Philrealty gets court approval for suspension of debt payments

A week after disclosing plans to submit itself to a rehabilitation program, Philippine Realty & Holdings Corp. said yesterday the court has granted its petition for a suspension of debt payments, putting the company under the supervision of a court-appointed receiver.

Philrealty president Amador Bacani said their petition for a debt payment moratorium is the main component of their corporate rehabilitation program, which will be overseen by Ricardo Ysmael, the designated rehabilitation receiver.

The Philippine Stock Exchange (PSE) has suspended trading in Philrealty shares for an indefinite period starting Dec. 16 upon the company’s disclosure that it has sought court action supporting a corporate rehabilitation program.

The court’s decision thus puts Philrealty in the same boat as Uniwide Holdings and Victorias Milling as listed companies that have been placed under rehabilitation and receivership due to their debt and liquidity problems.

According to the PSE, Philrealty’s case can be a ground for the voluntary delisting of its stocks, citing rules that involve the liquidation of the company’s assets, corporate dissolution, or other legal proceedings under the Insolvency Law.

Earlier this year, Nasipit Lumber Co. Inc. opted for the delisting of its shares after six years of serious financial difficulties, forcing it to seek a similar court relief for insolvency and liquidation proceedings.

In a special meeting last week, Philrealty’s board of directors unanimously approved a resolution earlier presented to stockholders authorizing the board, to "exercise full power and authority to take or cause such actions... to rehabilitate the corporation."

Bacani earlier said the company plans to explore various alternatives on how to go about its rehabilitation, including the settlement of its obligations to creditors by way of dacion en pago (payment in kind) of its real properties; the sale or transfer of its assets; conversion of obligations into equity (debt-to-equity swap); modification of shareholders’ rights; issuance of bonded indebtedness; and the restructing of its obligations.

He said the rehabilitation was called for since the company’s cash flow has been insufficient to fully service its total P3.76 billion liabilities as well as finance its working capital needs.

For the first nine months of this year, Philrealty’s losses remained heavy at P168 million, although this was substantially lower than the P633-million net loss in the same period last year.

Since 1998, the company has been offering land properties to the banks as payment for its obligations through dacion en pago arrangements.

It has also temporarily suspended the development and completion of real estate projects such as the Manila Golf Crest in Fort Bonifacio, Ivy League Square in Malate and Urdaneta Country Plaza in Pangasinan, and implemented cost-cutting measures including the reduction of its workforce.

Philrealty is primarily known for its projects in the Ortigas Center, foremost of which is the Tektite Towers – the headquarters of the PSE itself. Its other projects and landbank include the Alexandra Condominiums in Ortigas, the Andrea North mixed-use complex in Quezon City, and lot properties in Tagaytay, Batangas, Quezon and Rizal.