SEC asks court to dismiss Platinum Plans’ corporate rehab petition

The Securities and Exchange Commission (SEC) has asked the Makati Regional Trial Court to dismiss the petition filed by Platinum Plans Inc. seeking the suspension of its debt payments, pointing out that the pre-need firm is beyond repair as its assets are no longer sufficient to cover all its debts.

SEC commission secretary Gerard Lukban said the agency is opposing platinum’s petition on the ground that the company is already insolvent. "It is not merely illiquid but insolvent," he said.

Based on computations made by the SEC’s Non-Traditional Securities Department, the liabilities of Platinum, amounting to P3.2 billion, have already exceeded the company’s assets which are currently valued at P2.9 billion.

Lukban said the opposition is on top of the filing of criminal charges against erring officers and directors of the pre-need firm.

The Compliance and Surveillance Department, the surveillance arm of the SEC, is now investigating Platinum on allegations that mismanagement or misappropriation of funds led to the collapse of the pre-need firm.

Platinum is also under fire from securities regulators for its failure to comply with rules on the registration and sale of pre-need plans. Among these violations include non-submission of its actuarial valuation report, financial statements, and collection and sales reports.

Based on SEC records, Platinum has an actuarial reserve liability (ARL) of P470.1 million as against trust fund assets of P192.76 million, resulting to a trust fund deficiency of P277.34 million. The company has also been found to have failed to remit monthly deposits to its trust fund, which is made up mostly of real estate.

The SEC has increased to P2.28 million the penalty it has imposed on Platinum for continued non-payment of the previous assessed penalties.

The ARL is the present value of all current and future tuition availments. It is based on inflation, interest rates, and expected tuition fee increases, among others. A measure of how healthy a pre-need company is whether its trust fund is equal to or exceeds the ARL.

Platinum had sought reprieve on the payment of its debts to allow it to hammer out a viable recovery plan. It believes that given enough breathing space it would be able to settle all maturing obligations given the realizable value of its existing assets.

In its petition, Platinum said it could settle only up to P75 million of its maturing obligations to planholders. It intends to sell assets to raise funds to cover obligations to planholders.

Platinum is reportedly locked in negotiations with a Canadian firm that has offered to buy out the pre-need firm from the Salas family.

Platinum, however, said it remains uncertain whether a deal could be closed between the company and the prospective investor from Canada given the current controversies and the consequent operational and financial difficulties plaguing it.

It said the prospect of attracting a white knight will require a period for normal due diligence. "This is best done under a rehabilitation climate with the supervision of the court and receiver so that the terms and conditions that will be discussed can have legal stability and protection," Platinum said.

Platinum said getting a foreign investor will strengthen not only the company but restore credence and confidence in the pre-need industry as well.

According to the pre-need firm, existing long-term commitments of Platinum towards planholders will be better protected with new resources and management.

Aside from searching for a white knight, Platinum will also source fresh funds of P75 million to settle maturing plans.

Platinum also intends to offer a new homeowning system addressing the contractual savings capabilities of overseas Filipino workers and developing non-performing assets of banks suitable for housing from which the pre-need firm can earn a hefty income estimated to be worth P2.2 billion from just one specific property.