Problematic of liquidation and dissolution of companies under rwandan law: case study of Rwandatel

II.2 THE ROLE OF COMMERCIAL COURT

The commercial court has the competence to judge all cases relating to commercial things. That is, the Commercial court with jurisdiction in which the debtor is domiciled is the one that has exclusive jurisdiction, and the Registrar General in charge of commercial activities registration is the chief administrator responsible for insolvency proceedings^88(*). The Organic Law N. 6/2012 of 4/09/2012 determining the organization, functioning and jurisdiction of Commercial Courts, in its article 2 provides the commercial matters which are subject to commercial court, and in its included disputes related to liquidation, dissolution and recovery of business firms facing bankruptcy.^89(*)

II. 3DISSOLUTION AND LIQUIDATION OF RWANDATEL

Rwandatel was 80% Libyan owned Rwandan telecommunications company^90(*). It lost its license to provide mobile Lap GreenN was not fulfilling the agreement that it did with the Rwandan government when it purchased Rwandatel. In addition to that, it did not invest the amount needed and that led to the insolvency of Rwandatel. RURA using the powers that it is given by the law revoked its mobile license and requested the Registrar general to bring an action to court requesting for the beginning of Rwandatel's insolvency proceedings. The facts of the court proceedings on the case that led to the dissolution o Rwandatel are discussed in the next pages.

II.3.1 Cause of dissolution and liquidation of Rwandatel

The decision of liquidating Rwandatel came after audited reports found out that the company is technically insolvent with a lot of liabilities. Also the Rwanda Utilities and Regulatory Agency made its report showing that the operator was not meeting its liabilities anymore, that is why as it is provided by the Presidential Order N. 4/01 of 15/03/2004 determining specific duties of the Regulatory Board in telecommunication matters where it provides that the Regulatory Board has the responsibility of collaborating with other organization/institutions in respect of issues of general interest^91(*). This is the reason why it requested the registrar of companies to institute insolvency proceedings in commercial courts against Rwandatel.

II.3.2. Cause of Rwandatel's insolvency

When American conman Greg Wyler took over the company in October 2005, he prompted fired 130 employees saying it was for efficiency reasons when in fact it was a move to retain a skeleton staff while squeezing as much money as he could out of Rwandatel.^92(*) The workers' union in this country still has very little powers to influence decisions, or to protect workers against arbitrary massive dismissal. Wyler stripped the company to the bare bones and, to add insult to injury, the government had to pay him close to US$ 12 million to leave, and to get its company back.

LAP Green came in and forked over US$ 100 million for the company, which looked a very good deal. Things looked like they would go swimmingly from then onwards. But LAP Green made some disastrous decisions from the word go. Why it for example kept on Patrick KARININGUFU as CEO instead of bringing in a seasoned telecoms manager is beyond the understanding of most people^93(*). KARININGUFU was a young man who had graduated from the Kigali Institute of Science and Technology not very long ago and whose only prior work experience was the few years he was in the employ of Wyler.

The young CEO went ahead and made the mother of all promotions, the famous Tubirimo, which culminated in an exciting launch of Rwandatel's new GSM operation at the Amahoro Stadium in January 2009. The next day Rwandatel was giving MTN a bloody nose, and you could sense the panic emanating from the Nyarutarama shopping center. But the Tubirimo promotion was badly planned from the word go^94(*).

For starters, Rwandatel ran out of the Internet-enabled handsets that its eager new customers were clamoring for. That was a big disappointment for the many that had made the decision to switch from MTN. Then after a few days, more people willing to leave MTN for Rwandatel ran into another obstacle. There were no Rwandatel SIM cards to be found anywhere. Apparently they had been sold out, and there weren't any more in stock. And after a time the only airtime cards to be found were those of MTN.

These failings were a disastrous PR setback from which Rwandatel never recovered, even after it brought in the very experienced and affable Issiaka Maiga Hamidou. LAP Green also made matters worse by not always moving in a timely manner to disburse the necessary funds to keep ahead of the game in the fast-moving telecoms market.

* ⁸⁸ Law N^O12/2009 OF 29/05/2009 relating to commercial recovery and settling of issues arising from insolvency, art.5, OG N. special of 26/05/2009.

* ⁸⁹ N.6/2012 OL of 14/09/2012, determining the organization, functioning and jurisdiction of commercial courts. Art2, OG N. 45 of 05/11/2012.

* ⁹⁰ A. Rumanzi, «Rwandatel faced uncertainty after rura ultimatum», Rwanda Focus, May 5, 2011, issue no.456.

* ⁹¹Presidential Order n^o .4/01 of 15/03/2004 determining specific duties of the Regulatory Board in telecommunication matters,art.6., OG n^o special of 30/ 03/2004.

* ⁹² X, «Government Seeks Court Order to Liquidate Rwandatel», Rwanda Focus, April 18,2011, issue no. 565.

* ⁹³Ibid.

* ⁹⁴ RURA Legal Affairs Directorate& Ad Hoc Monitoring Committee, Report on the Implementation of the License Obligations, Share Pledge, Technical Proposal and the Investment Plan of Lap GreenN,December 2010, p.3