PBCom bucks sale of Uniwide subsidiary

The Philippine Bank of Communications (PBCom), one of the creditors of cash-challenged Uniwide Group of Companies, is opposing the sale of First Paragon Corp. (FPC) for P145 million to I Mart International Corp. (I Mart).

FPC, one of the subsidiaries of Uniwide, is set to close the sale on Feb. 7 coinciding with the expiration of the third 60-day debt relief given to the retail and property group.

In its comments submitted to the SEC, PBCom said the sale is not valid because the bank's approval was never sought and its conditions, ignored. At the same time, the sale, if it pushes through, will violate Section 4 of the Bulk Sales Law.

PBCom said it informed the SEC on Oct. 15, 1999 that it was giving its consent to the sale, but wanted certain conditions to be integrated into the terms of the sale. However, it never got a response from the SEC nor from Uniwide's interim receivership committee. Instead, Uniwide chairman Jimmy Gow went ahead with the sale last Dec. 9, 1999 which the SEC approved last Dec. 20.

PBCom said that upon looking at the MOA between FPC and I Mart, it was clear that not one of its conditions were considered.

These include: withdrawal of the pending petition for declaration of a state of suspension of payments in respect of FPC, simultaneous with the execution of any document evidencing the proposed sale; all proceeds from the sale be held in escrow subject only to the rights of PBCom as direct creditor to receive payment on FPC obligations, and no disposition of such proceeds be made from the escrow account except upon mutual consent of all FPC creditors.

Moreover, PBCom said its rights and interest as FPC's direct creditors should be preferred over any accommodation or third-party guarantee which may have been granted by FPC or any other claim by FPC affiliates.

PBCom added the sale also violated the Bulk Sales Law which requires advance written disclosure to creditors by delivering a sworn statement of listing of assets and credits, and the pro-rate application of the proceeds to bonafide claims of the seller, mortgagor, transferor or assignor. This provision also means the release of the escrow fund in favor of the PBCom and USWCI as the only creditors of FPC.

The sale of FPC is part of a three-pronged recovery plan for Uniwide which calls for an immediate equity infusion in the retail business, dacion en pago of non-operating assets and restructuring of remaining liabilities.

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