UNITED HEALTH INSURANCE APPLIES FOR LIQUIDATION

MBABANE - United Health Insurance Limited has applied to be placed under liquidation.

Liquidation is a process in which a company is brought to an end. Also, the assets and property of the company are redistributed to the creditors and owners. Liquidation is also referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation.
According to a letter annexed to the application for liquidation, the Medical Health book of the health insurance company had been transferred to Lidwala Insurance Limited. Per an audit that was done by FIPS on March 10, 2023, the net shareholders value of the company amounted to E702 330. The auditors found that the total assets of the company exceeded its total liabilities by the figure mentioned above.

Winding

In its application, the company submitted that the relief for winding up and liquidation was primarily based on the following circumstances;  that it  was no longer able to service its claim liabilities (losses) that were necessitated by COVID-19 infections and its  sustainability and validity was not guaranteed given the defined asset cover ratio to be maintained at all times. The applicant’s (United Health Insurance Limited) Chief Operations Officer, Mzingaye Ndlovu, further brought it to the attention of the court that the company had ceased operations as a business since December 31, 2022.  He averred that the applicant had taken a resolution to voluntarily wind up. Ndlovu averred that he had been advised and believed to be true that, when a company was unable to pay its debts, it was justifiable and equitable to have it would up.

“The applicant has liabilities in excess of the sum of E7 million and in view of the fact that the applicant is no longer trading, winding up the applicant was justifiable,” submitted Ndlovu.  He argued that it was, therefore, just and equitable that the applicant be wound up as contemplated in Section 287 (e) of the Companies Act. He submitted that he had been advised that a company could voluntarily wound up, where it had taken a special resolution to be liquidated and such resolution registered with the registrar of companies. It was further his submission that he had been advised and took it to be true that, a company may be wound up by the court upon application by it or its creditors. Ndlovu highlighted that pursuant to a meeting of the applicant’s directors and after careful consideration of the insurmountable financial distress, the applicant found itself in, it had no hope of resuscitating its business.

Resolution

“Consequently, the directors by a special resolution  during the company’s general meeting held on March 4, 2022, resolved to voluntarily wind up the applicant,” alleged the deponent.  He submitted that the resolution had been lodged with the registrar of companies in terms of Section 177 of the Companies Act. Ndlovu alleged that pursuant to the resolution being registered, the matter of the High Court also issued a certificate for security for costs. “The applicant does not have any assets of its own, as it merely operated a subsidiary company. The applicant has a cumulative loss balance of E7 985 874,” argued Ndlovu.

He went on to tell the court that it was the applicant’s belief that upon being granted the order for voluntarily liquidation, this would result in the liquidator being able to properly investigate the affairs, assets and liabilities of the applicant, with a view to prudently assessing its assets, its financial standing and the possibility of providing some relief to creditors in their order of legal preference. The granting of the order, according to the deponent, would also result in the liquidator being able to collect any debts known or unknown as yet, which were payable to the applicant. The applicant is also praying for an order that Mluleki Ndlangamandla should be appointed the liquidator of the company. The application for liquidation is still pending in court. The applicant is represented by lawyers from S.V Mdladla & Associates.

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