By Brad Ley
With the KCM saga looming I have noted that most Zambians don’t fully understand what liquidation is and many have misconstrued it for a receivership.
I have seen many get excited with the Liquidation of KCM without fully embracing the scope of what really liquidation is. From what am reading and seeing, it’s vividly clear that many think KCM is under a receivership.
This morning i heard the presidential spokesperson, Amos Chanda, state that they are preparing KCM for a smooth transition from Vedanta to the new, would be, owners.
A receivership is when a business is placed in the hands of creditors and wound up by means of a formal insolvency procedure. This is when a creditor takes control of a business and its assets with the intent of liquidating them. These creditors can then attempt to recover any money which they are due, and they can do this via the sales of a business and any applicable assets of that business.
Liquidation is a method of closing a business and distributing its assets to claimants. It usually arises when a company is insolvent, meaning it cannot pay its obligations when they are due. When the business is closed, the remaining assets are used to pay creditors and shareholders, based on the priority of their claims. Liquidation on the other hand simply means the process of selling the assets.
So to state it in simple terms, by saying that KCM has been liquidated means the Government has decided to strip the assets of KCM and sell them. The money raised will be used to pay off what KCM owes to its creditors and members of staff. After this is done, KCM will be closed. For this who remember, this is exactly what happened to Zambia Airways, Meridian BIAO, The Post Newspaper after they were liquidated. It means the end of the business and immediate job losses.
Am therefore lost as to whether the government has used a wrong term because if its Liquidation, then this is very bad news for the people of Chingola.