High Court unlocks govt's funding freeze on BCL
Mbongeni Mguni | Friday April 12, 2019 18:00
Dixon-Warren and government, which is BCL’s single biggest creditor and former sole shareholder, have been engaged in an increasingly bitter dispute over the path out of liquidation and high costs of the process.
Government, particularly the minerals minister, has come under intense pressure in Parliament for pumping P1.1 billion into BCL’s liquidation, with legislators accusing Dixon-Warren of dragging out the process in order to make a killing out of the liquidation. Dixon-Warren has said the costs were associated with continuing care and maintenance activities, as well as various studies and developments required to maintain and present a saleable asset to potential investors.
On Wednesday, Justice Rahim Khan ruled in favour of Dixon-Warren’s application to kickstart a process under which all creditors who have proven claims against BCL will be required to contribute to the liquidation process. Although the application was ex-parte, meaning one in which the other party is not notified in advance because of extreme urgency, the liquidator’s lawyers said they had served the Attorney General by hand on Wednesday morning.
The government’s claims against BCL account for 94% of the total P1.35 billion proven claims the mothballed mine is facing from creditors. While proven creditors may be required to contribute to the costs of liquidation under the Companies Act, this is done after the second creditors’ meeting when all claims and liabilities have been finalised. Dixon-Warren successfully convinced the court to grant him immediate relief, saying the funds in hand would only last until May 31 at which point he would be forced to let nature take its course at BCL.
“I cannot continue with care and maintenance as I do not have the funds,” the liquidator wrote in his founding affidavit. “I will soon be forced to undertake a hard shutdown of the mine. “This would mean switching the pumps that are constantly de-watering the mine and allowing the mine to inundate with water. “Within a short period of time, all of the underground equipment will be irrevocably damaged. “The mineral resources will be sterilised. There will be no provision to prevent further pollution of the surround environment. This would be catastrophic.”
Khan also granted Dixon-Warren his application to insulate himself from any personal liability should the funding crisis cause BCL to run afoul of any statutes, such as continuing rehabilitation obligations to the Mines and Minerals Act.
Representing the liquidator, senior counsel Steve Vivian told the court that his client was in an “impossible situation”. “The liquidator does not want to run contrary to the law in terms of the Mines and Minerals Act and he has tried everything, but is only getting silence (from government),” he said. Relations between Dixon-Warren and minerals minister, Eric Molale reached rock bottom last December when the latter moved to remove the liquidator.
The matter has not been resolved however. Dixon-Warren, meanwhile, recently applied to hand the mining assets back to government, a process that has also ground to a halt with no clear resolution in sight. In his affidavit, the liquidator told the court he had also served notice to cancel BCL’s mining licence.