KCM liquidator Milingo Lungu has clarified that the notice of petition advertised in the press will not affect employees at the mine.

And Lungu has explained that the period of provisional liquidation is not adequate to dismantle historical debt despite receiving enough funds from production to run the mine.

In an interview, the liquidator explained that the advertisement was a procedural requirement to allow interested parties to agree with or oppose the winding up of the company.

“So the winding up rules specifically state that when you present a petition, you are supposed to advertise in the government gazette and in the daily newspaper and that is why it also provides in the same rules that you can appoint a provisional liquidator ex parte because the effect of that advert, if we had gone according to the normal procedure, is that there will be a run on the company. So the appointment of a provisional liquidator prevents a run on the company by creditors, people levying execution and so on…once that petition is advertised, whoever is in support, whoever wants to oppose the petition then has an opportunity to appear on the date which has been advertised to either support or oppose,” Lungu explained.

“So, in terms of the procedure under the winding up rules, and this has been a problem, there has been a lot of mis-education. When a petition is presented, there is that document which accompanies it which is known as notice of petition. Ordinarily, what is supposed to happen when it was just presented is that the court should have endorsed a date, the return date on the petition (when it will be heard). Petitions are, by their nature, collective proceedings. They are public and they are collective; that is why they are not a dispute. So you can take out a petition for example as a creditor and when you succeed in winding up the company, you will still not get anything. That is the nature of winding up proceedings…they are public, collective and statutory.”

He said it was because of this that Vedanta Resources was prevented from joining as a party but to give notice on when they want to be heard to either support or oppose the winding up proceedings.

“It prevents a situation where…you have a thousand parties to a case. Let’s say you have a thousand creditors or you have a thousand shareholders, you would have a thousand parties so in order to avoid that, you simply advertise and then they give a notice that they want to be heard. So each creditor, each shareholder, each person who is interested will now give a notice to say I want to come on the 27th and I want to be heard that I support the petition for ABCD reasons or I oppose the petition for ABCD reasons,” Lungu said.

And Lungu said the provisional liquidator’s short mandate cannot allow settlement of the mine’s historical debt.

“Like we said, in terms of historical debt, the period of provisional liquidation is not going to be adequate to dismantle that but in terms of prospective debt, I think in terms of cash flow, we are receiving enough from production to be able to pay. Remember that while most creditors are trying to insist that we are on a cash basis, usually it’s a 30-day invoice period. So we ventured into a 30-day invoice period and we are able to generate cash and give 30 days to pay the invoices as and when they fall due. The issue still remains obviously the historical debt,” Lungu stated.

When asked how the transition would affect employees, Lungu explained that the court is yet to pronounce itself on whether the company will be wound up or not so “the workers remain unaffected”.

“…there is still the requirement for the trial of the proceedings. Once it is established or not established as to whether the company should be wound up, the court needs to pronounce itself on (it),” he said.

And when asked whether corporate social responsibility is more important than the payments to suppliers and employees, Lungu said the donation was already sitting as a debt and he was obligated to ensure it is paid.

“…I have already got an obligation to pay them and we haven’t paid for some time so it should be within my responsibilities as liquidator to pay those debts. So it’s not deviating from my responsibility as a liquidator to pay debt. And I think also, corporate social responsibility is one of the biggest tenets of KCM. KCM is not only just a business but it’s also a social and economic institution around those towns, so if it neglects on some of those responsibilities, I think the social and economic wellbeing of the community is affected,” explained Lungu.