SEC rejects Uniwide's third revision of rehabilitation plan

MANILA, Philippines -  The Securities and Exchange Commission has junked Uniwide Holdings Inc.’s third revision of its rehabilitation plan after majority of the debt-strapped warehouse club operator’s creditors thumbed down the revised proposal for not being viable.

The Uniwide group, owned by the Gow family, filed for suspension of debt payments and rehabilitation with the SEC in June 1999 owing to liquidity problems as a result of the economic crunch and a failed diversification. 

In its order, the SEC said it has lifted the order of suspension of debt payments against Uniwide after finding the rehabilitation plan not feasible and being opposed by approximately 66.27 percent of the group’s total secured creditors.

The total claims opposing the revised plan amount to P2.546 billion. “Clearly more than majority of secured creditors are opposing the revised agreement.This alone is sufficient cause to reject petitioners instant motion,” the SEC said in its order.

Under Sec 4-20 of the rules on rehabilitation, “no rehabilitation plan shall be approved by the commission if opposed by a majority of any class of creditors.”

Among those that are opposed to the amended rehabilitation plan are Land Bank of the Philippines (P36.91 million), Allied Bank (P360.65 million), Philippine National Bank and East West Banking Corp.

Of Uniwide’s total outstanding debt of P5.53 billion, P3.15 billion is owed to secured creditors – Landbank,  EBC, Rizal Commercial Banking Corp., Global Bank, Allied Bank, PNB, ING and a syndicate of banks.

The remaining P2.38 billion debt is owed to unsecured creditors consisting of trade suppliers, contractors, private lenders and non-trade suppliers.

The proposal to settle petitioners’ outstanding debt with secured and unsecured creditors via dacion en pago of its Metromall property is not feasible, according to the SEC.

The property is mortgaged to Allied Bank and PNB.  “Both banks have property rights under their  existing security arrangements with petitioners that cannot be put asunder without their consent or unless in exchange for valuable consideration that preserves at least the value of their property  rights,” the SEC said.

“Certainly, we cannot compel the creditors to agree to the dacion en pago proposed by petitioners. The dacion en pago program is not compulsory in nature. The terms of the rehabilitation plan such as dacion en pago scheme, waiver of interest, penalties and related charges are mere proposals of petitioners for the creditors to accept,” the SEC added.