Bona Life goes solo after CMB
Mpho Mokwape | Friday November 9, 2018 12:47
Bona Life, as the sole creditor of CMB Fund 1, has filed an urgent application seeking for the provisional winding up of CMB Fund 1 as the insurance company tries to protect its assets from going under liquidation through asset manager CMB.
CMB, which is already under liquidation is the asset manager for Bona Life and parent host for CMB Fund 1 while Bona Life is a creditor of CMB Fund 1 in a liquidated amount of at least P133,500,000 and reckons that should CMB Fund 1 go under winding up under CMB, it would lose its assets.
In that regard, Bona Life is petitioning the court through its chairperson and director, Martin Dingake with an application for the provisional winding up of CMB Fund 1 on the grounds that it was unable to pay its debt.According to court documents, the insurance company seeks an order to place CMB Fund 1 under an urgent provisional winding up order.
“Bona Life seeks to protect the interests of the pensioners and beneficiaries of life insurance policies, whose money was paid into the bank account of CMB Fund 1,” the documents read.
Bona Life argues that should CMB Fund 1 not be placed, on an urgent basis, into the hands of a liquidator, the harm and prejudice that will inevitably follow will be irreversible.
BonaLife explained that the reports of the statutory manager appointed to CMB, Peter Collins, have reflected unequivocally that CMB and CMB Fund 1 have been utilised as the personal fiefdom of certain people.
“No doubt, unless a halt is brought to their conduct on an urgent basis, there will be nothing left for the pensioners and the said beneficiaries,” protests Bona Life.
Bona Life’s argument according its court papers, is that CMB Fund 1 is indebted to them in the sum of P133,500,000 or alternatively P66,000,000, which amount was now due, owing and payable to them, which fund has failed to pay.
Further the insurance company has explained that CMB Fund 1 was unable to pay this debt, meaning it was factually and commercially insolvent, as envisaged in Section 368 (c) of the Companies Act.
“In this regard, CMB and CMB Fund 1 are in breach of the material terms of their appointment insofar as they were required to prepare monthly reports on returns and other ancillary issues and account to Bona Life, which they failed to do.”
“Bona Life has no security for its claim and has been unable to locate any funds or assets to cover the debt due to it,” states Bona Life.
Lastly, Bona Life also says CMB Fund 1 has failed to comply with the material provisions of the Notes, more particularly that it has failed to acquire all of the assets with the proceeds paid to it by them.
Meanwhile, against the backdrop of the sour relationship between Bona Life, CMB and CMB Fund 1 according to court documents, CMB is Bona Life’s asset manager and CMB Fund 1 was a fund designed to protect the assets that are acquired on behalf of Bona Life.
It was designed as a special purpose vehicle, which in the event that either CMB or CMB Fund 1 were liquidated, the ownership of the assets would remain with Bona Life.
Accordingly, the contractual agreement between the parties mostly done and concluded in the months of 2017 was that CMB as the parent host of CMB Fund 1 would acquire assets on behalf of Bona Life as its asset manager, of which the assets would be housed and registered in the name of the special purpose vehicle CMB Fund 1 to be registered and utilised for the sole benefit of Bona Life.
The assets were to be acquired with the proceeds of promissory notes to be issued in favour of Bona Life (“the Notes”). The Notes would provide security in favour of Bona Life for the acquired assets.
The case that was before Justice Chris Gabanagae last Friday, was postponed to November 23, 2018 for arguments.
CMB Fund 1 will file their answering papers on November 12, Bona Life their replying affidavit on November 19 while their heads of argument will be on November 21.