BULAWAYO, May 19 (The Source) – Struggling Bulawayo firm, Marvo Stationery Manufacturers, has been given up to 90 days to get a $1,5 million rescue package or face liquidation, a report has revealed.
One of Zimbabwe’s best-known brands, Marvo was placed under judicial management in September last year and Chrispen Mwete of C. Mwete and Company was appointed judicial manager.
A report prepared by Mwete and seen by The Source on Monday indicates that Marvo Stationery directors swindled the company of more than $150,000, leaving the company insolvent.
The report, which was presented at the first creditors’ meeting in Bulawayo High Court on 22 April 2015, also indicates that the directors also abused a $750, 000 loan accessed under the government’s Distressed Industries And Marginalised Areas Fund (Dimaf) loan, with $106, 729 not being accounted for.
“I can confirm that given working capital business still exists for Marvo and to that extent I have approached a finance house with proof in my hands of business and the response was first get a mandate from creditors for powers to borrow,” reads part of the judicial manager’s report.
“I am hoping at this meeting that mandate will be given. In this regard, workers were initially not keen on judicial management and I have asked them to give the company a period of at least 90 days after the first creditors’ meeting to see if there will be progress, to which they responded positively.”
The judicial manager added that if no rescue package materialiss over the next three months, the company would have to be liquidated.
“I also believe if we do not get an immediate rescue package it would be futile to continue with judicial management and as much as I believe after the 90 day period has expired and we have not been able to raise working capital, the company should go into liquidation to stop increasing liability,” reports reads.
Mwete’s report revealed that the $750, 000 loan given to Marvo in 2012, $437, 000 was used to settle 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.
He revealed that although the business has stopped operations, orders worth $186,000 showed there remained a market for its products.
The judicial manager 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 but the signatures are on the 14th of March 2013. The sellers continued to run the company until September 2013 (and) as a result, part of the debtors were used to pay a CABS loan which had been applied for by the old shareholders and directors,” he said.
“A reconciliation of the inflow and outflow of funds reflects an amount in excess of $150, 000 not accounted for. In my view this was not in the interest of the company but the sellers were protecting themselves at the expense of the company.”
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.