CAP files petition for rehabilitation

Pre-need firm College Assurance Plan Philippines Inc. (CAP) has filed a petition for rehabilitation with the Regional Trial Court of Makati, claiming it was forced to resort to this move to protect the company and its planholders from the continued bullying tactics of the Securities and Exchange Commission (SEC).

In a statement issued yesterday, CAP said: "Under the guise of exercising its regulatory functions, the SEC took it upon itself to threaten CAP with not only administrative sanctions but also the creation of a management committee and other forms of management control should it fail to explain its supposed violations of the Pre-Need Rules."

CAP further maintained that the SEC’s proposed creation of a management committee for CAP is not "really aimed at rehabilitating the company but rather at its eventual liquidation" at the expense not only of CAP and its employees, but also of its thousands of planholders.

The pre-need firm, one of the country’s biggest, cited the imposition by the SEC of the Pre-Need Uniform Chart of Accounts (PNUCA) in 2002 as one of the key factors for CAP’s present difficulties. It claimed that the imposition of the PNUCA was made "without proper notice and consultation in the middle of the game" which resulted in the "bloated yet theoretical" trust fund deficiency.

The SEC had suspended CAP’s dealer’s license last year due to the alleged deficiency in CAP’s trust funds resulting from the application of the PNUCA.

CAP said it sought a court-administered corporate rehabilitation precisely to protect the company from the SEC’s mischievous design for them. "It is CAP’s desire to properly rehabilitate itself to be able to fulfill its commitments and obligations to its planholders and it can do so only under the supervision of the court which is the proper forum, therefore, as mandated by law."

Under its rehabilitation plan, CAP affirmed its commitment to continue paying tuition benefits to all its planholders even while it undertakes efforts to build up the trust fund during the proposed eight-year rehabilitation period.

From September 2004 to July 2005, CAP had made P1.763 billion in payments to its planholders. Another P12.9 million in bank manager’s checks are waiting to be claimed by 862 planholders from Metro Manila and P5.04 million for 689 planholders in the company’s regional finance centers.

The rehabilitation plan also contains financial commitments for the infusion of additional capital as well as the liquidation of real estate assets of the trust fund to build up CAP’s equity and liquidity. It likewise promises a highly streamlined company operations and contribution of all foreign equity infusions to the trust fund to ensure payment of benefits to all planholders.

Based on its eight-year business plan, CAP said there will be no suspension of tuition payments. "Fixed value plans will be paid as they mature. Miscellaneous or ‘other standard fees’ will be revisited."

From a trust fund balance of P6.7 billion as of end-July 2005, CAP said it would seek to build this up to P14.36 billion, mainly from the sale of real estate properties, existing investments and future sale of new plans (assumed to begin in 2006).

After its rehabilitation, CAP said its trust fund will have an ending positive balance of P21.05 billion by 2025, with liquid assets of P11.8 billion. Capital impairment, in turn, will be fully eliminated by 2021.