SEC rejects Uniwide offer to settle back taxes using escrow fund

The entry of French retailer Casino Guichard-Perrachon into the Uniwide group may take longer than expected.

This possibility loomed after the Securities and Exchange Commission (SEC) turned down the request of Uniwide’s receivers to "borrow" P80 million in escrow fund from the proceeds of the sale of the assets of First Paragon Corp. (FPC), a Uniwide subsidiary, to pay for the parent company’s back taxes.

Monico Jacob, chairman of the Uniwide receivership committee, last month sought the SEC’s permission to gain access to the fund in order to pay off Uniwide’s P130-million tax delinquency in properties to be transferred to the bank creditors and to Casino.

A fund representing the proceeds of the sale of FPC’s assets is being held in escrow and is earmarked for payment to FPC’s creditors in accordance with the Bulk Sales Law. Jacob said part of the amount, or P80 million, has been set aside as payment to Uniwide Sales Warehouse Club Inc., a creditor of FPC.

Jacob said that while they are making "good progress" in implementing the amended rehabilitation plan of the Uniwide group, several issues remain to be resolved in order to meet the conditions set by Casino before it eventually puts in fresh equity into Uniwide.

Aside from the payment of back taxes, Casino is also seeking the approval of Uniwide’s rehabilitation plan by its major bank creditors. There are at present seven major creditor banks that have given their go-signal while three more have yet to express their concurrence.

"Uniwide has no source of fund for the payment of the above expenses as they continue to lose from operations," Jacob said.

He added the P80 million will be immediately repaid as soon as Casino makes its investment.

But the SEC said since Casino’s infusion will only materialize if the rehab plan is fully implemented, "then we will in effect be placing the interest of the creditors of FPC in a very precarious situation if we are to grant the request."

The agency added such a move would also put it in technical violation of the Bulk Sales Law, which prohibits the purchase of mortgage of properties for purposes other than for the pro rata payment of bona fide claims of the vendor’s creditors.