Creditors in limbo

Court said creditors’ loss was limited to a delay that does not extinguish any rights Creditors of the defunct Mupane Gold Mining (Pty) Ltd will have to wait longer to recover their dues after the Lobatse High Court temporarily halted the sale of the mine’s assets following a legal challenge by Ulsan Botswana (Pty) Ltd. Justice Reuben Lekorwe granted Ulsan an urgent interim interdict restraining the liquidator, Kopanang Thekiso, and other parties from proceeding with the sale of Mupane’s assets to Nova Africa Resources/AgaOne Commodities DMCC Joint Venture. The ruling effectively freezes the liquidation process, leaving dozens of creditors—including employees, suppliers, and financial institutions—in limbo as they await payment from the proceeds of the asset disposal. Justice Lekorwe acknowledged the inconvenience caused by the delay but said creditors’ absence from the proceedings was not “fatal” to the case. “No substantive relief is presently sought against the creditors. No doubt delay inconveniences them, but, in my view, that is short of the test of ‘direct and substantial interest,’” he said. He added that notice to the liquidator constitutes notice to creditors under the Companies Act. Ulsan had approached the court alleging procedural irregularities in the bidding process, claiming that the liquidator and the Master of the High Court mishandled Nova Africa’s bid. The company sought to stop the finalization of the sale pending a review of the decision to approve the winning bid. Some respondents, including the liquidator and Nova Africa, argued that the proceedings were invalid because Ulsan had not obtained the required leave of court under Section 376 of the Companies Act before suing a company under liquidation. They also claimed Ulsan lacked legal standing, as it was merely a disappointed bidder, not a creditor or shareholder. Justice Lekorwe disagreed, finding that Ulsan had established a prima facie right deserving of protection, even if open to some doubt. “Although the applicant’s right may not be clear, it is sufficient to warrant interim protection pending a substantive review,” he ruled. On the issue of prejudice, the court found that Ulsan stood to suffer “irreparable harm” if the sale proceeded before the review was concluded, while creditors’ loss was limited to a delay that does not extinguish any rights. The court also dismissed arguments that the application should have been referred to the Master before filing, ruling that the requirement applies to natural persons, not companies. The sale of Mupane Gold Mine, once one of Botswana’s few producing gold assets, had been viewed as the final step in winding up the insolvent operation and compensating claimants. With the interdict now in force, the liquidation process remains on hold until Ulsan’s anticipated review application is heard. Justice Lekorwe made no order as to costs, saying the “imperatives of justice” require each party to bear its own legal expenses.

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Creditors in limbo

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