Court asked to liquidate Raymund Moreno firms

Yuchengco-owned Rizal Commercial Banking Corp. (RCBC) has asked the Makati Regional Trial Court to proceed with the liquidation of Liberty Broadcasting Network Inc. (LBNI), as well as Liberty Telecoms Holdings Inc. and Skyphone Logistics, and to terminate the court rehabilitation proceedings on the three companies.

In a motion filed on May 15 with the Makati RTC Branch 149, RCBC said that under the interim rules on corporate rehabilitation, the rehabilitation proceedings can be terminated on the ground of the failure of the debtor-corporation to perform its obligations under the approved rehabilitation plan or upon determining that the plan may no longer be implemented in accordance with its terms, conditions, restrictions, or assumptions.

Specifically, RCBC questioned why LBNI’s 700 MHz frequency, the anchor of its proposed rehabilitation plan, has been reassigned by government to Smart Broadband Inc. (SBI).

“With the inability of petitioners to comply with the provisions of their revised rehabilitation plan, the withdrawal of this court’s approval of the said plan is in order. Corrolarily, the termination of the instant rehabilitation proceedings is also warranted to allow the liquidation of petitioners to proceed,” the creditor bank said.

The NTC earlier received an order from RTC Branch 149 requesting the agency to inform the court of any disposition, reallocation, or assignment of frequencies made by LBNI, Liberty Telecoms Holdings Inc. and Skyphone Logistics Inc. from Aug. 15, 2007 up to the present, as well as to inform “whether there is such a confidential nature of the frequencies assigned to said three companies.”

The three companies, all owned by businessman Raymund Moreno, owe RCBC and several other creditors around P1.7 billion. Most of the company assets such as buildings and telecommunications equipment have been attached by said creditors.

RCBC noted that the LBNI, in its court petition on Aug. 12, 2005, undertook to use its existing nationwide backbone network, specifically the frequencies allegedly already assigned and allocated to it by the NTC for the purpose of operating a nationwide voice and data network (WiMax) which shall be the center of its rehabilitation.

In subsequent court pleadings, LBNI reiterated that their existing nationwide backbone network, specifically the 700 MHz frequency allegedly allocated to it by the NTC will be utilized to operate its WiMax network.

According to LBNI’s revised rehabilitation plan, their proposed WiMax network, which is the main product/service in their 10-year rehab plan, shall account for more than 90 percent of their projected total revenue. This will be established on LBNI’s existing backbone network and making use of technology and frequencies (such as their 700 MHz frequency) they claim to have, RCBC noted.

RCBC said that since the proposed WiMax network shall be LBNI’s primary source of revenues, it is axiomatic that the failure of the proposed network necessarily spells the death of its rehabilitation.

The bank also stressed that under the interim rules, upon approval of the rehabilitation plan, the debtor-corporation shall comply with the provisions thereof and take all actions necessary to carry it out.

“It is thus clear that for petitioners to be able to comply with and carry out their revised rehab plan as approved by the court, it is crucial that they retain possession, disposition, and control of their claimed existing assets and frequency allocations. Accordingly, possession, disposition and control of the 700 MHz frequency is indispensable as without it, petitioners cannot set up, maintain and operate the proposed WiMax network considered by the court in approving the revised rehab plan,” RCBC noted in its motion.

The bank claimed that based on NTC records, LBNI’s proposed WiMax network under the 700 MHz frequency is no longer possible since SBI has applied for and reportedly been granted and allocated this particular bandwidth.

“In this connection, the Honorable Court can direct the commissioner of the NTC and other NTC officials to inform the court of the allocation or assignment of the 700 Mhz frequency,” RCBC said.

RCBC also stated that the LBNI’s revised rehab plan should not have been approved in the first place since the company has admitted that it has virtually ceased commercial operations since 2000 when its strategic partner Deutsche Telekom withdrew its operations from the Philippines. “Without any operations, employees, customers, and new investors for over seven years, its viability as a business enterprise is highly questionable,” it added.

The court’s order followed claims by some creditors that LBNI has been disposing of some of its frequencies, which according to the creditors are company assets which cannot be disposed by a company under rehabilitation without approval by the court and the receiver.