The Securities and Exchange Commission (SEC) has granted the request of Urbancorp Investments Inc., the collapsed investment house of Urban Bank, for a 60-day debt payment reprieve.
In its order, the SEC said the suspension of debt payments will keep Urbancorp's creditors at bay which is needed for the investment house to get its finances and remaining assets in order.
In another order, the SEC's brokers and exchange department withheld the revocation of Urbancorp's license to operate as an investment house since this would render moot and academic the suspension of debt payments order, and will consequently, make it impossible for the investment house to implement its rehabilitation plan.
"The undesirable court actions will surely paralyze Urbancorp's operation, bring forth the possible dissipation, loss and wastage of corporate assets and properties and put to naught all the rehabilitation efforts," the SEC order stated.
Urbancorp which is 40 percent owned by Urban Bank claimed in its petition it owns and possesses sufficient assets to cover all its obligations and liabilities estimated at P5.8 billion, of which P557.110 million consists of the liabilities as in investment house, and P5.274 billion comprise the liabilities of its trust operations.
On the other hand, Urbancorp said its assets total P6.338 billion.
Urbancorp in its petition, said it foresees the impossibility of meeting its obligations as they mature.
The investment house blamed its financial collapse to Bangko Sentral ng Pilipinas issuance of Circular 229 which converted the bank into a lower category, the misinterpretation and negative news about the downgrading of Urban Bank into a thrift bank which resulted in the loss of confidence in the stability and financial condition of the bank, the Wincorp and ASB realty fiascos and the refusal of Citibank to honor C&P papers which posed financial threats to wary investors that eventually led to the massive withdrawals of P3.5 billion.
Urbancorp said the heavy withdrawals unduly strained the liquidity position of the bank. This was made worse by the negative text messages involving Urban Bank, the declaration of bank holiday or immediate placement of the Urban Bank under the receivership of Philippine Deposit Insurance Corp., and the renovation of its trust license and ordered the immediate cessation of its trust operations last May 3.
The SEC said the debt reprieve will give Urbancorp to fine-tune its rehabilitation plan.
The SEC will set a hearing this month to create a management committee or interim receiver for Urbancorp. -