KCM faces court pressure to fulfill payment obligations amid financial struggles

KCM faces court pressure to fulfill payment obligations amid financial struggles

By Mast Reporter

MORE than eight months after the High Court sanctioned a scheme of arrangement for Konkola Copper Mines (KCM), the company has yet to fulfill its financial obligations to some creditors, including the Copperbelt Energy Corporation (CEC).

On March 7, 2025, Lusaka High Court Judge Charles Kafunda lifted an injunction that had previously halted KCM’s part payment of US$29,609,678.63 owed to CEC.

However, contrary to some media reports, CEC did not seek a court directive for immediate full payment of the amount.

Instead, it petitioned the court to enforce KCM’s own proposed repayment schedule under the scheme of arrangement.

This request was granted in a ruling delivered on December 2, 2024, which instructed KCM to pay the first installment due within 10 days.

The High Court ruling clearly stated that KCM’s June 28, 2024, scheme approval remains legally binding despite an appeal to the Court of Appeal by some creditors, including CEC.

Judge Kafunda clarified that the right to appeal does not negate an affected creditor’s entitlement to receive payments as outlined in the scheme.

He also dismissed KCM’s argument that making payments would render the appeal redundant, stating that the Deed of Release and Waiver does not prevent creditors from exercising their constitutional right to appeal.

“The affected creditor is entitled to enjoy the fruits of the ruling of the court,” Judge Kafunda stated, reinforcing CEC’s right to payment.

On December 12, 2024, KCM filed for a review of the December 2 ruling, citing fresh evidence from creditors such as Lumwana Mining Company and Komatsu Enterprises.

However, the court dismissed this request on December 19, 2024, ruling that KCM, as the primary debtor, should have been aware of such disputes earlier.

Consequently, the stay of execution orders issued on June 28, 2024, and December 2, 2024, were vacated, reinforcing KCM’s obligation to proceed with payments as scheduled.

In his ruling, Judge Kafunda emphasized, “No action of a restrictive or punitive nature can be made to bear on an affected creditor who chooses to exercise their statutory and constitutional rights.”

KCM’s financial difficulties have persisted, prompting it to propose a scheme of arrangement in February 2024.

Under this scheme, approved by the High Court on June 28, 2024, KCM committed to a structured repayment plan backed by US$225 million from Vedanta Resources.

The scheme categorizes 679 creditors into two classes: Class 1 Creditors (owed less than US$1 million) are to receive lump-sum payments, while Class 2 Creditors (owed US$1 million or more), including CEC, are to be paid in installments.

Despite these commitments, KCM’s continued delays raise concerns about its ability to meet financial obligations, potentially affecting the overall stability of the scheme.

Judge Kafunda, in a firm rebuke of KCM’s non-compliance, stated, “In the absence of a stay of the ruling of the court, the 1st Respondent cannot use the appeal by the affected creditor as justification to deny payment due under the scheme.”

With the court reaffirming CEC’s right to payments, the pressure is now on KCM to comply with the terms it originally proposed and make a part payment 10 days from the date of the March 7, 2025, ruling, which discharged the interim injunction.