Unfortunately, we have outdated corporate rehabilitation laws and they are up for a complete overhaul. Corporate rehab is a very important tool for companies experiencing financial difficulties, allowing them to avoid bankruptcy and liquidation. It’s about time that our legislators pass laws protecting companies under rehab, while our regulatory agencies should do all they can to give these ailing companies a fighting chance.
The intention of the law in allowing for rehabilitation is to allow companies on the verge of financial collapse to save themselves and "emerge" out of bankruptcy – saving jobs, assets and the business itself. So effective has corporate rehabilitation been that many large companies have, at one time or another, filed for corporate rehabilitation. The Philippine Long Distance Telephone Company’s (PLDT) Pilipino Telephone Corp. (Piltel), the Lopezes‚ Bayantel and Maynilad Water Services, Rufino’s Trust International Paper Corp. (Tipco), Metro Pacific’s Negros Navigation, and Uniwide are just among the high profile companies which have sought protection under the laws.
Debates rage on what to do with pre-need companies which currently suffer from financial difficulties. One after another, pre-need companies are filing for rehabilitation, reeling from the financial aftershock of offering traditional educational plans. Similarly, in Singapore, American International Assurance, a subsidiary of US-based AIG, which in turn is the parent company of Philamlife and Philam Plans, recently announced to its 23,000 customers who bought life policies a decade ago that they would continue paying premiums beyond the expected date since investment returns did not materialize as projected. Even the most well managed of funds it seems are not immune from external circumstances.
There are those who believe that these pre-need companies should be sold lock-stock-and-barrel and whatever money can be had from the deal should be divided among their plan holders, creditors and employees. This would be worse for the plan holders since they would certainly get less under this scenario than if these well-managed companies were rehabilitated and "emerged" from bankruptcy. Saving these companies from collapse is the only choice I sincerely believe is palatable. Over the long term, rehabilitating pre-need companies will serve the best interest of all the parties concerned.
If I remember right, Japan’s parliament two years ago passed a law permitting insurers facing financial difficulties to give plan holders a much lower interest rate than what was agreed on under the policy. In the US, a congressional report recommended giving relief to companies with under funded pension plans for a period of three years, with traditional defined benefit pension plans assuming less returns based on an index of high grade corporate bonds rather than a current formula based on 30-year US treasury bond yields.
Our legislators should take the cue from their US and Japan counterparts. Philippine pre-need companies facing financial difficulties should be aided. Their current plight, I believe is beyond their control. More and more, an industry-wide rehabilitation is needed, and legislators should seriously look at offering a moratorium to give relief to the pre-need companies and allow them to get back on their feet, and in fighting form.
Under this scenario, the Securities and Exchange Commission (SEC) plays a critical role in nursing pre-need companies back to life. I believe the SEC should thoroughly evaluate each pre-need company under rehab, renewing licenses of those companies that have a fighting chance to succeed under the rehab plan. This way, a genuine industry-wide corporate reorganization and rehabilitation can take place and plan holders protected.
But while rehabilitation’s relief may bring a few drops of water to a scorched earth that is the pre-need industry, the cumbersome, per-company relief may not be enough to aid the industry, hence the need for legislators to step in.
Not only is SBMA having problems with the National Telecommunications Commission (NTC) over frequency assignments and fees (NTC wants a share of the fees SBMA has been collecting from telcos, since anyway, the commission has been doing a large part of SBMA’s work as far as frequency management is concerned). This time, SBMA is at loggerheads with the Philippine Long Distance Telephone Co. (PLDT) over a possible breach of contract.
Subic Telecommunications Co., a PLDT subsidiary, has filed a motion for reconsideration of the order of dismissal issued by the Olongapo City Regional Trial Court in connection with its case against the SBMA.
According to SubicTel, SBMA has breached a contract that granted the former exclusive rights for a certain period to provide telecommunications services in the Subic Bay Freeport Zone when it allowed Innove Communications, a subsidiary of Globe Telecom, to operate in the area.
SubicTel says it has already invested almost P1 billion since 1994 to develop the telecommunications infrastructure in the area. The company was created in 1994 after PLDT, SBMA and AT&T of the US decided to form a joint venture to provide state-of-the-art telecommunications facilities for the Freeport Zone. This joint venture agreement provided for this exclusive privilege to provide telco services.
Sugar mills have been producing as a by-product bagasse, an energy source that has helped these mills become self-sufficient in power.
But because of modernization program of the sugar milling sector, these companies have installed new boilers which are very high pressure (due to automation) so that they are able to produce seven times the power they used to produce. As a result, they can now sell extra electricity.
In order to boost the production by sugar mills of power, there is an urgent need to provide incentives in the Renewable Energy Bill for biomass, particularly by not charging sugar mills for transmitting power to the grid. If our government can afford to give tax incentives to big ventures, why not waiving transmission charges for small ventures such as these that are rural-based? This incentive can also be given to other sources, like wind and power, so long as they are small power producers, probably 20 to 30 megawatts.
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