Textile Mills exits judicial management

Published: 16 August 2017

ONE of the oldest textile companies in Bulawayo, Textile Mills, has come out of judicial management after its creditors approved a scheme of arrangement to recapitalise the company, an official has said.

The company, which was established in 1947, owed an estimated $1 million to its employees and $2 million to trade and other creditors.

The textile firm was placed under judicial management a few years ago after facing serious under-capitalisation challenges, competition from cheap imports and shortage of working capital, among others.

Last December, the High Court in Bulawayo ordered Textile Mills to convene a creditors' meeting to discuss recapitalisation strategies that included the leasing of some of the firm's properties.

The proceeds from the leasing of properties would be distributed with the first $20 000 set aside to settle outstanding post-judicial management salaries and wages, seven percent of net rental income would be applied in clearing long outstanding judicial management fees not withdrawn by the judicial manager to help the company stay afloat.

In addition, the approved scheme of arrangement requires that a wholly-owned subsidiary of Textile Mills, Security Mills, will be incorporated to carry on the business of textile manufacture.

Textile Mills former judicial manager Mr Tapiwa Chizana told Business Chronicle last week that the troubled firm had successfully negotiated a scheme of arrangement with its creditors.

He said the textile company was now being restructured to match the present business environment.

"Textile Mills has now come out of judicial management following a scheme of arrangement that we negotiated with creditors.

"The scheme was agreed by a majority of creditors hence its approval by the High Court in Bulawayo," said Mr Chizana, adding that he did not have off hand the percentage of the creditors who voted in favour of the scheme and those that opposed the arrangement.

For a scheme of arrangement to be approved by the Courts, he said, at least 75 percent of the creditors should vote in its favour.

"As a result of the scheme of arrangement, Textile Mills is now being restructured to suit the present operating environment as well as the current demand for new products on the market," Mr Chizana said.

Textile Mills was faced with cashflow constraints emanating from the need to resuscitate the business through the sourcing of raw materials and paying labour and statutory costs.
- chronicle

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