‘Judicial managers must reduce fees’

GOVERNMENT should reduce fees charged by judicial managers who handle the liquidation processes of insolvent companies to avoid plunging them further into debt, Mutare residents have said.

This came out during a consultative public hearing on the Electoral Amendment Bill and the Insolvency Bill by the Parliamentary Portfolio Committee for Justice, Legal and Parliamentary Affairs in Mutare last week.

“These companies are already struggling when they are placed under judicial management and the fees being charged by judicial managers are too much, one resident Mr Edward Makoni said.

“It means the company will accrue more debts and the only way out would be to liquidate.”

Another resident Mr Alfred Mukarakate said judicial management brought positive results in some companies in Mutare, which had since recovered.

“We have companies that were placed under judicial management and have been revived, so we cannot do away with it,” he said.

“We need to just make sure that the judicial management does its work within the confines of the law and does not leave that company in more debt than it already was.”

Mr Mukarakate said the new Bill should provide for ways to deal with small to medium enterprises in the event that they became insolvent, as they were now a major economic player.

Most participants reiterated the importance of protecting employees of companies that go into liquidation to make sure they received their packages.

They said Government should establish an unemployment benefit fund that would cater for such employees.

The committee’s chairperson Innocent Gonese said the consultations were meant to gather views on the Insolvency Bill, which would repeal the Insolvency Act and Chapter 5 of the Companies Act.

“Companies have been taking a long time under judicial management before they are revived or liquidated,” he said.

“We want to hear your contributions so that we can add them in the new Bill. The main aim of the Bill is to reduce the period, which it has taken to deal with issues to do with insolvency.”

Mr Gonese said it took about 45 months to conclude insolvency cases, and Government wanted to reduce the period to 12 months or less.

“Government has realised that we are not doing well in terms of ease of doing business, so it decided that we should consult the public on how best we can improve on this,” he said.

“We are also looking at how other countries have been dealing with issues of insolvency and taking a leaf from them.”