Afrimax collapses into liquidation process
Afrimax Group, a company that got rights to trade as Vodafone Uganda has silently started a liquidation process after its shareholders failed to get an investor.
Liquidation refers to a process of bringing a business to an end and distributing its assets to claimants or creditors. Afrimax and Vodafone Group merged in 2014 to form Vodafone Uganda.
This development comes barely three months after shareholders of the troubled telecom firm run to court seeking bankruptcy protection from its angry creditors.
On May 16, 2018, Fred Otunnu, the director of Corporate Affairs at the Uganda Communications Commission (UCC) confirmed the development saying that management had no option but to liquidate the company over mounting debt pressures.
“Vodafone is undergoing liquidation. This was decided during a recent meeting of creditors. Shareholders voted to stop the provisional administration and opted that it be out rightly liquated,” Otunnu said.
“Now what they have to do is inform us of their migrations plan [of customers],” he added. It has about 1,000 customers according to data from UCC.
Vodafone went into provisional administration following an interim protective order granted by the High Court in February which also confirmed Donald Nyakairu as the provisional administrator.
An audit of the firm revealed that unpaid debt to creditors floated over sh298b, nearly five times its total asset value estimated at sh55b as at February 15, 2018.
Under provisional administration, it allowed the company to buy off sometime and continue to operate as shareholders attempted to find a buyer to invest or take over the business.
Liquidating the company means that the creditors’ interest is most likely to be jeopardized as the secured creditors will get only a fraction of its claim and the unsecured getting nothing, the audit warned.
UMOA to write-off sh500m
Although the liquidation process is being done in reference to the Insolvency Act, it means that creditors to the company will be sorted in terms to priority. Some of the secured creditors include Nedbank, National Social Security Fund, Uganda Revenue Authority among others.
Other creditors described as unsecured such as media companies will most likely have to write-off these debts.
According to the chairman Uganda Media Association (UMOA), Susan Nsibirwa, at least 11 media houses are demanding nearly sh500m from Vodafone.
“On July 3, 2017 we wrote to them over unpaid dues. In August, they wrote asking for an extension to September that they would clear. They letter requested that we suspend them as they plan to pay their debt,” Nsibirwa said.
She continued that: “It will be disheartening to have to write-off these debts off because the services were offered were in good faith. But again it will be lesson to us as media owners. Unfortunately, we just have to rethink the way we do business.”