Zimbabwe High Court: Zimbabwe Corporate Rescue: Leave to Sue OK Zimbabwe

• Zimbabwe's High Court granted Savvas Investments leave to continue its pre-existing eviction case against OK Zimbabwe, a retailer currently under corporate rescue.
• The ruling clarifies that the corporate rescue moratorium under Section 126 of the Insolvency Act is not an absolute bar to litigation, especially for claims seeking possession of property.
• Savvas seeks to confirm the cancellation of OK Zimbabwe's lease for commercial premises in Mount Pleasant, evict the retailer, and recover damages.
• Justice Mungwari noted that the eviction proceedings commenced before OK Zimbabwe entered corporate rescue and that the indefinite duration of the rescue caused continuing prejudice to Savvas.
• The court emphasized that corporate rescue cannot be used to indefinitely extend a contested lease, allowing the underlying contractual dispute to proceed to trial.

This landmark decision underscores that the statutory protection afforded to companies undergoing corporate rescue in Zimbabwe is not an absolute shield against all forms of litigation, particularly when pre-existing claims involve the recovery of property.

A recent High Court decision has clarified the scope of Zimbabwe's corporate rescue provisions, granting Savvas Investments permission to proceed with its eviction case against financially distressed retailer OK Zimbabwe. The ruling, handed down by Justice Lucy Mungwari, allows the property company to continue with case HCHC 110/26, which was initially filed before OK Zimbabwe entered voluntary corporate rescue proceedings.

This judicial green light means Savvas Investments can now actively pursue its pending court action. The company seeks confirmation of the cancellation of OK Zimbabwe's lease agreement, the eviction of the retailer from its commercial premises located at 48 Bond Street, Mount Pleasant, Harare, and the recovery of holding-over damages along with other claimed amounts. It is important to note that Justice Mungwari's decision specifically addresses the right to continue litigation and does not determine the ultimate validity of the lease cancellation or whether OK Zimbabwe will ultimately be evicted; these substantive issues are reserved for the main trial.

The dispute originates from a lease agreement signed by Savvas Investments and OK Zimbabwe on December 19, 2024. Savvas alleged that OK Zimbabwe repeatedly breached the terms of this agreement by failing to make timely payments for rent, municipal rates, and electricity charges. Further allegations included the retailer's failure to convene agreed management meetings and neglect of necessary repairs to the property.

Following these alleged breaches, Savvas Investments formally cancelled the lease on December 12, 2025, and demanded that OK Zimbabwe vacate the premises. Despite this, the retailer remained in occupation. Savvas subsequently issued summons on February 17, 2026, initiating proceedings to confirm the cancellation, secure eviction, and claim holding-over damages and outstanding municipal rates. Just one week later, on February 24, 2026, OK Zimbabwe entered voluntary corporate rescue, triggering a statutory moratorium on litigation under Section 126 of the Zimbabwe Insolvency Act, which necessitated Savvas obtaining High Court leave to continue its action.

OK Zimbabwe opposed Savvas's application for leave to continue proceedings, arguing that allowing the case to proceed would undermine the corporate rescue process and prejudice its approximately 3,000 creditors, employees, and other stakeholders. The retailer asserted it was undergoing restructuring aimed at rehabilitating the business and preserving it as a going concern, while also disputing Savvas's allegations of persistent default and challenging the legality of the lease cancellation. Initially, OK Zimbabwe informed the court it expected to exit corporate rescue by July 31, 2026, following a creditor resolution, but this date passed without the company exiting rescue, and its lawyer could not provide a new exit date, ultimately accepting the rescue's indefinite duration.

Justice Mungwari found that this indefinite duration created ongoing prejudice for Savvas, as its property remained occupied with the dispute unresolved. The court distinguished Savvas's claim as one seeking possession of its property, rather than merely attempting to recover money from a company under rescue. Crucially, the eviction proceedings had been instituted before OK Zimbabwe entered corporate rescue. The judge emphasized that Savvas was not initiating a new or speculative claim against a company already in rescue but sought leave to continue proceedings that had commenced before the moratorium took effect. The court explicitly stated, "Corporate rescue cannot be converted into a substantive extension of a contested lease," and noted the weakness of OK Zimbabwe's denial regarding the lease cancellation, while deliberately reserving the determination of the central contractual dispute for the trial court.

This landmark decision underscores that the statutory protection afforded to companies undergoing corporate rescue in Zimbabwe is not an absolute shield against all forms of litigation, particularly when pre-existing claims involve the recovery of property. The ruling provides significant clarity for creditors and landlords, indicating that they may successfully seek leave from the High Court to continue eviction proceedings corporate rescue, even against entities under the protection of the Zimbabwe Insolvency Act Section 126 moratorium.

The judgment highlights that the nature of the claim—specifically, seeking possession of property rather than just monetary recovery—and the timing of its initiation are critical factors. Companies in corporate rescue, such as OK Zimbabwe, must now be prepared to defend such actions, especially if their rescue period becomes protracted or indefinite, as the court will consider the prejudice caused to claimants by prolonged occupation of their assets. This ruling sets a precedent for how the High Court may interpret the limits of the corporate rescue moratorium litigation in future cases involving similar circumstances.

This ruling clarifies that Zimbabwe's corporate rescue moratorium under the Insolvency Act is not an absolute bar to litigation, particularly for pre-existing claims seeking possession of property. Lawyers should advise clients that they may successfully seek leave from the High Court to continue such proceedings against companies in corporate rescue, while companies in rescue must prepare to defend such actions.

Source: Original reporting via High Court records.