Press ordered to pay K7 billion over PTC deal

The High Court Commercial Division in Blantyre yesterday ordered conglomerate Press Corporation plc (PCL) to pay K7.07 billion over debts left by its subsidiary, People’s Trading Centre (PTC), which is under liquidation.

The court also ordered the country’s largest holding company to pay 70 percent of the litigation costs.

Once vibrant PTC headquarters at Chichiri in Blantyre. | Nation

The ruling follows an application by the provisional liquidator, the Registrar General, seeking contribution from PCL towards PTC’s outstanding liabilities to nearly 300 creditors.

The case dates back to October 2022 when the High Court issued a winding-up order for the struggling retail chain.

High Court Commercial Division Judge Masauko Msungama ordered PTC’s liquidation and complete closure without an option of takeover by another investor because of the company’s debt situation.

The order followed dismissal of an application for reorganisation filed by Tafika Holdings Limited, which had acquired a 100 percent stake in PTC from PCL in March 2022. Tafika is a South Africa-based trading and investment company owned by a Malawian entrepreneur.

Delivering his ruling, Msungama held that PCL’s prolonged involvement in PTC’s affairs justified financial responsibility for creditors’ losses.

The court ordered PCL to remit K7 071 493 241 after taking into account amounts recovered through the liquidation and liabilities attributable to PTC.

“The court determines that PCL’s decision to allow its subsidiary to continue operations and accumulate liabilities over the span of nearly seven years, despite its apparent inability to meet creditor obligations, significantly contributed to the circumstances surrounding PTC’s liquidation.

“The court finds PCL directly culpable for PTC’s resultant insolvency for permitting and encouraging its subsidiary to operate while insolvent,” said the judge.

Msungama concluded that it was just and equitable for PCL to pay the sums because the criteria under the relevant law had been satisfied, warranting an order under Section 137(1) of the Insolvency Act.

The court said evidence showed that, as of the transfer date, liabilities to be assumed by Tafika, following PCL’s settlement of more than K12 billion to other creditors, amounted to K5 999 999 081.

“Consequently, PCL is hereby ordered to pay the applicant the aforementioned sum,” said Msungama.

He added that PTC employed more than 500 people at the time of transfer and liquidation, making them creditors whose terminal dues amounted to K1 545 273 957.

“Accordingly, PCL is further ordered to remit this amount to the applicant,” he ordered.

In an interview, private practice lawyer Bruno Matumbi, who represented the liquidator, said the Registrar General was happy with the decision that employees and other creditors must be paid.

PCL lawyer Modecai Msisha, SC, was unavailable for comment.

PTC’s difficulties had persisted for years, with the retail chain shrinking from more than 135 outlets nationwide to about 20 stores by 2022.

Registered in 1973, PTC was Malawi’s first retail chain store, but poor performance and insufficient capital increasingly undermined its operations.

PCL is a public company incorporated under the Companies Act 1984 and listed on the Malawi Stock Exchange. It has interests in financial services, telecommunications, energy, property investments, hospitality and tourism.

The diversified group has stakes in about 15 companies, comprising eight subsidiaries, four joint ventures and one associate.

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