(Second of a three-part series)
HOW long would it take for a court-designated receiver to decide the fate of Philippine Women’s University (PWU), its creditors and stockholders, from receivership to either rehabilitation or liquidation?
Due Diligencer does not have the answer, and would rather refer the questions of anyone interested in corporate welfare to some top officials of the Securities and Exchange Commission (SEC). As regulators, SEC officials would probably be asking themselves whatever happened to the stockholders and the remaining recoverable assets of failed corporations under their watch.
As a matter of fact, for a start, the Benitezes and their lawyers should report PWU’s financials to the public stockholders of STI Education Systems Inc. before a court-appointed receiver takes over. In this way, STI’s stockholders would be able to closely monitor the school’s financial performance and how its revenues, mostly generated from enrolment fees, would be spent or disbursed by the receiver.
But first things first: Will all the court’s appointee or appointees be acceptable to the Tanco group? Will the receiver be a one-man affair working without any help from a committee of CPAs and lawyers? The CPAs would study the financials while the lawyers would provide the legal justification for every corporate act of the receiver.
Now let us talk about money. It won’t be easy for the court to determine the remuneration of the receiver it has appointed to take over PWU’s management. So the question that begs an answer is how much a court-appointed receiver or rehabilitator or liquidator should be paid for his/her services.
The decision on pay and perks would come only after the qualifications of the receiver shall have passed the standard or standards expected by the contending stockholders.
How would the Benitezes and the Tancos be able to make judgment on the receiver’s qualifications? Well, the best measure of one’s efficiency would be previous performance in either bringing back an ailing company to financial health, or in liquidating a company’s remaining but recoverable assets to the satisfaction of all creditors and stockholders.
Simple. Study the previous cases of receivership and ask SEC officials how they decided on the final amount a receiver was entitled to receive. Would the remuneration be based on a percentage of the remaining but recoverable assets, or would the court set the amount based on the need or petition of a receiver? If in percentage, what would it be?
All this, of course, depends on the acceptability of a receiver by the contesting factions of stockholders who are fighting for their respective interests in PWU.
Here is another crucial question that STI’s public stockholders may want to ask: Who between the two groups of stockholders would be recognized by the court as the major creditor group? Will it be the Benitezes, who claim only a P38-million exposure in PWU, or the Tancos, who had computed their own total exposure at P926.1 million as of January 2015?
It is up to the court to decide who should compose the majority of the creditors’ oversight committee. As interested parties, both the Tancos and the Benitezes would name their lawyers and CPAs. How about the suppliers and the employees’ group who also have as much claim over PWU assets ahead of either the Tancos or the Benitezes as stockholders? They, especially the retiring employees, are also entitled to representation in any committee as PWU creditors.
Finally, who will protect the interest of PWU’s paying clients, which are the students? Is the school’s Parents and Teachers Association or PTA still active in protecting the welfare of their children?
Everything here boils down to one big question mark, which is about money. From receivership to composition of a receivership, or rehabilitation or liquidation committee as the case may be, money plays the most vital role. Who will decide the administrative cost of rehabilitation? How will the court deal with the remuneration of CPAs, lawyers, receivers, rehabilitators and liquidators who may be involved in bringing PWU back to recovery?
Certainly, no one would work for free to save PWU from financial collapse. Ask lawyer Monico Jacob who, incidentally, is a member of the Tanco group as president and chief executive officer of STI Holdings, how much a receiver should be worth. He used to be an SEC associate commissioner.