Equitable bucks sale of Uniwide subsidiary

Equitable PCI Bank, one of the creditors of Uniwide Sales Inc. (USI) is opposing the sale of its retail subsidiary, First Paragon Corp. (FPC) to IMart International (IMI).

The Bank has asked the SEC to reconsider its recent approval of the sale of FPC to IMI for P145 million saying the creditors were not consulted prior to the consummation of the sale.

The Bank said the sale or intended sale of all the assets of FPC for one, should be stopped since it is not in accordance with the Bulk Sales Law (BSL). There is also no proof that the sale was approved by its board of directors and stokcholders which is required under Section 40 of the Corporation Code. Moreover, the Bank's right over the leasehold rights of FPC will be prejudiced by the approval of the sale.

FPC's creditor said that the sale does not comply with the BSL which requires that any sale of goods not in the ordinary course of trade cannot be made unless the seller notifies his creditors about the sale or transfer and the buyer in turn notifies such creditors of the proposed sale in advance.

The Bank said there are no documents to show that the FPC secured a written waiver of the applicability of the provisions of the BSL. The law also requires the seller, among others, to apply the proceeds of the sale of the assets to the pro-rata payment of the bonafide claim of its creditors.

Moreover, the Bank said the sale of FPC does not appear to conform with the provisions of the Corporation Code which provides that a sale of properties or assets of a corporation, requires a majority vote of its board of directors, and the authorization of its stockholders representing at least two-thirds of the outstanding capital stock.

The Bank added the sale will also unduly prejudice and put to naught the vested rights of the Bank over the assigned leasehold rights. For one the assets subject of the sale includes the leasehold rights of FPC such as the advance rentals and deposits paid by the latter to and held by the lessors of the Uniwide Family Stores. The bank has prior and vested rights over the leasehold rights constituted on the lease contracts of the stores.

Also, the intended transaction will leave FPC with no assets to own and manage. Eventually, it would only be a matter of time for FPC to die a natural death by way of dissolution which the bank said, is totally averse to the idea of USI to rehabilitate the ailing company.

"If this happens, the Bank's lien on the FPC's shares by way of chattel mortgage, will be put to naught. A convenient way to mock the purpose of the security constituted thereon. This is not far from possible because FPC is a franchisee of the Uniwide Family Stores, Uniwide Holdings Inc., being the franchiser," the Bank said.

FPC is one of Uniwide subsidiaries. It owns and operates 44 retail stores called Uniwide Family Store with various leased areas in Luzon.