HARARE – Judicial managers are unjustly enriching themselves by charging exorbitant fees, Parliament has said.
Judicial managers are experts appointed by the Master of the High Court in terms of the provisions of the Companies Act, to give viable companies which are in financial trouble a more even chance to rehabilitate themselves and be restored to profitability.
Companies under judicial management enjoy a moratorium on debt payment, while the judicial manager works on revival initiatives, but obliged to pay creditors once the company returns to profitability and that often takes years, depending on the process of securing investors.
Chegutu West MP Dexter Nduna told the National Assembly during debate on the Insolvency Bill that the idea of appointing judicial managers is doing more harm than good.
“What happens when a company is in liquidation and what happens when the judiciary manager takes over, a judicial manager is like a consultant; he is like a doctor.
You pay consultation fee, whether the patient gets up from their ailing environment or they do not; the judicial manager will still get paid because they have been empowered by the court to preside over a company until it has been resuscitated.
“That as it might be, I ask that this House makes sure that we do not fall into the trap of enriching judicial managers as opposed to enriching the many. When you enrich a judicial manager, you are enriching one person, who is a consultant over a company which is under judicial management.”
Nduna said judicial managers have been given unfettered access in liquidation.
“Their powers should be curtailed by enacting the Insolvency Act. In the same vein, we need to also look at the Companies Act, Section 306, which gives unfettered access and movement of the judiciary manager in terms of his mandate when he carries out his duties on a company which is being liquidated.
“What you see happening is very unfortunate because when a company is in liquidation, whoever has got the prowess and the power of presiding over that company is an individual or a small company formed of three people that is formed by judicial managers,” he said. – Daily News