MASERU – Troubled MKM firm has filed an application at the High Court to stop the Central Bank of Lesotho from liquidating the company arguing that it has already filed an appeal against the High Court decision declaring it insolvent.
The central bank filed the petition to liquidate MKM after auditors declared the firm insolvent.
The auditors said out of the M400 million deposited with MKM only M100 million could be traced. They said there was a shortfall of M300 million that could not be accounted for.
MKM has however appealed against the High Court’s decision that ruled they were conducting insurance business. It says the court’s decision was erroneous.
The High Court will hear the application on the 1st of December 2008.
“That the execution of judgment delivered by Guni, J in the main application on the 6th June 2008 should be stayed pending the outcome of the appeal against the said judgment,” read the notice of motion.
In his founding affidavit MKM managing director Simon Thebe-ea-khale said his company will suffer harm if the petition is heard before the appeal is dealt with by the Appeal Court.
“I aver that there is the potentiality of irreparable harm and prejudice to be sustained by the present applicants (MKM companies) and I included, regard being had to the fact that petitions for liquidating 1st to 4th applicants have been filed and they will soon be heard by the court.
“Should this application be refused the applicants will be highly prejudiced and will suffer irreparable harm in their appeal as execution will have taken place as it is already in the process,” said Thebe-ea-khale.
Thebe-ea-khale wants the court to stay judgment pending its appeal in the Appeal Court.
The Appeal Court is expected to deal with MKM’s appeal in April next year.
Last October a South African based company Channel Life Limited signed a deal to bail out MKM out of its financial woes.
The agreement needs endorsement from the central bank to allow depositors to access their funds.
MKM and Channel Life are expected to submit to the central bank the consolidated payout proposal before Monday next week.
If the court upholds MKM’s application to stay court proceedings pending the appeal this could allow MKM and Channel Life to have more time for consultations with the central bank to settle the matter out of court.
MKM last month said it had proposed to start paying its depositors from the 5th of January next year.
MKM was shut down last November for allegedly violating the country’s banking laws. Only its funeral businesses have been allowed to continue operating.