Legacy files petition for dissolution
The Manila Times
Dec. 19, 2008
By Likha Cuevas-Miel, Reporter
After shutting down its operations and offices unannounced, Legacy Consolidated Plans Inc. filed a petition for voluntary dissolution with the Securities and Exchange Commission (SEC) late Thursday.
The petitioner, a member of the Legacy Group that is linked to banks that were recently placed under receivership, filed 10 separate petitions for voluntary dissolution where creditors are affected for each of the companies that were deemed insolvent.
According to Gerard Lukban, SEC secretary, filing for dissolution could be equated to filing for bankruptcy. This meant that the assets of the company were less than their liabilities or the assets are not sufficient to service planholders.
The other companies that filed for dissolution were Legacy Card Inc., One Realty Corp., Galaxy Realty and Holdings Inc., Legacy Consolidated Asset Holdings Inc., Fusion Capital Corp., Conventional Realty Corp., Shining Armour Property Inc., Legacy Motors Inc. and Scholarship Plan Phils. Inc.
Last week, The Manila Times reported that Legacy Consolidated shut down its operations without warning to neither the SEC nor the planholders. After inspecting the company’s offices to confirm the padlocking, the regulators found that the preneed firm’s offices have been closed since December 8.
Under Section 119 of the Corporation Code, dissolution where creditors are affected “may prejudice the rights of any creditor.” The SEC would then have to issue an order that would state the purpose of such petition and fix a date on or before anybody can file objections to it. This should be at least 30 days but not more than 60 after issuing the order and published in a newspaper of general circulation.
After five days, the SEC will hold a hearing on the petition and try any issue made by the objections filed. If it did not receive any objections, then the SEC would dissolve the company and direct the disposal of the assets of the troubled company.
Lukban said the regulators would assign a receiver to collect the assets and pay the debts, or in the preneed firm’s case, the planholders of Legacy. This is the “damage control” that the SEC would do “to safeguard that the trust fund is intact.”
Losses, ‘inhospitable’ market
“The petitioner is presently insolvent because its assets are no longer enough to cover its liabilities. This lamentable circumstance was brought about by inhospitable and bleak market conditions which have persisted for a long time, which likewise affected its investments in other corporations/industries,” the Legacy Consolidated petition read.
With that, the firm’s management deemed that it is no longer viable and “will result [in] more losses to the greater prejudice of all its stakeholders,” Legacy Consolidated said.
The firm nominated lawyer Danilo Conception as its liquidator, to service the claims against it that amounted to P1.06 billion, including all contractual liabilities.
Lukban said what happened to Legacy Consolidated was “worse than Pacific and CAP,” because Legacy does not have any means to operate or rehabilitate anymore whereas the two other preneed firms could still be salvaged. Pacific Plans and CAP are currently under rehabilitation.
Lukban said the SEC has called the attention of Legacy Consolidated “several times in the past” on the deficiencies in its trust fund. But the company was able to address this “so that the situation was not yet deemed alarming.”
“If you remember, Legacy was buying the portfolio of Danvil this year, but it did not push through,” he added.
It turned out that both preneed firms have capital deficiencies. Legacy, as reported earlier by The Times, does not have any license to sell next year and has not submitted its latest financial report. Danvil, which has Family First as its marketing arm, did not have a license to sell starting this year.
With the collapse of Legacy, all the SEC could do is support the planholders, who should file the case against Legacy since they are the aggrieved party. “Planholders have to be vigilant,” Lukban said.
PEP hits regulator
Meanwhile, Victoria Gomez, the media-relations person of the PEP Coalition, told The Times that they have been warning the regulators about Legacy since 2006.
“We have given ample warnings to the SEC regarding Legacy, aside from Pacific Plans, Platinum, The Professional Group [TPG] and College Assurance Plan [CAP],” she said.
Gomez added that there were already Legacy planholders who asked for help about their problems, such as difficulty in claiming benefits. She said that these planholders have been told by Legacy Consolidated to come back some other time or that the benefits would be paid in installments.
“That was already a warning sign,” Gomez said.
But the group could not intercede in behalf of these planholders because they did not have sufficient evidence that something was amiss with the company and “no one was yet claiming that they were not being paid.”
“What was SEC doing? Weren’t CAP and Pacific Plans enough for them to start sniffing around and investigate companies like Legacy?” Gomez asked.
Imelda Huala, a Legacy Consolidated planholder from Pilar, Bataan, told The Times over the phone that she would welcome the liquidation of her first child’s Optimax Plus education plan. Her child is already 10 years old.
“Even if they could only give us back the premiums that my husband paid, that would be enough as long as we can get something out of it. I don’t have anything left. My husband died of colon cancer and the livelihood that he left me with was taken away from me. I don’t know where we can get the money for my eldest child’s college education. All I can do is fight for it,” she said, crying.
Gomez of PEP Coalition said that the Legacy planholders should get together and form a group to gather all the pertinent documents, cases and other information needed to lodge a case against the management of the preneed firm.
“When they get the people—50 would be enough—we will help them, coordinate with them. It is hard when they come to us individually because how can we help them when we do not know Legacy?” she added.
Gomez said the planholders should be proactive to fight for what is due them.
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