Zim textile giant placed under judicial management
On Tuesday, High Court judge Justice Hungwe effectively granted the order in response to papers filed by the Zimbabwe Textiles Workers Union (ZTWU) nearly 12 months ago. Details of the identity of the judicial manager or his term of office could not be ascertained at the time of going to press yesterday. But in papers filed at the High Court, ZTWU claimed that in addition to rampant mismanagement, David Whitehead lacked proper governance structures for a firm of its size and reputation. ZTWU argued: “There is reasonable probability that if management is placed in the hands of a competent person appointed by the court, they will overcome its difficulties and meet its obligations.” Secretary-general Silas Kuveya said his union will “work hand-in-glove with the judicial manager to ensure that DW is viable and protects more than 2 300 jobs”. A firm is usually placed under judicial management when it is faced with the threat of collapse due to mismanagement when there is ample evidence that it can be saved if remedial measures are taken. It also provides for fair and efficient resolution of complex litigation and business matters while at the same time mapping out a comprehensive rescue plan. Judicial management is not an end in itself; rather it is intended to bring about a just resolution as speedily and inexpensively as possible. It should be tailored to the needs of the particular business and to the resources available. DW chief executive Edwin Chimanye was not immediately available to comment, as his mobile phone continuously went unanswered. In a previous interview, however, Chimanye denied there was a basis for placing the textile producer under judicial management as the company was viable. “We have no reason to believe the firm is in need of an external manager. There is nothing to show that at this stage there is any necessity for liquidation. Management at David Whitehead has not failed. Just like many other firms in these difficult times, the company has not been spared from the current economic challenges. “But the intention is to find a lasting solution to all the company’s problems and ensure we set a firm footing for continued operations,” he was quoted as saying. But is common knowledge that the textile group has been going through a lean spell over the last two years, culminating in its suspension from the stock exchange. Workers have also downed tools after going for several months without pay. To compound its woes, capacity utilisation has dropped to as low as 40 percent due to frequent equipment breakdowns and inadequate foreign currency to import raw materials. At its hosiery division in Gweru, equipment has been grounded due to lack of critical raw materials while at the spinning division in Kadoma, only two machines (out of 20) are functioning owing to limited cotton lint supplies. The situation is no better at the weaving unit in Chegutu, where only seven out of over 200 machines are operating at full capacity, for similar reasons. Only last week, there were reports that the Industrial Development Corporation would soon inject capital into the ailing company.