Bungled rehabilitation

I’m sure many are familiar with the rise and sudden downfall of one of the retail chain icons up to the 1990s – Uniwide Sales.

But for those who are not, a recent article about Uniwide, quoting its founder Jimmy Gow and several official documents that were released after a Parañaque court ordered the liquidation of the company in 2016, could shed light on how something so successful can fail just like that.

What’s particularly interesting is the part regarding Uniwide Holdings Inc.’s (UHI) rehabilitation.

From October 1999 to October 2001, UHI saw three rehab plans. For those not familiar with what corporate rehabilitation is, it is one that is intended to enable a distressed company to gain a new lease on life and to continue its business as a going concern. It is not intended to close and liquidate a company.

UHI’s original rehab prepared by Buenaventura Filamor Echauz (BFE). This was amended twice by the Securities and Exchange Commission-appointed receivership committee composed of Monico Jacob as chairman, and Cornelio Peralta and Arthur Aguilar as members. Its chief finance officer at that time, Jaime Cabangis, was on top of Uniwide’s operations.

According to the article, BFE’s rehab plan, which was submitted to the SEC in October 1999, “had 15 action plans, including the return of Uniwide to its core business of retailing and restructuring of all loans.”

A few months later, the receivership committee came up with the first amendment to the rehab plan, highlighted by the entry of French retailer Casino Guichard-Perachon, which committed to invest P3.57 billion. The amendment called for the total repayment of all loans via a combination of dacion en pago and cash payment at a discount.

The committee secured a 20-percent discount from the creditors, who would be paid through a dacion en pago scheme involving Uniwide assets and the money to be invested by Casino. With the 20 percent discount, which was approved by the creditors, the total debt of Uniwide was reduced to only P9 billion. At that time, Uniwide’s total assets was still at P19.9 billion, according to BFE.

But something went wrong during the progress of the transaction with Casino and the latter backed out of the deal, leaving behind around P60 million in cash advances.

With Casino gone, Jacob’s team presented the second amendment to the rehab plan, which was seen as more damaging to Uniwide’s cause since banks were allowed to raise the original debts by 20 percent.

Current Uniwide Group president Jesus Arranza said the second amendment of the rehab plan effectively increased the value of Uniwide debts by 40 percent from the first amended rehab plan. Arranza also took note of the committee’s decision to make Gow spend for all the costs to implement the dacion en pago, including the capital gains tax equivalent to six percent of the transfer value.

Observers say this was like kicking somebody who was already down on the ground and Uniwide got the wrong end of the deal.

The result was a disaster. According to the article, it obliterated Uniwide’s assets, effectively liquidating it, instead of rehabilitating it.”

Surely, this is not how to rehabilitate a company.

Flawed system

Just recently, I had a very important breakfast meeting in Makati, something everybody who lives in the north dreads.

And why not? Given the traffic situation in Metro Manila, there is always a huge possibility that one you will not make it on time for a meeting. If the meeting is at 9 a.m. a minimum of two and a half hours is given as an allowance for traffic, which could turn from bad to worse given the flashfloods, vehicle breakdowns, or accidents, among others. This means I have to leave my place before 7 a.m., at least if I want to make it to my meeting.

I thought of bringing my car to Makati, but then the Metro Manila Development Authority (MMDA) at that time was doing a dry-run of the driver-only rush hour ban. This meant I could not take EDSA and would have had to rely on my Waze app to navigate me through the inner streets.

So I decided to just book a ride via Grab. It took a little while before the car got to my place but even with that, I safely arrived at my destination, and early. Going back, I also booked a ride and because it was just a little after lunch, I didn’t encounter any problem finding one. In short, I got to my meeting and returned home in one piece.

The advent of transport networking vehicle services, or TNVS, made possible through ride-hailing apps on mobile phones or on one’s computer, is a savior for many Metro Manila commuters. The more providers, the better because healthy competition is always good for the consumer.

A recent study by Research and Tech Lab (RTL) showed that of the 781 publicly shared sentiments across social media platforms from March to May this year, the study showed that half or 46.47 percent of online Filipinos choose TNVS as their primary mode of transportation. The others take take other modes of public transport.

Majority of the riders like the convenience, security, and fixed rates offered by the TNVS system.

But the Land Transport Franchising and Regulatory Board (LTFRB), the government agency tasked with accrediting and licensing TNVS providers, does not seem to realize this.

We heard that as of February this year, the LTFRB only allows 65,000 TNVS cars, a number which has to be shared by Grab and the newcomers, which is a far cry from the 600,000 passenger booking requests per day which Grab alone receives. This is the reason why it is often next to impossible to book a ride during peak hours.

With our mass transport system still in disarray, and in no way comparable to that which our neighbors in the region have, the LTFRB may want to rethink this.

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