High Court approves $1,2m claims against Tetrad Bank

15 Mar, 2015 - 00:03 0 Views

The Sunday News

Thulani Ndlovu Business Correspondent
THE Deputy Master of the High Court approved claims amounting to $1,2 million by creditors and depositors against Tetrad Investment Bank at the first meeting of account holders in the southern part of the country held at a Bulawayo hotel on Friday.
Tetrad Investment Bank had its operating licence cancelled by the Reserve Bank of Zimbabwe and subsequently placed under provisional judicial management by the Harare High Court on 29 January 2015 after the bank’s liabilities exceeded its assets.

About 100 depositors and creditors lodged their claims with the Master of the High Court.
However, some of the claims including that of debt-ridden Bulawayo City Council and TelOne were declined and would be dealt with at the second meeting of creditors, members and depositors.

The date of the meeting is yet to be announced.
TelOne submitted a claim of $4 823 while BCC submitted a claim of $631 500.
The Master of High Court Mr Antonio Antonio said he had difficulties with reconciling the figures in an affidavit for the proof of an open account lodged by the city council.

The representative of BCC agreed with Mr Antonio saying he “could not make head or tail either of the figures” and he would seek clarity from the council.

Some of the creditors who had their claims approved are Safe Guard Security — $9 162, Rodor Properties — $32 720, Clothing Industry Pension Fund — $108 000, Zimbabwe International Trade Fair — $184 000 and Fawcett Security — $7 513.

However, the provisional judicial manager, Mr Winsley Militala of Petwin Executor and Trust said the bank was not trading and as a result it did not have money to pay out depositors and creditors.

In a commentary of the statement of asset and liabilities, Mr Militala said the bank continued to report significant losses since 2009 except for the year ending 30 September 2011.

“Accumulated losses as at January 31, 2015 stand at $54 million.
Total liabilities exceed total assets by $263 million,” he said. “These conditions, alongside other matters set out in this report, indicate the existence of material uncertainty which may cast doubt on the bank’s ability to continue as a going concern.”

He noted that the bank understated its risk exposure by some $12,9 million when it declared $19,1 million instead of the $32 million.

“For instance, the current loan classification report as at January 31, 2015, management reported provisions of only $30 million understating by $12,9 million being additional related parties discovered by the provisional judicial management,” said Mr Militala.

He also noted with concern that the placement of cash with Metbank ($8,42 million) and Ecobank ($4 million) were in fact cash cover required by the two banks in order for them to guarantee loans granted to Tetrad Holdings amounting to $14,2 million.

“The bank at one point undertook an arrangement to cover the level of insider loans by taking off the Tapvice facility of $3,79 million from the bank’s books to the holding company. In a Tetrad Investment Bank Board meeting held in December 2012, the board was advised that a facility to Tapvice had been transferred to Tetrad Holdings Limited,” said Mr Militala. “There was, however, no explanation sought or given on what the transfer actually involved and implications thereof.”

He added that the bank’s core capital was in the negative when the minimum capital requirements for licensing of merchant banks should be a positive $25 million.

Mr Militala assured creditors and depositors that they would be treated equally when the bank obtains money.
“Judicial management puts all rights of creditors at the same level — all creditors are treated equally. The bank further enjoys a moratorium which means no legal action can be taken against the bank,” he said. “Prior to my coming in as a provisional judicial manager, the bank used to pay certain depositors what it called humanitarian assistance. I have since stopped that practice as it is prohibited by the law. Paying any one of you (depositors) is undue preference punishable with imprisonment.”

He added: “When money comes in, the Insolvency Act will guide me on how to issue pay-outs. The depositors will be grouped into three categories — secured creditors, preferential creditors and ordinary creditors.”

Furthermore, he said all deposits with the bank ceased accruing interest on 29 January, save for those with mortgage bonds.

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