|
THE
Court of Appeals (CA) has issued a 60-day temporary
restraining order (TRO) stopping the Regional Trial
Court (RTC) in Batangas City from implementing its
December 3, 2007, ruling which placed Steel Corp. of
the Philippines under rehabilitation.
In a
four-page resolution issued on June 18, the CA’s
Eleventh Division said the TRO will take effect upon
posting of P500,000 bond by Steel Corp.
“To
preserve the rights of the parties pending resolution of
this case on its merits, a temporary restraining order
is hereby issued, conditioned upon the posting by
petitioner of a bond in the amount of P500,000 effective
for 60 days from the posting of said bond, directing the
Regional Trial Court of Batangas, Branch 2, respondent
Equitable PCI Bank [EPCIB], rehabilitation receiver
Atty. Santiago Gabionza Jr., and all those acting in
their behalf to cease and desist from enforcing and
implementing the assailed decision dated December 3,
2007,” the appellate court ruled.
Earlier,
a separate division of the appellate court had directed
the Batangas RTC to terminate the proceedings for the
rehabilitation of the Steel Corp. of the Philippines,
saying it is unlikely that the rehabilitation may
still be implemented in accordance with its terms.
In a
34-page ruling issued by the appellate court’s Twelfth
Division through Associate Justice Juan Q. Enriquez Jr.,
it held that the termination is warranted pursuant to
Section 27, Rule 4 of the Interim Rules of Procedure on
Corporate Rehabilitation.
The said
provision states that, “In case of the failure of the
debtor to submit the rehabilitation plan, or the
disapproval thereof by the court, or the failure of the
rehabilitation of the debtor because of failure to
achieve the desired target or goals set forth therein,
or the failure of the said debtor to perform its
obligations under the said plan, or a determination that
the rehabilitation plan may no longer be implemented in
accordance with its terms, conditions, restrictions, or
assumptions, the court shall upon motion, motu propio,
or upon the recommendation of the Rehabilitation
Receiver, terminate upon the successful implementation
of the rehabilitation plan.”
Steel
Corp’s. lawyer Ferdinand Topacio said they would file a
petition seeking the consolidation of all cases pending
before different divisions of the appellate court.
The TRO
stemmed from an appeal filed by Steel Corp. seeking to
prohibit the Batangas RTC, the rehabilitation receiver
and the creditors from executing the approved
rehabilitation plan.
In its
appeal, Steel Corp. asked the CA to adopt an updated
counter-rehabilitation plan which will allow the company
to pay its obligations to its creditors over a
reasonable period and to allow the company to regain its
financial health, which it argued is the real objective
of the law on corporate rehabilitation.
Steel
Corp. explained that its total debt as determined by the
rehabilitation court stands at P7.205 billion, while its
total physical assets amount to P13 billion.
“It is
thus incontrovertible that Steel Corp.’s prospects
remain very positive. This, ironically, provided the
motivation for BDO [Banco de Oro]-EPCIB to file the
petition for rehabilitation—not really to rehabilitate,
but to take it over from its original owners,” Steel
Corp. said.
BDO-EPCIB’s proposed rehabilitation plan called for a
restructuring of some P2.2 billion of Steel Corp. debt
that it finds sustainable, and the outright conversion
of the balance of the Steel Corp. debt in the amount of
P3.12 billion that it considered “unsustainable.”
Under
the scheme, Steel Corp. said, the conversion into common
shares at a ratio of P100 of debt to one common share
would ultimately result into 90 percent-ownership of
Steel Corp.
The
further conversion into redeemable shares at a ratio of
P1 of debt to one redeemable share would translate into
practically 100-percent ownership of Steel Corp. |
