Inside the complex web that ran KFC
Brian Benza | Friday September 2, 2016 18:00
Following an urgent petition by First National Bank of Botswana (FNBB) over a P41 million debt, KFC Botswana was placed under provisional liquidation on June 2, 2016 with the provisional liquidator, Nigel Dixon-Warren later determining the franchise’s total creditors at P106 million.
Lead petitioner, FNBB was this week successful in its bid to have all the four companies liquidated including one that the bank claimed was used as a conduit to divert funds from the franchise.
According to court papers, the KFC franchise was held by VPB Propco, which is cited as the first respondent. The second respondent was QSR Foods, which held leases and owned assets at the Kasane, Molepolole and Game City, Gaborone franchise stores. Leases and assets of the rest of the stores in the country were held under a company called Boitumelo Dijo, which was cited as the third respondent. The fourth respondent was Greenax Limited, a company that did not hold any leases or assets but only operated as the receiver of revenues from the 12 stores.
In respect of the trading licences for the stores, three were held by QSR Foods and the balance by Boitumelo Dijo. However, the business names for each of the stores were registered only in the name of Boitumelo Dijo notwithstanding that the lease for the applicable stores was in the name of QSR Foods.
According to court papers, the bank accounts held by the various stores demonstrated that monies generated from all the stores were deposited into various bank accounts held by each of the four companies.
QSR Foods had two bank accounts with FNBB and Stanbic Bank while Boitumelo Dijo had six bank accounts with FNBB, seven accounts with Barclays Bank Botswana and one with Stanbic Bank Botswana. On the other hand, Greenax, which FNBB alleges was simply a conduit to divert revenues from the businesses of the 12 stores, had three bank accounts with Stanbic Bank.
FNBB, through CEO Steven Bogatsu had petitioned for the final liquidation of the franchise and the three related companies, which the VPB, through its proprietor, Anthony Siwawa, was contesting.
Apart from disputing the insolvency of the franchise, VPB Propco was also contesting the inclusion of Greenax in the petition arguing that the company, although connected to the KFC business, was not a creditor to FNBB.
According to the loan agreement, FNBB advanced the loan to VPB Propco while QSR Foods and Boitumelo Dijo generated the income and provided surety for the loan.
However, Justice Leburu ruled that by receiving funds generated by the restaurants, the connection provides the necessary nexus between FNBB and Greenax. “By receiving the fund generated by the stores, the Greenax placed itself within the tentacles of the creditors.
“The manner in which the four companies operated the business, in my judgment, confused the creditors and further led to a clouding of respective corporate identities, with many creditors treating the business as an entity known as KFC Botswana. It (is) therefore just and equitable to treat all four companies as one,” he ruled.