SEC orders dissolution, liquidation of Uniwide

The Securities and Exchange Commission has ordered the dissolution and liquidation of Uniwide Holdings Inc., a listed company owned by businessman Jimmy Gow and five other companies under Uniwide Group of Companies.

In a decision, SEC denied the Uniwide group's appeal to reconsider the special hearing panel’s decision to terminate the proposed rehabilitation of Uniwide Group of Companies.

"The dissolution of all companies in the group, namely Uniwide Sales Inc., Uniwide Holdings Inc., Naic Resources and Development Corp., Uniwide Sales Realty and Resources Corp., First Paragon Corp. and Uniwide Sales Warehouse Club Inc. is hereby ordered pursuant to Sec 6-1
of the SEC Rules of Procedures on Corporate Recovery, after which, liquidation shall follow," SEC said.

In 2009, the SEC's special hearing panel decided to terminate the Uniwide Group's rehabilitation plan because of its failure to comply with the terms of the plan as approved in 2002.

The special hearing panel also concluded that the Uniwide group has changed from being "solvent but distressed" to "technically insolvent."

Under the rehabilitation plan, Uniwide planned to settle its debts with secured creditors through dacion en pago, a special mode of payment whereby the debtor offers another thing to the creditor as equivalent of payment of an outstanding obligation.

The supermarket chain was also expected to generate cash from operations of existing stores.

SEC however said the planned dacion en pago with Allied Bank, Philippine National Bank, LNC SPV-AMC Corp and other secured creditors failed because of refusal of some creditors to comply with the terms of the rehabilitation plan.

The supermarket chain also failed to increase its sales because of closure of Uniwide stores, the lack of supplier support for the company’s supermarket operations and unprogrammed operating expenses.

But in 2010, Uniwide group filed an appeal with the SEC and even asked the corporate regulator to approve an amended rehabilitation plan.

The group explained that the SEC should encourage rehabilitation of distressed corporations.

Uniwide also argued that the company is deserving of government support since it is "a hugely popular enterprise" and that possible liquidation of the company would seriously affect the lives of hundreds of employees.

The company also said that majority of the creditors still support the continuation of the rehabilitation proceedings and that the company has managed to successfully implement the rehabilitation plan by bringing down its debt to around P1.4 billion.

At the filing of the petition for rehabilitation on June 25, 1999, Uniwide Group operated eight warehouse clubs and two department stores with total assets of P19.86 billion and total liabilities of P11.1 billion.

But by the end of 2008, the SEC said, the number of Uniwide stores was down to five warehouses and one department store. The group’s assets were also down to P2.7 billion while liabilities ballooned to P12.3 billion.

"The conclusion is inescapable. Petitioner have metamorphosed from being 'solvent but distressed' enterprise to 'technically insolvent' and then to unmistakably 'insolvent' conglomerate,” SEC said. — BM, GMA News