Africa-Press – Eswatini. About 50 emaSwati will lose their jobs after the company, which was operating Ocean Basket, filed an application for liquidation.
Liquidation is the process of bringing a business to an end and distributing its assets to claimants. In its application, Zwetho Investments stated that it was indebted to a number of creditors to the tune of E9 202 146.99. The company stated that it was carrying restaurant and food business under the name Ocean Basket and it had two branches in the kingdom.
“The applicant (Zwetho Investments) has been carrying on business for a number of years and has enjoyed success, mainly through the support of the Ocean Basket franchise. However, over the last few years, mainly due to the effects of COVID-19 pandemic and the change of shareholding of the franchisor which has translated into lack of support, the applicant has experienced a serious downturn in customers,” submitted the applicant.
Zwetho Investments stated that it was planning to pay an amount of E294 502.67 to its 50 employees as terminal benefits, as part of the liquidation process. In the notice of motion filed at the High Court, the Director of the company, Thokozile Jele disclosed details of the severe financial and operational challenges faced by the company.
Losses
She informed the court that the application was a culmination of months of financial woes, which included significant losses, trouble paying the business bills on time and a sudden change of ownership of the franchise business.
She averred that the application for liquidation was a culmination of months long downward spiral in the business’s financial performance due to huge losses and enormous debt. She traced the company’s troubles from the severe disruptions which were caused by the restrictions which were imposed by government in a bid to contain the COVID-19 pandemic about four years ago.
Furthermore, Jele submitted that there was also a lack of support from the main franchisor, due to changes engendered by structural changes in the principal business’s ownership. She said changes were introduced in the franchisor’s shareholding, which translated into lack of support for the local business.
“The national and international shutdown of businesses in 2020, as a result of the COVID-19 pandemic, had a severe financial effect on the applicant. The national shutdown made it extremely difficult for the applicant to operate and meet its ongoing expenses. Even though the shutdown occurred in 2020, the applicant is still feeling the effects thereof, today.
“At the time when the shutdown occurred, the applicant was severely restricted in its hours of operation and could not carry on with business in its ordinary course. While income margins were severely affected, the liabilities and ongoing expenses including staff costs, rent and other operational costs, continued to be incurred,” the applicant submitted.
She averred that the company directors tried to mitigate the effects of the pandemic but to no success. She submitted that the performance of the restaurants was dismal; expenses and the expenditure of the company exceeded the income the business was making or rather attracting. “It became evident, despite the concerted efforts on the part of the directors of the company that the applicant’s operational costs were leading the company into an insolvent position,” she submitted.
Obligations
Jele further pointed out that the company was failing to meet its financial or labour obligations like paying salaries of its employees on time. She mentioned that this did not put the company in good light and as a result, they were incurring debts on an ongoing basis. Apart from that, she submitted that they were struggling to deal with legal suits from companies demanding payments. Jele mentioned that Eswatini National Provident Fund (ENPF) was among the companies which had instituted legal proceedings against the company.
“I submit that it is clear from the aforementioned that the applicant is insolvent, and that it has made out a proper case for this honourable court to grant a winding up order in terms of Section 287 (a) (d) and (e) of the Companies Act,” she argued.
The director submitted that the liquidation of the company would enable the liquidator to properly investigate its affairs. It was mentioned in the court documents that the applicant had suggested the name of Paul Mulindwa, a known attorney alongside an individual who is experienced, for the task of provisional liquidator.
Meanwhile, about 15 employees of Auto Metal Panel Beaters (PTY) LTD stand to lose their jobs after the company also moved an application to be placed under liquidation due to severe financial pressure. The company, which has conducted the panel beating and spray painting business since October 1994, around Manzini, approached the High Court yesterday, complaining that it was no longer able to meet its operational costs.
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