Metro Peech & Browne Wholesales (Private) Limited, one of Zimbabwe’s largest wholesalers, is facing insolvency and a negative net asset value of US$8,878,493. The company’s 497 employees are at risk of losing their jobs. A Corporate Rescue First Report by Oliver Mtasa of Crowe Advisory (Private) Limited revealed the causes of the company’s financial distress after a creditors meeting on September 20, 2023.
The report showed that the company’s assets of US$12.8 m were surpassed by its liabilities of US$21.7 m, which included US$9.8 m to suppliers, US$5.4 m to banks, US$5 m to inter-company and other creditors, and US$229,000 in salary arrears. The company suffered from poor governance, financial discipline, and debt servicing; high overhead costs, stock shortages, and informal sector competition; rapid expansion without adequate capital; and currency fluctuations.
The company was paying its staff 50% below the National Employment Council rates and was behind on rent payments. It also faced skills flight due to salary cuts. The company had 497 staff members, consisting of 392 NEC staff and 105 managerial staff. The conversion of bank loans from Zimbabwean dollars to US dollars increased the debt and interest payments. The company negotiated for lower interest rates with financial institutions. The company had insufficient stock levels for the market demand and lost customers due to exchange rate disparities.