SEC welcomes court OK of CAP rehab plan

The Securities and Exchange Commission (SEC) has lauded the Makati Regional Trial Court’s approval of the petition for rehabilitation filed by College Assurance Plan (CAP) Phils. Inc., noting this should ease planholders’ concerns on the status of the pre-need firm’s case.

"We’re happy that the court has acted on it rather than put planholders in limbo," SEC commission secretary Gerard Lukban said.

Meanwhile, a group of planholders opposed to the rehabilitation of CAP is planning to file a petition for certiorari with the Supreme Court.

"The decision was expected. We will file a petition for certiorari. We were given 60 days to do so but we would like to do it sooner due the urgency of the situation because we’re talking about some 800,000 students. We believe that at the end of the tunnel justice will be on the side of the planholders," said Maricel Lopez, legal counsel for the opposing planholders.

The court has directed CAP rehabilitation receiver Mamerto Marcelo to evaluate the rehabilitation plan and submit recommendations within 30 days from receipt of the order.

"Even as the court notes the substantial questions posed by the SEC and some creditors on the solvency of the corporation, it finds the interests of the planholders/investing public as an overriding consideration which cannot be summarily or injudiciously dismissed without a thorough evaluation by the rehabilitation receiver of the corporation’s chances of being restored to a successful operation and solvency if given the opportunity and considering particularly the adverse results to the planholders of a liquidation scenario as against its proposed rehabilitation under which they may possibly recover 100 percent of their contributions," judge Romeo Barza said in his order.

CAP sought a moratorium on the payment of all obligations to planholders and creditors to give it enough breathing room to map out a viable and acceptable rehabilitation plan. The move was also intended to prevent the SEC from taking over management of CAP which could eventually lead to the pre-need firm’s closure.

In its proposed rehabilitation plan, CAP is seeking a 10-year restructuring of its P2.9 billion loan obligations to creditors including Fil-Estate Management Inc., Philippine Veterans Bank, CAP Pension and Pentacapital Investment Corp. The initial payment is expected to commence not earlier than 2008.

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, inclusive of its obligations to planholders, amounting to P1.2 billion.

As of July 31, 2005, CAP’s trust fund is valued at P6.75 billion, P255 million of which or three percent is liquid.

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.

CAP’s projections show that trust fund balances after 2012 will be positive and increasing from 2013 to 2025, with an ending positive balance of P20.96 billion with liquid assets of about P11.8 billion as of 2025.

Similarly, CAP expects to achieve a positive cash flow from 2005 to 2012 with an ending cash balance as of end-December 2012 of about P289 million. CAP’s capital deficiency will be reduced from P17.574 million to about P9.2 billion in 2012.