By Amado P. Macasaet
A business needs the permit of the mayor to operate. Without it, Steel Corporation of the Philippines or any business operation, cannot do anything.
The case of this company is weird in some ways. First, it ran into financial troubles that prompted its creditors to take over. Steel Corp. came up with a prepayment plan to reduce obligations.
It was a successful scheme in the sense that about 70 percent of the creditors agreed to a rehabilitation process which, under the law, must be approved, by the court and a receiver appointed.
The first receiver was rejected by the company for reasons it has not needed to explain. In the end, a receiver acceptable to the parties was found. The rehab process was supposed to be well on the way from that point.
Strangely, the judge suggested liquidation of the assets presumably for the company to have funds to pay its creditors who, the judge mindlessly ignored, agreed to the rehab to give the mill another chance at recovery and for them to be paid with cash instead of assets they would sell if the liquidation had been the mode.
The case hopped from one RTC judge in Batangas to another. One or two judges inhibited themselves or were asked to inhibit.
In any case, a sensible judge learned to appreciate the fact the company may be brought back to life as shown by the successful implementation of the payment reduction program. But then he also got out of the case. The rehab program landed with another judge who sits on the program instead of proceeding with it.
The treasurer of Batangas threw a monkey wrench on the path to the rehab.
He demanded the assets of Steel Corp. be sold to satisfy tax obligation to the city of Batangas. As if that were not enough the mayor of Balayan City where Steel Corp. has a multi-billion plant, refuses to renew the permit to operate unless the tax presumed to be overdue is paid.
As if those were not bad enough, the case was transferred to another commercial court with a judge who seems to have a latent hatred for rehab.
The tax claims of the treasurer of Batangas City and the mayor of Balayan City are being used as lame excuses to deny the company a permit to operate.
A judge refuses to reconsider his decision disallowing rehabilitation in spite of the consent of 70 percent of its creditors to allow the company a chance to get back at life. It seems only the stockholders of the company and their creditors realize the rehab process exits at some point after a clear determination the company can stand on its feet.
Schedule of payment of the creditors is presumably drawn up after the exit of the rehab process.
An out-of-court restructuring is beyond the control of the commercial court that cannot see the wisdom of the rehab.
This route cannot produce positive result if the treasurer of Batangas city and the mayor of Balayan continue to “harass” Steel Corp. with tax claims.
Maybe Finance Secretary Cesar Purisima should restrain the treasurer of Batangas from pursuing his tax claims. Maybe, Interior and Local Government Secretary Mar Roxas , a presidential hopeful in the 2016, should tell the mayor of Balayan to issue Steel Corp a permit to operate precisely to give it a chance to breathe life unto itself.
The case seems to be so small a matter for their valuable time.
In the first place, hardly anybody appreciates the fact that, like nearly all such companies, Steel Corp. was practically brought down to its knees by the smugglers of steel products.
Massive smuggling came at a time when Steel Corp. was just beginning to feel its way into the market. In a manner of speaking, the smugglers made Steel Corp. a still-born operation.
A consortium of banks led by Banco de Oro would not have lent Steel Corp. billions of pesos if they knew the company did not have a chance.
In spite of present troubles, the creditors agree to the rehabilitation process after they saw the success of the payment reduction program.
When private businessmen and their creditors agree to a rehab as the best way to settle obligations and put the company back on its feet, should the state through its local government agencies and the courts interfere with tax claims to dig the company’s grave?
Or will some people, benefit from the feigned death. We do not know. We say maybe.
If we piece events together, we cannot help but suspect some powerful people are out to take over Steel Corp. without paying for what it is really worth.
If the treasurer of Batangas orders the sale of the asset to satisfy a tax obligation, said assets will be sold — presumably in public bidding.
Or, arbitrarily, the city of Batangas becomes the owner of the plant having taken over its assets in payment of tax obligations.
If this comes to pass, the city of Balayan will be paid its tax claims. A mayor’s permit will be issued.
But who will run and own the mill?
Not the creditors who wanted rehabilitation as the mode for them to get paid. Not the owners of the steel mill. But who? That is the big question only the treasurer of Batangas, the judge of the rehabilitation court and the mayor of Balayan can answer.
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Email:amadomacasaet@yahoo.com
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