DMCI obtains CA approval to rehabilitate Universal Rightfield

The Court of Appeals has stopped the Mandaluyong Regional Trial Court from enforcing an order dismissing D.M. Consunji Inc.’s petition to rehabilitate Universal Rightfield Property Holdings Inc.

In its order dated March 3, 2006, the CA granted DMCI’s petition for a temporary restraining order (TRO) against the RTC’s resolution.

The TRO is effective for a period of 60 days unless sooner lifted.

"By reason of said TRO, the parties are restored to the status quo ante, the last peaceable situation obtaining prior to the dismissal of the rehabilitation case by the trial court and the lifting of the stay order.

The trial court is enjoined at this time from executing its order dismissing the rehabilitation case and lifting the stay order," the Appellate Court said.

Out of Universal Rightfield’s total liabilities to banks, contractors and others, DMCI accounts for P480.5 million as of end-September 2003 which are currently due for payment.

DMCI filed the petition to register its liabilities as a contractor of services and materials and ensure that it will be paid by Universal Rightfield under a court-appointed rehabilitation receiver in accordance with past and previous attempts by DMCI to collect payments.

DMCI said the appointment of a rehabilitation receiver will facilitate the implementation of an equitable and commercially viable restructuring of the financial indebtedness that returns Universal Rightfield to financial health and provides it with the certainty necessary to continue its business effectively and profitably.

The proposed rehabilitation plan submitted by DMCI involves the reduction of debt through dacion en pago and an initial infusion of P150 million to jumpstart development costs of Universal Rightfield’s property in Cabuyao, Laguna.

The dacion en pago scheme, according to DMCI, will lessen the pressure for debt servicing by developing real property currently in the landbank of Universal Rightfield into value-added properties, including joint venture undertakings with third party developers/financiers and recapitalization.

An analysis of Universal Rightfield’s cashflow projections carried out by DMCI’s financial advisers shows that the cash-strapped firm may be able to repay its debt over a period of 10 years.

DMCI’s financial advisers noted that Universal Rightfield’s core business of residential and leisure development in 1996 was promising but the principal difficulties it experienced stemmed from the expansion in terms of land banking during the start of the Asian financial crisis in 1997.

Nevertheless, DMCI’s financial advisers believe that the property market will rebound and Universal Rightfield, capitalizing on the property of its wholly-owned subsidiaries Universal Leisure Corp., Orizontas Property Management Corp. and Manuel Development Corp. has a potentially viable and substantial business which can and should be returned to financial health by the implementation of the rehabilitation plan.