The future of Deluxe Coaches Limited is under threat after the High Court Commercial Division Blantyre registry on Tuesday granted an order for its liquidation.
The liquidation comes after the company, a subsidiary of Agma Holdings Limited and a sister company to AXA Bus Company owned by politician Mark Katsonga Phiri, failed to settle a K750 million loan agreement with FDH Bank.
Through their lawyers Ritz Attorneys at Law, FDH sued Deluxe Coaches Limited, formerly Ampex Limited, and got judgement for K750 million the company failed to honour.
Ritz Attorneys at Law spokesperson Lozindaba Mbvundula confirmed in an interview yesterday, the liquidation proceedings stem from a 2016 judgement.
She said: “Deluxe Coaches Limited entered into a loan agreement with Malawi Savings Bank (MSB). Subsequently, FDH Bank plc acquired MSB and the loan was transferred to FDH.”
Mbvundula explained that FDH Bank’s efforts to enforce the judgement by sending sheriffs proved futile as the passenger service company did not have moveable property for the sheriffs to impound and sell to realise the money.
“The sheriff tried and failed to recover any moveable assets… The statutory demand given to Deluxe Coaches was not complied with. This prompted FDH to apply for winding-up of the company,” she said.
According to court documents in the ‘Insolvency Case Number 2 of 2019’, besides granting the petition for winding up, High Court Judge Jabbar Alide also dismissed an application to set aside FDH’s statutory demand.
A statutory demand is a claim to pay back money owed within 21 days or risk insolvency (liquidation, receivership and/or administration) made pursuant to the Insolvency Act.
The court has also appointed John Kalampa as liquidator for Deluxe Coaches and further awarded costs to FDH Bank on an indemnity basis.
In an interview yesterday, Kalampa, a private practice lawyer from Ritz Attorneys at Law, confirmed his appointment.
“I am essentially supposed to compile all the company’s assets as well as its liabilities, sell them off piece-meal and pay back the creditors or people who are owed money by the company,” said Kalampa.
He said there was no strict time-frame for the liquidation process which could even take years before completion.
“This is because tracing assets of the insolvent company is tricky. Some might have been disposed of, hidden or otherwise dissipated. I do, however, intend to complete the exercise within six months,” he said.
Lawyer for Deluxe Coaches Limited, Wesley Mwafulirwa, asked for more time to consult his office before commenting because he had not yet seen the order.
In 2017, another bus company in the country, National Bus Company Limited, which is a subsidiary of Mulli Brothers Company Limited, also faced liquidation due to a K20 million debt it owed Total Malawi Limited.