Windhoek-The beleaguered SME Bank – a joint venture between the Namibian government and private investors from Zimbabwe – was yesterday officially placed in the hands of the Master of the High Court to start its provisional winding up as ordered by Judge Hannelie Prinsloo in the Windhoek High Court.
The Master of the High Court will now appoint a provisional liquidator to oversee the process.
Yesterday’s landmark ruling throws into turmoil the future of about 200 employees of the bank, who held a peaceful demonstration yesterday regarding their fate at the embattled financial institution.
The imminent closure of the bank – which needed recapitalisation of N$359 million to remain afloat – is a result of questionable investments of about N$200 million in mainly little-known South African entities.
During the marathon hearing, in which the Bank of Namibia sought closure of the bank, the court was told the N$200 million is likely lost.
It is not clear whether any sanctions are being lined up against those who presided over the contentious multi-million dollar investments, or whether separate charges would be brought.
Judge Prinsloo yesterday issued a rule nisi (special court order) calling upon all the respondents (including the government, Namibian Financing Trust, minister of industrialisation and the minister of finance to show cause, if any, on September 15 why the court should not make a final order to close down the bank and that the costs of the application be included in the winding up.
Government respondents did not oppose the application, but the minority partners, the Metropolitan Bank of Zimbabwe and World Eagle Properties, both from Zimbabwe, have been opposed to it from the beginning.
The judge further ordered that the order be served by the Deputy Sheriff of Windhoek on the SME Bank at its registered address.
The Bank of Namibia approached the courts to close down SME Bank, which it said was no longer able to service its mandate, which is to help and support emerging entrepreneurs and small and medium business persons.
The Bank of Namibia took over the running of the SME Bank after it emerged that several risky investments were made by the bank, which left it leaking money at an alarming rate.
The winding up will now bring about a concursus creditorium, which is essentially the creation of a creditors group and the interests of the creditors as a group will enjoy preference over the interests of individual creditors.
However, the claim of each creditor must be dealt with as it existed at the date of the commencement of the concursus creditorium, and no transaction can thereafter be entered into with regard to estate matters by a single creditor to the prejudice of the general body of creditors. A winding-up order will also preclude the unfair treatment of a specific creditor or group of creditors, and will enable a duly appointed liquidator to attend to the orderly winding up of the SME Bank.
Once a liquidator is appointed, he or she can and must take measures within the confines of the law to protect and administer the bank’s affairs and property. Such liquidator will stand in a fiduciary position to the bank and must immediately take possession of all assets of the bank and apply them in satisfaction of the costs of the winding up and the claims of creditors, and distribute the balance among the members according to their rights and interests in the bank.