Court rejects attempt to liquidate FirstCred

STAFF WRITER

editors@thepatriot.co.bw

The High Court has ruled in favour of Botswana based micro-finance company FirstCred, declining petitions from creditors ALCB Fund and AS Mintos Market Place to wind up the company. ALCB Fund and Mintos invested when the Company was Getbucks Botswana part of the P120 million that was lost under management of Getbucks Botswana, also included in the amount lost funds is P50 million invested by JSE listed Afristrat Investment Holdings Limited (formely Ecsponent Limited).

As requested by FirstCred, court granted an order of Judicial Management to allow the company an opportunity to resolve its debt position as a result of the negative impact caused by the forensic findings and recapitalise. The judgement comes as independent forensic examinations commissioned by FirstCred has revealed gross misuse of P120 million raised from investors by former management under Getbucks Botswana between 2017 and 2019. FirstCred has since initiated legal and criminal action against former management and their associates found to have been participant in the loss of BWP120 million of investors’ funds.

FirstCred Limited welcomed the judgement handed down by the High Court of Botswana in favour of the Company on Friday, 19 August 2022, placing it under Judicial Management.

“The forensic examinations show that BWP 160 million was raised between 2017 and 2019 when the Company was operating as Getbucks Botswana and BWP 120 million of these funds was grossly and inappropriately misused and this resulted in its loss. Such was the level of malfeasance that investor funds only spent two days in the then Getbucks Botswana bank accounts before they were taken out of Botswana and spent. The funds were primarily raised from AS Mintos MarketPlace and from a listed bond on the Botswana Stock Exchange whose investors included ALCB Fund managed by Lions Head and Ecsponent Limited (now Afristrat Investment Holdings Limited),” said Dudu Garekwe, FirstCred Chief Executive Officer (CEO).

“The misdeeds by previous management that resulted in the loss of P120 million made it almost impossible for the now FirstCred to repay investors who became victims of previous management’s mismanagement and poor governance practices between 2017 and 2019. As new management from 2020 we have focused on engagements with creditors who were exposed to this loss and sensitised them of the negative impact on the ability to timely repay funds due to such high levels of misappropriation,“ she added.

“We welcome the High Court ruling and believe the Judicial Management provides the most optimal avenue for FirstCred to repay all its creditors because, the fundamentals of the business remain sound, and can be leveraged through appropriate refinancing initiatives. A winding up of the company would have closed the doors for the company to fully investigate and bring to book those responsible whereas Judicial Management also offers prospects to deal with investors through either conversion of their investments or other suitable arrangements that ensure that as much value is recouped”.

The ruling follows the completion of two independent forensic reports conducted, pointing to gross misappropriation of funds by former management. “We have reported the findings of the forensic reports to the regulatory authorities for investigation and have retained counsel with a view on legal action against individuals implicated,” said Garekwe.

The High Court order to place FirstCred under judicial management follows the application of ALCB Fund and Minitos Market Place – both funders of the business in 2017-2019 to wind up FirstCred. FirstCred successfully argued that Judicial management was more appropriate course of action and the high court ruled with costs against ALCB Fund.