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Prior to its closure Karina had attempted to attract investors but failed to court suitors.

THE provisional liquidator is expected to hold the third auction to dispose Karina Textiles this month after the second public sale failed to attract enough bidders, the Financial Gazette’s Companies amp Markets (CampM) can reveal.

The first auction, where only movable assets like desks, computers and vehicles were sold, was held in 2013 before another auction was held in February.

Teri Grimmel, the provisional liquidator, told CampM that the second auction attracted three bids, which were not high enough to be accepted.

Grimmel said another auction would be conducted this month to dispose the knitting yarn manufacturer’s machinery and structures separately as a measure to attract serious bidders.

“The machinery and equipment is now going to be removed from the buildings and auctioned separately, sometime in May, to give us time to ensure that the auction is well publicised,” she said.

The structures and assets under disposal include all the land, buildings and machinery at the factory in Durban Road, Mutare, company vehicles the depot in Msasa and the contents of the Head Office in Harare.

Grimmel was confident that auctioning the buildings and machinery separately would find suitors.

“We believe that this will prove more successful as the machinery can be used in various industries and the buildings can be used for many different things, and they are well constructed, sturdy and were well maintained,” she said.

Karina has been closed since January 2012 and was placed under provisional liquidation on June 13, 2012, with Grimmel being appointed provisional liquidator.

The company’s confirmation of the liquidation order was opposed by the Zimbabwe Textile Workers Union (ZTWU) but the opposition was defeated on November 28, 2013.

Prior to its closure Karina had attempted to attract investors but failed to court suitors.

ZTWU went on to successfully represent workers of the knitting yarn manufacturer and the High Court on February 12, 2014 approved a US$588 888,47 the firm owed its former employees.

Grimmel indicated that the claim would only be settled from funds generated from the auction only after certain creditors had been paid in terms of the law.

“The claim from the workers will be dealt with in the normal way for liquidations. There is an order of payment set in law, which must be followed. The Karina property was mortgaged, so the proceeds from any sale of the land and buildings would first be applied to the mortgage holder,” she said.

Therefore, the funds from the moveable assets will be applied in the manner set out in the Insolvency Act.

Karina will settle its arrears to NSSA, the pension fund and any other contributory funds first before paying employees.

Source : Financial Gazette

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