SEC chairman Fe Barin said, in a radio interview, that the agency is now preparing its opposition to CAP’s petition for corporate rehabilitation which it hopes to file this week or next week.
Barin said CAP can no longer be rehabilitated since its liabilities have already exceeded its assets.
CAP is the third pre-need company to file for rehabilitation, citing tight liquidity problems brought about by the deregulation of tuition fees.
The Makati Regional Trial Court granted last week CAP’s petition for debt relief, effectively preventing the pre-need firm from paying obligations to creditors and planholders and from selling any of its properties or assets except in the ordinary course of business.
Based on its audited financial statements as of end-December 2004, CAP has P14.6 million in cash and cash equivalents.
In contrast, CAP’s total liabilities which are now due and demandable amount to P4.1 billion, P1.2 billion of which is owed to first semester tuition fees.
CAP sought debt reprieve from the court to give it enough breathing room to map out a viable and acceptable rehabilitation plan.
The move was also intended to avert SEC’s plan to take over management of CAP which is seen to lead to the pre-need firm’s demise.
In its petition, CAP said it will seek a 10-year restructuring of its obligations from its creditors including Fil-Estate Management, Inc., Philippine Veterans Bank, CAP Pension and Pentacapital Investment Corp.
Based on its proposed recovery program, CAP projects a total trust fund build-up of about P13.56 billion by 2012 with the trust fund achieving a positive balance by 2010. At the end of the implementation of the business plan, CAP expects to have a trust fund balance of about P9.115 billion with about P395 million in liquid assets.
Similarly, CAP expects to achieve a positive cash flow from 2005 to 2012 with an ending cash balance as of December 2012 of about P289 million. CAP’s capital deficiency will be reduced from P17.574 million to about P9.2 billion in 2012.
The SEC earlier filed with the Department of Justice a criminal complaint against CAP, its officers and directors for unauthorized sale of pre-need plans in violation of the Securities Regulation Code.
It also sought the issuance of a hold-departure order against the respondents to prevent them from fleeing the country and evading criminal liabilities.
The SEC said CAP sold pre-need educational plans despite the fact that it knew it had no more registered plans to sell in violation of Sec. 16 of the src.