Galaxy Medical Aid Society faces closure as creditors opt for cash

Galaxy Medical Aid Society faces closure as creditors opt for cash

By Chipo Musoko, HARARE, April 17 (The Source) – Struggling Galaxy Medical Medial Aid Society faces closure after creditors, who are owed close to $1,5 million, declined a takeover bid by its former owner and voted for the trustees to pay them out instead.

Galaxy, one of the three medical aid societies that was threatened with closure by government two years ago after struggling to clear arrears with service providers, was placed under provisional judicial management in November last year at the behest of a creditor.

During a creditors meeting at the High Court on Wednesday, provisional judicial manager, Wesley Sibanda of Welsa International Chartered Accountants gave creditors three options to either exchange assets for payment by contributors (trustees), rope in an new investor or liquidate the company.

“We have an investor who started the society who approached me. He wants to take over the assets but will not pay the full amount owed to creditors. He will pay a dividend to be agreed to,” he said, declining to reveal the name of the investor citing a non-disclosure agreement he had signed.

The assets of the company are valued at $760,000 while its liabilities are close to $1,5 million after new claims were presented during the meeting worth close to $300,000.

The investment  option would have meant that the society would continue to operate  and that existing members would not be subjected to waiting periods as required when one joins a society.

However, creditors including service providers voted for a payout by trustees over a period of six months in exchange of assets and that the shareholders would write off their claim.

“We are service providers and waiting period exemptions do not apply to us and so we had rather have our money,” said one creditor.

Sibanda said he would liaise with the trustees to release some funds once he had verified all the claims presented.