Harare — MITCHELL and Mitchell -- the exporter of horticultural produce -- is insolvent and its directors have filed an application for provisional liquidation.

According to a High Court document, M&M, liabilities, which include offshore debts and outstanding salaries have shot up to US$4 million.

Insolvency Practitioner Mr Winsley Militala of Petwin Executor and Trust has been appointed the provisional liquidator.

Court papers are stating that the business, which experienced a rapid growth between the time of its formation in 1996 and 2003 slowed owing to, among other factors, RBZ policies.

For instance, M&M became subject to tax retention on gross revenue imposed by the central bank which varied between 25 percent and 45 percent during the period 2004 and 2008.

Interest rates also rose from 90 percent to 890 percent. By March 2004, annualised interest rates equated to 77 700 percent.

At that time, the horticultural company was rezoned as agro industrial which tripled the wage bill.

The company was employing thousands.

M&M had entered into a joint venture with Kondozi Estate in Odzi, which was acquired under the Government's land reform programme in April 2004.

As a result, the company lost some of its major international clients.

Due to the dramatic reduction in the company's income and profitability towards the end of 2004 and 2005, the firm laid off some of its workers.

The business continued on a much reduced scale until July last year.

It was impacted negatively by such issues as retention tax on inflows and inability to access significant amount of ASPEF funding.

On July 2008, M&M major remaining customer, the UK leading supermarket chain stopped doing business with Zimbabwe citing political instability.

The company said: "This event in itself had a catastrophic effect" on the company's operations. "The cash flow all but dried up entirely."

The company then re-focused on South Africa and other regional markets as substitute for the lost markets.

During the nine months period ended June 30 2008, M&M operated at a loss of almost 200 000 pounds.

Efforts to revive the company by bringing in potential investors failed. Last year, the company entered into negotiations with THL Holdings but the deal failed to see light of the day.

"Economic conditions within the country were, at the time, regrettably not conducive to investors nor financial institutions," according to the application.

"Hope that Zimbabwean banks would be able to assist following the dollarisation of the economy turned out to be unfounded as liquidity crisis continued."

In the mid 2009, the directors resolved it was impossible for the company to continue with operations and most of the workers were sent on unpaid leave.

"The applicant's assets are limited, to say the least, to all intents and purpose, has no income to pay its creditors and to continue funding the business."

Of its liabilities, the company's offshore debts are at US$2,7 million, staff claims for outstanding salaries and wages are at about US$240 000 and trade creditors totalling US$600 000.

M&M was established in 1996 to operate as Export Processing Zone. It used to export fresh produce to the UK, South Africa and New Zealand.

At its peak, the company was the major employer in Marondera, situated about 74km east of Harare.