Trymore Tagwirei

The High Court has dismissed an application seeking to place mining company RioZim Limited under corporate rescue after ruling that the applicants lacked the legal standing required under the Insolvency Act.

In a judgment delivered by Justice Gibson Mandaza, the court found that the Zimbabwe Diamond and Allied Minerals Workers Union did not qualify as an “affected person” because it does not specifically represent RioZim employees.

The application was brought by the trade union together with two current and former RioZim employees, who argued that the company was financially distressed and required corporate rescue to protect jobs, stabilise operations and preserve shareholder value.

They claimed RioZim’s liabilities exceeded its assets, that its financial performance had deteriorated, and that adverse audit opinions pointed to severe financial distress.

RioZim opposed the application, disputing claims of financial distress and raising preliminary objections, including that the applicants lacked locus standi. The company also maintained that its board had validly authorised opposition to the proceedings.

Justice Mandaza dismissed arguments that RioZim was improperly before the court or barred from defending itself, ruling that the Insolvency Act does not prevent a company from opposing a corporate rescue application and that the board resolution was valid.

However, the court ruled that the union did not meet the legal threshold to initiate the proceedings.

“The trade union represents mining sector employees generally and not employees of RioZim specifically,” Justice Mandaza ruled, describing the union as a busybody with no direct and substantial legal interest in the matter.

The court held that the two individual applicants similarly lacked standing after associating themselves with the union’s application.

As a result, the court did not consider whether RioZim was financially distressed or whether corporate rescue would have been appropriate.

The application was dismissed, with each party ordered to bear its own costs after the court found that the matter raised important legal questions and was not frivolous or vexatious.