Morogoro Mills Seek to Avert Receivership

Mr Abood
The  Member of Parliament (MP) for Morogoro Urban (CCM), Aziz Mohamed Abood, has taken the CRDB Bank and a receiver manager to court in a bid to avert confiscation of Morogoro Canvas Mills (1998) Limited assets to recover 15.4bn/- loan facility.

Mr Abood, who is the Chairman of Board of Directors of the company, which runs a factory in Morogoro region, filed the suit at the High Court's Commercial Division under legal services of Kesaria and Company, Advocates.

The suit came for mention before Judge Kassim Nyangarika on October 16, 2012 and has been set for hearing on November 8, 2012, of an application for extension of time for the defendants to file their written statements of defence in the matter. 

Already, the court has granted an interim injunction, restraining the bank and the receiver manager, Leonard Clement Mususa, from taking receivership action against Morogoro Canvas Mills (MCM) or taking possession or entry into the premises of the factory.

It is alleged that in March 2006, the MCM applied and was granted a loan to finance acquisition of new machinery for expansion, upgrading and modernization of technology of the plant and its machinery. 

The said facility was secured under an agreement of the debt over fixed and floating assets of the MCM. It was payable within a period of ten years until 2016.

After receiving the loan, the MCM sourced equipments and machineries from manufacturers. 

"However, the process to secure the equipments and machineries faced some challenges, including problems in sourcing, placing orders, delay in shipment at Dar es Salaam Port for five months caused by congestion and power disconnection at the plant for three months," reads part of the plaint.

As a result, the plaint states, there were further delays to install machineries, testing and commissioning of the same. Such problems were allegedly well notified to the CRDB Bank. Furthermore, between 2009 and 2011 there was a global economic crisis which affected the industries and the MCM was not spared.

Between September 2010 and May 2011, there were several meetings by the parties, Ministry of Finance and Bank of Tanzania to discuss the issue. But to the surprise of the MCM, the CRDB allegedly gave a demand note for payment of the loan in full within 30 days. 

It is alleged that the Prime Minister was asked to intervene on the matter, who in turn directed the ministries of Finance and Empowerment to jointly plan how to rescue the MCM.

Thereafter, the MCM requested the government through the Tanzania Investment Bank (TIB) to take over the debt. 

On April 11, 2012, the Ministry of Finance wrote to the CRDB bank, advising suspension of its intention to employ recovery measures, but on July 19, 2012, the bank served the MCM with a notice for appointment of a receiver manager. The MCM had no option than filing the suit in question.
Source: The Daily News,http://dailynews.co.tz, reported by Faustine Kapama in Dar es Salaam
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