescue proceedings, only takes effect after the court makes an order under section 124(4)(a) placing the company under supervision and a further order under section 124(5) appointing a Corporate Rescue Practitioner. Until such orders are made, the board remains in control and the company retains the right to defend proceedings, including the corporate rescue application itself. To hold otherwise would create an unconstitutional leadership vacuum and deprive the company of its constitutional right to be heard under section 69 of the Constitution. Corporate rescue proceedings commence immediately upon filing an application under section 124(1), which brings the moratoriums under sections 126 and 127 into immediate effect, even before the court determines the merits of the application. The purpose is to protect the troubled company's assets so that Corporate Rescue Practitioners do not inherit shells. The disposal of mining assets and non-core assets that will have a material effect on the company's balance sheet does not constitute disposal 'in the ordinary course of business' under section 127(1)(a)(i), where the company's ordinary business is mining and selling mineral products, not selling its own mining assets. The exception in section 127(1)(a)(i) applies only to disposals that would normally be transacted by a solvent businessman carrying on a business of that kind as part of the company's usual and regular revenue-generating activities.

The court observed that points in limine should only be raised where they are meritorious and capable of resolving the matter, not simply as a matter of fashion or routine. Legal practitioners who abuse the court by raising endless groundless preliminary points in hope that the court may find in their favor by chance may be ordered to pay costs de bonis propriis. The court noted that there is no specific mandatory dies induciae prescribed for urgent chamber applications under rule 60, and the timeframes are entirely controlled by the judge as case manager under rule 60(6), (8) and (9). The judge has discretion to consider papers, direct filing of further papers, require parties to appear and argue, and direct the time within which respondents must file opposing papers depending on the circumstances. The court emphasized that in interpreting statutes, the cardinal canon is the literal or golden rule - words must be given their ordinary and grammatical meaning unless to do so would lead to an absurdity, repugnancy, or inconsistency with the intention of the legislature. Words must be read in their context. The court noted that justice cannot be sacrificed on the altar of slavish obedience to procedural rules, referencing rule 7 which gives the court power to condone or direct departure from rules in the interests of justice.

This judgment provides important guidance on the interpretation and application of Zimbabwe's corporate rescue provisions under the Insolvency Act, particularly: (1) It clarifies that section 130(2) (deeming the board dissolved during corporate rescue proceedings) only applies after the court makes an order placing the company under supervision and appointing a CRP, not merely upon filing of the application - companies retain the right to defend corporate rescue applications to avoid unconstitutional deprivation of the right to be heard; (2) It confirms that the moratoriums under sections 126 and 127 take immediate effect upon filing a corporate rescue application under section 124(1), even before the court determines the merits; (3) It provides authoritative interpretation of 'disposal in the ordinary course of business' under section 127(1)(a)(i), holding that disposal of core business assets does not fall within this exception even if intended to address liquidity challenges; (4) It affirms the protective purpose of section 127 - to preserve company assets so Corporate Rescue Practitioners do not inherit shells; (5) It clarifies procedural matters regarding urgent chamber applications, including that there is no mandatory dies induciae for such applications and they are subject to judicial case management; and (6) It discourages the raising of frivolous preliminary points that waste court time. The case demonstrates the court's willingness to give effect to the statutory scheme protecting company assets during corporate rescue proceedings while balancing constitutional rights to a fair hearing.