SEC orders liquidation of Uniwide assets

MANILA, Philippines - The Securities and Exchange Commission (SEC) has ordered the liquidation of all assets of cash-strapped Uniwide Group of Companies, ending the decade-long saga for the former retail giant.

In a memorandum, corporate regulators ordered the dissolution of all the companies in the group, namely Uniwide Sales Inc., Uniwide Holdings Inc., Naic Resources & Development Corp., Uniwide Sales Realty and Resources Corp., First Paragon Corp. and Uniwide Sales Warehouse Club Inc.

Liquidation of all existing assets will follow to pay existing debts.

“The Special Hearing Panel (SHP) saw the enormous capital deficit of (Uniwide Group),” SEC said.

When the second rehabilitation plan was approved in December 2002, the Uniwide Group’s capital deficiency stood at P1.362 billion but as of September 2009, this ballooned to P9.567 billion.

“There are no indications that fresh capital is forthcoming to rescue the Uniwide Group. These considerations convinced the SHP that [Uniwide Group] can no longer be rescued,” SEC said.

Early in the rehabilitation phase of the Uniwide Group, there were reports that several interested parties led by the Wal-Mart chain of the US and two investor groups from Hong Kong and Taiwan have sent feelers for exploratory buy-in negotiations. However, no agreements pushed through.

SEC said the panel also found out that Uniwide Group failed to achieve the desired targets in its rehabilitation plan.

For instance, revenues from operation dropped 2.69 percent in 2005, 8.65 percent in 2006, 6.09 percent in 2007, 4.95 percent in 2008 and 70.97 percent in 2009.

Creditors of Uniwide Group include Philippine National Bank, Land Bank of the Philippines and East West Banking Corp. As of June 2010, Uniwide Group’s debts hit P10.45 billion.

At the time of filing its rehabilitation plan in 2001, Uniwide had secured debt of around P5.82 billion and was solvent as assets exceeded its liabilities. From 2003 to 2009, Uniwide’s total liabilities consistently surpassed total assets. As of 2010, assets were almost depleted, amounting only to P2.726 billion as against liabilities of P12.29 billion.

The SEC approved Uniwide’s second amended rehabilitation in December 2002 based on the group’s assumptions it could generate enough cash from retail operations to support its rehabilitation plan.

Debunking Uniwide’s claim that it is on the road to recovery, creditors argued that the rehabilitation case should be terminated since this has been dragging on for more than 10 years and Uniwide has not achieved the desired goals under the rehabilitation plan.