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Distressed Businesses in Zimbabwe

A financially distressed business in Zimbabwe refers to a business or company which appears to be reasonably unlikely to be able to pay all of its debts as they become due and payable within the immediate ensuring six months or the business is likely soon do become insolvent. The solution is to reorganise and restructure.

The High Court in Zimbabwe Diamond and Allied Minerals Mines Workers Union & Others v Zimbabwe German Graphite Mines (Pvt) Ltd & Others 2021 (1) ZLR 138 (H) 141 held that ‘financial distress is the inability to pay obligations as they fall due, with a possibility that a company will not be able to pay its obligations within the next six months.’

The Supreme Court in Metallon Gold Zimbabwe (Pvt) Ltd v Shatirwa Investments (Pvt) Ltd & Others 2021 (2) ZLR 193 (S) 199 held that restructuring of companies in financial distress is on the increase. Financially distressed business in Zimbabwe now has an opportunity to reorganize and restructure. This has far-reaching effects on creditors, financial institutions, shareholders, employees and society at large.