Understanding Corporate Rescue Proceedings in Zimbabwe

Discover the intricacies of corporate rescue under Zimbabwe's Insolvency Act, its initiation, duration, and the role of Corporate Rescue Practitioners. Learn about recourse against negligent practitioners and the transition from judicial management to corporate rescue.


The Insolvency Act (Chapter 6:07), which was promulgated on 25 June 2018, has brought about the inaugural aspect of Corporate Rescue in Zimbabwe, which is a diversion from the commonly known process of judicial management, under which companies in distress were placed. This article seeks to provide an understanding the of concept of corporate rescue, the preparation and adoption of the corporate rescue plan, recourse to creditors against errant Corporate Rescue Practitioners, and the differences between corporate rescue and judicial management.


Section 121 of the Insolvency Act defines corporate rescue as proceedings the facilitation of the rehabilitation of a company that is financially distressed. The proceedings provide this through the temporary supervision of the company and of the management of its affairs, business and property by a qualified and registered Corporate Rescue Practitioner. A company under corporate rescue is entitled to a temporary moratorium on litigation on the rights of claimants against the company or in respect of property in its possession. This means that no litigation can be instituted or continued for any debts or liabilities of the company by any creditors. Finally, during the corporate rescue proceedings, there is the development and implementation, of a plan to rescue the company by restructuring its affairs, business, property, debt and other liabilities, and equity in a manner that maximises the likelihood of the company continuing in existence on a solvent basis. This plan must be approved by the creditors. Were it is not possible for the company to continue in existence, the plan paves way for a better return for the company’s creditors or shareholders than would result from the immediate liquidation of the company.

It is clear from this section that corporate rescue proceedings are not permanent: they are simply a measure for the temporary supervision of a financially distressed company in order to revive it and restore it to viability. It is for this reason that section 125(3) provides that corporate rescue proceedings must be concluded within three months. If a longer period is required, the Corporate Rescue Practitioner must apply to the High Court for this.


According to section 125 of the Insolvency Act, corporate rescue proceedings may commence in one of 4 ways. Firstly, corporate rescue may be initiated by the company by filing a board resolution to place itself under supervision. Next, the company may apply to the High Court for consent to file a resolution placing the company under supervision. The section also empowers an affected person to apply to the High Court placing the company under supervision. The final route is that the High Court may make an order placing a company under supervision during the course of liquidation proceedings, or proceedings to enforce a security interest.

There is a school of thought which believes that corporate rescue proceedings end when the 90-day period within which the process must be completed has lapsed. This perspective is garnered from section 125(3) of the Act, which alludes to a period of three months within which corporate rescue proceedings ought to be concluded.

However, the second school of thought is to the effect that corporate rescue proceedings end under five distinctly defined circumstances derived from Section 125(2), namely, when the High Court sets aside the resolution or court order that began the proceedings; or when the High Court converts the rescue proceedings to liquidation; or when the Corporate Rescue Practitioner files a notice of termination of rescue proceedings; orwhen a corporate rescue plan has been adopted and the Corporate Rescue Practitioner has filed a notice of substantial implementation of the plan; or when a corporate rescue plan has been proposed and rejected and there has been no extension of the proceedings.

Section 125(3) states that if corporate rescue proceedings have not ended in three months since their commencement, or such longer time as permitted by the High Court, the Corporate Rescue Practitioner has an obligation to prepare a progress report of the proceedings, which must be updated monthly until the end of the proceedings. The Corporate Rescue Practitioner must deliver this report and each monthly update to the affected persons, the High Court and the Master.


Section 142 stipulates that a Corporate Rescue Practitioner, must prepare a corporate rescue plan for consideration and possible adoption, having consulted relevant stakeholders of the embattled entity, including creditors, other affected persons, and the management.

Such a plan must contain all the information necessary for the stakeholders to decide whether or not to accept or reject the plan. It must include an inventory of the material assets of the company, identification of the assets held as security by creditors when the corporate rescue proceedings began; a comprehensive list of creditors and their qualification; an estimated dividend which will be received by creditors; a list of the of the company’s shareholders; the Corporate Rescue Practitioner’s remuneration; and a statement whether the corporate rescue plan includes a proposal made informally by a creditor of the company.

The plan must also include the nature and duration of any moratorium of litigation for which the corporate rescue plan makes provision; the extent to which the company is to be released from the payment of its debts, and the extent to which any debt is proposed to be converted to equity in that company, or another company; the treatment of any existing agreements; the property of the company that is available to pay creditors’ claims; the order of preference in which creditors will be paid if the corporate rescue plan is adopted; a projected balance sheet for the company; and a statement of income and expenses for the ensuing three years prepared on the assumption that the proposed corporate plan is adopted.

This corporate rescue plan must be published within 45 business days after the date on which the Corporate Rescue Practitioner was appointed, or such longer time as may be allowed by the High Court, on application by the company or the holders of a majority of the creditors’ voting interests.

Section 143(1) of the Act states that the Corporate Rescue Practitioner must convene and preside over a meeting of creditors and any other holders of a voting interest, called for the purpose of considering the plan within 10 business days after publishing this plan in terms of section 142.

Failure to prepare a plan and convene a meeting as indicated above therefore cripples the corporate rescue proceedings altogether and constitutes incompetence and failure to conduct his duties by the Corporate Rescue Practitioner.


When appointed, a Corporate Rescue Practitioner has full management control of the company in substitution of its board and management team, which are dissolved upon commencement of the corporate rescue process. The Practitioner has other powers and duties set out in the Act.

Where a Corporate Rescue Practitioner has not fulfilled his role, an interested party has the option to approach the High Court with an application for the removal of the Corporate Rescue Practitioner in terms of section 132(2) of the Insolvency Act read with section 132(1)(b). The High Court may also remove the Corporate Rescue Practitioners on its own motion.

Where the High Court removes a corporate rescue practitioner from office, it considers a number of factors as grounds for removal. The first is incompetence or failure to perform duties as a Corporate Rescue Practitioner. Next, is failure to exercise the proper degree of care in the performance of the Corporate Rescue Practitioner’s functions, including failure to publish the corporate rescue plan within 45 business days after the date he was appointed. Another ground is failure to consult with creditors, other affected persons, and the management of the entity under corporate rescue and failure to prepare a corporate rescue plan for consideration and adoption. Finally, engaging in illegal acts or conduct; conflict of interest or lack of independence; incapacitation to the extent of being unable to perform the functions of that office also constitute grounds for removal from office.

The Court will grant the removal of a Corporate Rescue Practitioner upon being satisfied that one or more of these grounds exist, thus making it undesirable that he should continue in office.


Corporate rescue brought to an end the era of judicial management, and rightly so. There are many differences and benefits between the two processes, the first being that corporate rescue must be concluded at least within 90 days, or a longer period approved by the High Court. Next, the preparation, approval and adoption of the corporate rescue plan is new, and comes with certainty of how the distressed company will be operated going forward. Finally, errant Corporate Rescue Practitioners can in fact be removed from office.


Whilst corporate rescue as a method of aiding distressed companies is a welcome development in our law, it is one which needs to be understood by all relevant stakeholders in the embattled organization, in order to realise its efficacy, success and fruits. In practice, this has not been the case, as a number of those appointed as Corporate Rescue Practitioners still need to learn and adapt to the concept, which can only be effectively done when they hang their judicial management boots.


  • Julian Mugova

    Julian is one of the Partners at Titan Law, and is the Head of the Litigation; Private Law; and Alternative Dispute Resolution Practice Group. She is also the Managing Partner of the firm’s Bulawayo Office. Her expertise is in Civil Litigation, Recoveries, Legal Research, Business Law, and Family Law.

    View all posts


More Posts

Kelvin Sabao

Safe Deposit Boxes in Zimbabwe

Explore the implications of Zimbabwe’s Finance Act No. 13 of 2023, which grants ZIMRA powers to access safe deposit boxes, aiming to enhance tax transparency. Learn how these amendments align with international standards and their impact on financial privacy and tax enforcement.

Read More »
Business News

Telone New Area Codes

TelOne, Zimbabwe’s primary fixed-line telephone provider since independence, underwent a significant upgrade in 2018 to enhance and expand its network capacity. This update included changes to the area codes across the country, marking a departure from the longstanding system in place. While adjusting to the new system may take some time, it offers improved functionality and efficiency. The updated area codes now feature a three-digit code accompanied

Read More »
Valentine TM Masaiti

The New Sentencing Guidelines: Striving for Equality and Justice in Zimbabwe

The Criminal Procedure (Sentencing Guidelines) Regulations 2023 in Zimbabwe aim to promote consistency and fairness in sentencing. These guidelines, enacted on August 8, 2023, address disparities in punishment highlighted in the case of State v Sixpence & 5 Others HH567/23. They introduce a victim impact statement, ensuring victims have a voice in the sentencing process. Additionally, the guidelines consider factors such as offender characteristics and the probability of reoffending. This approach aims to provide certainty in sentencing and enhance justice for both offenders and victims.

Read More »

Send Author A Message