EIPA URGES COURT TO INTERVENE IN FACTORY SHELL DISPUTE

MBABANE – EIPA has approached the High Court of Eswatini to secure access to a property previously leased by Davinscot Clothing, citing financial losses and risks to valuable machinery. The matter, which is at the centre of a legal tussle involving five respondents, arose after Davinscot Clothing, the first respondent, vacated the premises and initiated provisional liquidation under the Companies Act No. 8 of 2009. In the application for liquidation, filed in the High Court in November last year, the Director of the company, Roy Mann, told the court that in the recent past, the company has experienced a serious downturn in its business.  Liquidation means that the business is not able to pay its debts. When a company goes into liquidation, its assets are sold to repay creditors and the business closes down.Despite a court order preventing the removal of assets, the second respondent, Derrick Ndo Jele, who was appointed as provisional liquidator, allegedly refused to surrender the keys to the property.

Machinery

According to the Eswatini Investment Promotion Authority (EIPA), their inability to access the premises has led to mounting concerns. The authority, tasked with promoting trade and investment in Eswatini, claims the delay is costing them revenue and derailing efforts to lease the premises to new tenants eager to occupy the space. The property is reportedly central to EIPA’s mission of driving economic growth by attracting investment and creating business opportunities. In a sworn affidavit by Samkelo Dlamini, an attorney for EIPA, the authority stated that it is owed a staggering E749 463 in unpaid rent by Davinscot Clothing. Furthermore, EIPA has expressed fears of sabotage, suggesting that the first and second respondents may collaborate to unlawfully access the premises and remove assets in violation of the court order.

Machinery

\“The machinery inside the premises has not been in use since October 2024, when the liquidation application was filed,” Dlamini explained. “There is a serious risk that the machinery may sustain damage from prolonged disuse, which would further prejudice EIPA’s ability to recover its outstanding rent through the value of the assets.”
The application also highlights concerns over the potential disposal or hiding of assets if the matter is delayed. EIPA has, therefore, requested the court to authorise the deputy sheriff to forcibly enter the property and take inventory of the movables. The urgency of the matter stems from the risk of significant financial and operational losses for EIPA, including damage to the machinery and lost revenue from prospective tenant. “Each day without access to the premises adds to the authority’s financial burden,” the affidavit emphasised. The matter, now under judicial consideration, underscores the challenges facing Eswatini’s investment landscape when disputes between landlords and tenants arise.
The High Court’s ruling is eagerly awaited as the matter will continue on January 28, 2025.

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