‘DUBAI’ DEALER OWING SRA TO LIQUIDATE

MBABANE -   The company which complained of stiff competition in the second hand dealership space has finally been placed under provisional liquidation by the High Court.

Provisional liquidation is a process which exists as part of the corporate insolvency laws of a number of common law jurisdictions, whereby after the lodging of a petition for the winding-up of a company by the court, but before the court hears and determines the petition, the court may appoint a liquidator on a ‘provisional’ basis.

The order comes after PUNJAB Investments (PTY) Limited which deals in the sale of import cars, known as ‘Dubais’ moved an application for provisional liquidation.

Judge John Magagula, who heard the application, directed that the company be wound up in the hands of the Master of the High Court and that all interested parties to show cause why the order should not be made final. The court further directed that lawyer Ian DuPont should be appointed the liquidator. The court further directed that the order should be published in one of the country’s publications and government gazettes.

Some of the reasons forwarded by PUNJAB Investments (PTY) Limited are serious cash flow problems and stiff competition in the industry. The company, which is based in Matsapha, has been operational since 2009. “The prudent move to liquidate the company is also rounded upon statutory compliance requirements. That is to avoid issues of incurring further credit under the circumstances when the trading environment is unregulated to protect small companies like ours from the fierce competition posed by large dealerships who have a foot in the whole of Africa, Asia and parts of Europe,” submitted the company.

The competition, according to the company, manifested itself in this situation; motor vehicles were sourced at a particular price and shipped into the country; other dealerships likewise, reportedly reduced the selling price, which made it impossible to even return the cars back to suppliers. The company claimed that it was difficult to return the motor vehicles back because of the freight costs, insurance, re-import restrictions back to the country of origin. “It is a logical nightmare. The motor vehicles deteriorate and as of necessity the value must be reduced. That is how the loss came about,” contended the company.

Debts

In its application, the company submitted that on or during the year 2018, it ran into serious cash problems, which were mainly attributable to stiff competition in the second hand car dealership space. “As a result of this unfortunate situation, the company fell into serious debts with its suppliers who now form part of the major creditors. The amount due to the various creditors, suppliers local and abroad is in excess of E4 million,” submitted the petitioner (company).

It was further the petitioner’s contention that with a debt owing for pervious stock supply, no other supplier was willing to sell second hand motor vehicles to it, in fear that payment might not be made. The company submitted that all efforts had been made to try clear the debts due to suppliers, when it received a letter on or about March 2019 for additional assessment of Income Tax and VAT.

According to the petitioner, it wrote back to Eswatini Revenue Authority (SRA) to lodge an objection.  The objection was allegedly based on the fact that the company was unable to independently appreciate the basis upon which the additional assessment had been computed. It was further the company’s averments that SRA has issued a statement in respect of additional assessment to the tune of E3 094 3005.57.  “Your petitioner is also handicapped in terms of trading since it cannot clear imported stock from Japan, following non- renewal of clearing licence hence a huge blow in the company’s trading and turnover,” reads part of the application filed by the company.

According to the company, its means to survive had proven to be so difficult because of the main creditors. 

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