Glasgow starts to pay creditors

Glasgow Credit and Collection Services, Inc. recently established a precedent as it started to repay some 9,000 creditors following a move by the Securities and Exchange Commission (SEC) to ask the Anti-Money Laundering Council (AMLC) to unfreeze the bank accounts of the firm.

Glasgow president Manuel Roldan Jr. said the firm is set to pay out some P696 million representing its total liquid assets in five banks. He said the firm’s creditors will be paid close to 80 percent of their outstanding claims. Roldan said the payment is expected to be completed over a 15-day period.

Glasgow becomes the first company to pay back its creditors among several firms issued a cease-and-desist order (CDO) by the SEC in the wake of its crackdown on boiler-room firms. Glasgow lawyers earlier asked the SEC to lift the CDO which was issued in July this year following unverified allegations that the firm might have been involved in the sale of securities which was not allowed under the terms of its incorporation.

Glasgow clarified that the contracts it executed with its creditors are not securities but loan documents that do not assume the nature of an investment. The firm, however, recently told the SEC that it will no longer pursue the lifting of the CDO following its move to file an offer to settle.

In the offer, Glasgow said it will voluntarily wind up and permanently stop its operations. "We will do this after ensuring that all creditors have been reasonably paid," Roldan said.

Glasgow underscored, however, that the offer to settle "does not in anyway mean an admission of guilt or liability". The firm pointed out that in contrast to other firms suspected of engaging in the so-called Ponzi scheme, Glasgow has not been remiss in the payment of its creditors, nor has it engaged in pyramiding. Roldan earlier said the funds of the firm have been placed in legitimate investments.

Roldan lamented that the firm "may have been caught in the maelstrom of negative public opinion against so-called investment firms". He said the firm "does not fault the SEC for its vigilance". We recognize the need for the SEC to strictly police the local investments industry, he added.

He pointed out, however, that the SEC CDO "did not stem from any complaint by its creditors that they have not been paid" since the firm has religiously paid out its obligations.

"The problem arose from a legal question on the nature of the instrument executed between us and our creditors," he said. "The issue was whether they were investment contracts or loan documents," he added.

He said the firm supports the SEC's drive versus illegal investment schemes "so that the industry could be cleaned up and legitimate firms could prosper".