Tetrad Holdings loses property battle

EFFORTS by embattled Tetrad Holdings to stop the sale of 10 immovable properties that were surrendered by the financial services group’s backers as collateral for a US$5 million loan from the National Social Security Authority (NSSA) hit a brick wall after the High Court recently ruled that the transfer of ownership to the buyers should proceed.
Tetrad Holdings filed an urgent court application seeking to stop NSSA, through the Court Sheriff, from transferring ownership of properties its directors offered the compulsory pensions firm as collateral for a loan that the group failed to repay.
Tetrad alleged that the properties were sold at prices far below market value.
In its application, Tetrad Holdings sought to stop ownership transfer to the different buyers and to reverse the attachment and the subsequent sale of the assets.
In its appeal, Tetrad Holdings tried to distance itself from its subsidiary, Tetrad Investment Bank (TIB), and argued that court rulings against the bank, should not be confused for rulings against the holding company. NSSA, however, insisted it had advanced the loan to Tetrad Holdings, not its subsidiary, and therefore it could not be stopped from selling the properties.
High Court judge, justice Chinembiri Bhunu, who heard the urgent application by Tetrad Holding to stop the assets transfer, was displeased by the financial services group’s arguments, and equated the behaviour of the firm to mischievous village yokels.
“The applicant’s (Tetrad Holdings) strategy in this respect reminds me of two village pranks in our area who used to start a fight between themselves whenever food and drink were running low (only) to regroup, sit down and enjoy the left-overs after everyone else had fled in panic,” Justice Bhunu observed as he dismissed the urgent application.
Tetrad filed its urgent application a good three weeks after the properties had been sold in the presence of it officials, blaming the long delay on its former lawyer, Gerald Mlotshwa, whom it accused of incompetence.
Tetrad claimed Mlotshwa continued to cling to the case despite being asked to renounce agency.
The properties that were sold in March this year belonged to Sizy Security (Private) Limited, Anne Butler Property Company, VG Seven Investments, VG Eight Investments, VG Nine Investments, VG Ten Investments, VG Eleven Investments, VG Twelve Investments, VG Fourteen Investments and VG Fifteen Investments.
Last year, High Court judge, justice Happias Zhou, gave NSSA the green light to attach Tetrad’s assets to recover nearly US$5 million it was owed by the financial services group.
The judge ordered that properties belonging to the 10 companies that had given surety mortgage bonds to NSSA in respect of their immovable properties in Harare be attached and sold.
NSSA had sued defaulting Tetrad along with 10 other companies that acted as guarantors for the loans advanced to the troubled financial concern.
Creditors are hotly pursuing both Tetrad Holdings and its subsidiary, TIB. The Deposit Protection Corporation (DPC) was in July this year appointed the provisional judicial manager of the banking arm.
In turn, the DPC appointed Ngoni Kudenga of BDO Zimbabwe Chartered Accountants as its provisional judicial management agent.
Meanwhile, official reports showed this week that as at August 30, 2015, TIB was reeling under a negative US$42,99 million liquidity gap, although this was a slight improvement from US$50 million in June.
Judicial managers said TIB required about US$51 million in fresh capital, which is in doubt after several institutions that had expressed interest in taking over the firm ripped apart by poor governance, developed cold feet.
At a recent creditors’ meeting, creditors were asked to approve a scheme to convert their debts into equity or lose their investments.
TIB’s judiciary manager, the DPB said as at June 30, 2015, pressure had been piled on TIB by 76 creditors who were seeking to recover US$14 million that was trapped in the bank.
The DPB described TIB as having a “high composite legal risk” and “weak legal risk management systems”.
The report said as at June 30, 2015, land and buildings and investment properties constituted 74 percent of TIB’s balance sheet.
This number had moved to 81 percent as at August 31, 2015, according to the DPB statistics.
“Most of the buildings were ceded as security to depositors who had placed funds with the bank. We also report that NSSA had disposed of certain assets it held as security at less than market values, however, the bank applied for a court interdict on the transfer of ownership of the properties citing the low auction values,” DPB said.
TIB is at the cross roads, with 99,6 percent of its book reportedly non-performing as at August 31, 2015. — Cyril Zenda Additional reporting by Staff Reporter
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