Guma survives FNBB P25m debt
Justice Dr. Kebonang stays execution of writs against the company and its sureties
Businessman- cum- politician Samson Guma has managed to stop the sale of properties belonging to his business - United Refineries Botswana Holdings - over the P25 million First National Bank of Botswana ( FNBB) debt.
Guma approached the court seeking leave to join the current proceedings and continue with the urgent application commenced by the Judicial Manager, Evans Munanula: to adopt the pleadings, affidavits and documents filed by the judicial manager as if specifically pleaded by him; declaring that the writs of execution against the properties of the guarantors and sureties of United Refineries Botswana Holdings ( Pty) ltd; and staying of execution against the properties known as Plot 43556 Francistown, that is, the land, buildings, plant and machinery, which make up the property and all immovable or movable property belonging to the guarantors and sureties of the company pending finalisation of the winding up of the company.
Respondents in the matter are FNBB ( 1st Respondent), Deputy Sheriff Bathusi Billy ( 2nd Respondent), The Master of the High Court ( 3rd Respondent), The Companies and Intellectual Property Authority ( CIPA as 4th Respondent), The Registrar of Deeds ( 5th Respondent) and The Creditors of the Applicant ( 6th Respondent).
Gaborone High Court Judge Dr. Zein Kebonang this week ordered that pending the determination of the Court of Appeal the execution of the writs issued in favour of FNBB against the Applicant and/ or sureties/ guarantors of United Refineries “are hereby stayed pending the determination of the legal question referred to the Court of Appeal”.
Kebonang stated that it is common cause that the company was placed under judicial management in 2019, the result of which was to stay all legal proceedings against it as required by Section 376 ( a) of the Companies Act.
According to Justice Dr. Kebonang, the consequence of placing the company under judicial management means that every benefit extended to it also inures for the benefit of sureties. He explained that if the company is afforded more time to pay, or its debt is discharged, reduced or compromised or suspended or prescribes, the obligation of sureties is to be likewise treated.
“The essence of a judicial management order ‘ is to postpone a liquidation of a company which is in difficulties and to provide a moratorium for the company for a period long enough to enable that company to meet its obligation and to become a successful concern’. “It follows in my view that where judicial proceedings are suspended or stayed against the company, then any recourse against the sureties is similarly stayed or suspended,” the judge said.
Justice Dr. Kebonang pointed out that in the circumstances of this case, it seems that so long as the company is under judicial management, the moratorium that applies to it must also apply to its sureties/ guarantors and no execution of the writs should be permitted against them. He added that any execution would be invalid.
“Mindful that there is no judicial precedent on this point in Botswana, at least none that I am aware of, and given its significance, I consider it prudent that the Court of Appeal must provide a determinative answer to the question whether a creditor can proceed against sureties where a company is under judicial management. This question is referred to the Court of Appeal in terms of Section 15 of the Rules of the Court of Appeal,” ordered the Justice Dr. Kebonang.
Giving background of the matter the judge stated that the Applicant, together with five others not before court, namely Elffel Flats ( Pty) ltd; Mmoloki Tibe; Tec ( pty) Ltd; Profidensico ( Pty) ltd and Tiedze Chapi, each bound themselves as sureties and co- principal debtors in respect of a debt owed by a company called United Refineries Botswana Holdings ( Pty) Ltd, to FNBB ( 1st Respondent).
“The 1st Respondent had extended banking facilities to the company in the amount of P25 424 548, which was then secured through the suretyship of the Applicant and five other shareholders.
“Documents filed of record also show that the Applicant ( Guma); Bob Chapi; Mmoloki Tibe and Tec ( Pty) Ltd had similarly stood as sureties in favour of the Botswana Development Corporation ( BDC) in respect of a loan granted to the company in 2013 by BDC.
“In terms of the amended loan agreement with BDC, the company’s original security in favour of BDC, being a first Surety Mortgage Bond passed by Tec ( Pty) Ltd Lot 32247, Francistown, was amended to provide that such surety mortgage bond was now to be passed over two portions of the said Lot 32247 being Lot 43555 and 43557 Francistown,” explained the judge.
He stated that documents filed reveal that the Citizen Entrepreneurial Development Agency ( CEDA) had also
granted a debt facility to the company. For this debt, he said CEDA was to hold a bond on Plot 43556 Francistown with FNBB on a ‘ paripassu’ or equal basis.
He said the documents further show that the debt facility at CEDA was secured through sureties provided by Guma Mmoloki Tibe. It is evident from the above narration that the Applicant is a person with sufficient interest in the current proceedings and not some meddlesome interloper, the judge said.