Zambian Airways owes K28 bn.

And the National Airports Corporation Limited (NACL) has disputed the appointment of a receiver of Zambian Airways assets and undertakings. The defunct airline also owes its employees K3.4 billion in salary arrears.

This is according to the companys receivership manager Sipho Phiri, in his affidavit in support of summons to stay the default judgement passed in favour of the NACL. The Lusaka High Court passed the default judgement early this year after Zambian Airways failed to defend itself against legal proceedings commenced by NACL.

The case was scheduled to come up on Monday, September 14, 2009 for inter-parte hearing of the stay of execution, which Judge Prisca Nyambe ordered in June this year. However, the case could not take off as Ms Justice Nyambe was committed to other official business and adjourned it to October 1, 2009.

Early this year, Ms Justice Nyambe ruled in favour of NACL, which was claiming over US$2 million from Zambian Airways in unremitted passenger service charges, parking fees, ground, navigation and air handling charges.

In his affidavit in support of summons to stay execution of the default judgement, Mr Phiri said the three banks Zambian Airways owes are Investrust Bank (US$1,484,336.18), Intermarket Bank Zambia Limited (US$1,440,620.93), and Development Bank of Zambia (US$3,014,006.68).

Mr Phiri said the employees are owed a total of K3, 408,356,930.50.

He said after the default judgement, Investrust Bank Zambia Plc appointed a Mr Kieran Day of Kenya as receiver over all assets and undertakings belonging to Zambian Airways. Mr Phiri said this was by reason of a floating charge and debenture to secure the US$1,484,336.18 loan.

The plaintiffs (NACL) have tried to execute the default judgement when they know that the defendant company (Zambian Airways) is in receivership. They have sought to proceed with the matter against a company in receivership without leave of any court, Mr Phiri said.

And Zambian Airways lawyer Ngosa Simachela said since the company is in receivership, as at April 2, 2009, its assets no longer belong to the defunct airline but to the receiver.

Ms Simachela said the sheriffs have since seized Zambian Airways vehicles in execution and reliance on the attachment order, which Ms Justice Nyambe granted to NACL. Before the appointment of the receiver, the assets remained in the ownership of Zambian Airways and were freely disposable without reference to secured creditors. The appointment of the receiver completely assigns the companys property to the creditor Ms Simachela said.

She said allowing NACL to execute the judgement will disadvantage Zambian Airways secured creditors and favour NACL, which is an unsecured creditor.

But NACL company secretary Elita Mwikisa has disputed the appointment of the receiver, saying the appointment came after the Lusaka High Court had granted her organisation the attachment order over Zambian Airways assets. The order restricted the airline from accessing, interfering with or disposing of any asset included in the order.

Ms Mwikisa said in her affidavit in opposition to inter-parte summons for stay of execution that by the time Ms Simachela was filing her affidavit, she did not have instructions from both Zambian Airways management and the alleged receiver.

Evidence of appointment of the alleged receiver for Zambian Airways could not be produced before this court as the lawyer who purported to act for the receiver had not filed and indeed did not have in her possession relevant documents relating to the alleged appointment of the receiver, Ms Mwikisa said.

She said documents attached to Ms Simachelas affidavit did not prove that the named person (Mr Day) was appointed as receiver. The particular goods and chattels of the defendant (Zambian Airways)were not and are not affected by any subsequent crystallisation of any floating charge in respect of which a receiver was appointed she said.

Ms Mwikisa said bailiffs who partially executed the default judgement, by seizing motor vehicles belonging to Zambian Airways, perfected the order of attachment.

Zambia Daily Mail