Minority owners buck Saniwares’ insolvency plea

Minority investors of Sanitary Wares Manufacturing Corp. have opposed the company's petition for insolvency on grounds that the filing of such was done in bad faith and that the company had engaged in misrepresentation.

Through lawyers Maricel Lopez and Jose Tomas Syquia, Saniwares’ minority investors have asked the Las Piñas Regional Trial Court to recall an order approving the petition for insolvency filed by Saniwares and the appointment of an assignee or receiver.

In their filing, the minority shareholders claimed that the firm’s move to cease operations was made to give preference to the American Standard Group, the majority shareholder of Saniwares to the prejudice of its creditors and small investors.

Small investors also claimed that Saniwares is not insolvent as its assets still exceed its liabilities. They alleged that Saniwares had deflated the value of their assets to make it appear they have more liabilities than their assets. "The true assets of petitioner corporation is not P281.25 million but approximately P573.22 million, putting their assets more than their true payables and liabilities," minority shareholders said.

Minority investors likewise alleged that the creation of a new class of redeemable preferred stock to be subscribed to by American Standard had been intended to solely benefit the majority shareholder since the holders of preferred shares shall have preference in the distribution of assets after creditors.

"Under this insolvency proceedings the majority shareholders will have their cake and eat it too while the minority shareholders will be left in the kankungan," minority investors said.

The American Standard Group owns approximately 67.51 percent of the total issued common stock and 100 percent of the total issued preferred shares of Saniwares.

In addition, the minority shareholders opposed the P549.94 million claim of the American Standard Group. They noted that in the quarterly report filed by Saniwares for the period ending June 2004, the amount listed as payables from intercompany trade was only P15 million.

"We’re here to protect legitimate claims and safeguard the interest of minority investors. They just can’t leave just like that," Lopez said in a briefing with reporters yesterday.

Among the minority shareholders include Willy Tieng, William Tieng, Wilson Tieng, Daisy Tieng, G.D. Tan & Co., KLG International, and Solar Resources Inc.

The Las Piñas RTC has granted Saniwares’ petition for voluntary insolvency after finding it "sufficient in form and substance".

The filing of a petition for voluntary liquidation had been approved by the board of directors of Saniwares as early as November last year, citing its balooning debts.

After 43 years of operations, Saniwares closed downn its manufacturing plant last November due to ballooning losses and rising costs of doing business that have hobbled its ability to settle maturing debts.

In the nine months ending September 2004, Saniware incurred operating losses of P89.5 million.

Saniwares said its deteriorating financial condition had made it difficult for the company to secure substantial funding needed to upgrade its plant and sustain operations.

The company is now conducting a comprehensive review of its assets and liabilities to ensure that the business is closed out in an "orderly fashion."