By 
The Court of Appeal has overturned a High Court decision and declared that Copperbelt Energy Corporation (CEC) should be treated as a preferential creditor in the ongoing liquidation process of Konkola Copper Mines (KCM).
The ruling effectively orders KCM to settle CEC’s US$29.6 million debt with priority.
In a judgment delivered on October 5, 2025, the appellate court found that the High Court erred in law by failing to recognize CEC’s status as a preferential creditor and by treating the sanctioning of KCM’s scheme of arrangement as a mere formality rather than a careful exercise of judicial discretion.
“The mischaracterization of CEC’s claim, defective class constitution, lack of proper related-party disclosure, wrongful exclusion of its vote, and absence of scrutiny of decisive related-party debts all meant the statutory safeguards were not met,” the court stated.
A three-judge bench comprising Justices Justin Chashi, Petronella Ngulube, and Annesie Banda-Bobo unanimously held that the High Court misdirected itself on fundamental statutory preconditions and failed to ensure fairness in class composition and voting during the scheme approval process.
According to the Court, the law requires that creditors be classified based on their legal rights rather than the size of their claims or commercial interests.
The judges cited English and Commonwealth precedents, including Sovereign Life Assurance Co. v Dodd and Re Hawk Insurance Co. Ltd., emphasizing that CEC’s claim—arising as a preferential liquidation expense—was distinct from that of ordinary unsecured creditors and should not have been grouped with them.
“The defects were material and went to jurisdiction and fairness,” the judgment read, adding “We find merit in all the grounds of appeal. The learned Judge misdirected himself on fundamental statutory preconditions. The appeal succeeds, and the scheme is varied to that extent.”
The court also criticized the High Court for failing to scrutinize related-party debts and for allowing votes from entities with conflicting interests to dominate the scheme’s approval. It ruled that such irregularities compromised the integrity of the vote and prejudiced creditors’ rights.
As a result, the Court of Appeal ordered that CEC be considered and treated as a preferential creditor and that it be paid as such, with costs to be taxed in default.
WARNING! All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express permission from ZAMBIA MONITOR.
Comments