Raw deal for AirZim creditors . . . state paying Zim dollars for US dollar debts
HUNDREDS of Air Zimbabwe (AirZim) creditors, including over 300 ex-workers will be paid various debts accrued by the airline before it plunged into administration in Zimbabwe dollars at a rate of US$1:ZW$1, businessdigest established this week.
This means creditors who were owed US$20 000 for instance, would receive ZW$20 000, according to a payment plan confirmed by external administrators this week.
This week’s developments marked a new phase of a long struggle by workers, some of who had served the airline for decades, to receive their due.
AirZim, which entered external administration in 2018 as the government battled to protect it from creditors who were owed US$341 million, sent out debt settlement proposals last week with administrator, Grant Thornton, undertaking to release payments once creditors signed off their papers.
Businessdigest understands that in making the payments, administrators will be guided by Statutory Instrument (SI) 33 of 2019, which converted all bank balances to Zimbabwe dollars at par with the greenback.
The SI also converted all United States dollar denominated assets and liabilities to Zimbabwe dollars except for unsettled offshore commitments. Of the total amount, US$314 million was owed to domestic creditors.
This week’s developments meant that the government, which holds full control of the troubled airline, will pay out ZW$314 million to domestic creditors instead of US$314 million, which creditors were owed before currency reforms in 2019.
At the prevailing official exchange, the government will release US$3,7 million to pay off the combined debt, instead of US$341 million.
In an interview with businessdigest, a former AirZim executive confirmed receiving the debt settlement plan but said she would receive ZW$40 000 out of the US$40 000 that the airline owed her.
This translates to US$476 at the prevailing exchange rate, but much less at the black market rate where rates had been running amok in the past two months.
“If the government itself is justifying reviewing fees on the basis that the Zimbabwe dollar has lost value why do they think that somehow Air Zimbabwe staff would be okay,” the executive asked.
“It is daylight robbery. Our pensions were eroded so people are suffering. You can just imagine I will get the equivalent of US$476 instead of US$40 000. The administrator is now in a rush to finalise this agreement,” the executive who served AirZim for over two decades said.
AirZim administrator Tonderai Mukubvu confirmed that pay-outs kicked off last week at US$1:ZW$1.
“All workers’ verified claims have been funded and we are paying them once the agreements are signed,” Mukubvu told businessdigest.
“All claims are being paid individually and what I can just say is that the staff creditors are being paid and the money is there,” he added.
The payouts will be vital for cleaning up the airline’s balance sheet during a time when the government has been scouting for potential suitors to takeover a stake in AirZim under a broad privatisation strategy involving about 15 parastatals.
Last week’s settlement agreement said the administrator had completed the verification and validation process, which would cancel any security which had been held against the airline.
“This agreement automatically cancels any security which was held against the airline or encumbrances on its properties and authorises the administrator through the Master of the High Court to immediately cancel any such encumbrances,” the settlement agreement jointly written by AirZim and Grant Thornton said.
“I/We may not rely on any representation that allegedly induced me/us to enter into this agreement, unless the representation is recorded in this agreement. No extrinsic evidence may be relied upon in interpreting the provisions of this agreement. This document is the sole record of the agreement entered into by me/us and the administrator and/or the airline regarding the payment of the amount due.
“Any variation of this agreement, or any waiver connected with this agreement, shall be void for all purposes unless, in the case of variation, it is agreed to in writing and signed by or on behalf of the parties, or in the case of a waiver signed by or on behalf of the party granting the waiver. This agreement constitutes the entire agreement between me/us and the administrator and/ or the airline regarding the payment of the amount owed to me/us and I/we confirm that there are no collateral or supplemental agreements relating to this agreement,” paper said.