'Plastics king' forces regulators to stop EIB asset sale

by Jun Vallecera, BusinessMirror

Posted at Dec 13 2012 09:51 AM | Updated as of Dec 13 2012 05:51 PM

MANILA, Philippines - Businessman William Gatchalian’s efforts to recover the P1.47 billion he invested in the now-closed Export and Industry Bank (EIB) have forced regulators to stop the lender’s bidding sale of its remaining assets.

In a statement released on Wednesday, the government said Gatchalian, known in some circles as the “plastics king,” raised contentious points in his complaint that compelled the regulators’ move. The sale was supposed to take place on October 18, 2012.

Also up for sale was EIB’s license as commercial lender. This license could only be bought at premium because of an ongoing moratorium.

According to the Philippine Deposit Insurance Corp. (PDIC), legal complications presented by Gatchalian’s complaint worried the bank’s shareholders, who only want to dispose assets that have proven to be problematic in recent months.

“EIB stockholders are willing to give their consent [to the bidding sale], but cited some concerns before doing so.?They expressed concern over the claim on the bank’s assets by parties other than the depositors and creditors of the bank as of its closure on April 27, 2012,” the PDIC said. It added that the shareholder’s consent in any rehabilitation attempt after the bidding sale is an indispensable component of the entire process.

Another concern raised was the need to get consent from all creditors and uninsured deposits.

Gatchalian-owned companies that have contingent claims to the bank’s remaining assets include Forum Holdings Corp., Pacific Rehouse Corp., East Asia Oil Co. Inc., Pacific Concorde Corp. and Mizpah Holdings Inc.

Representatives of these companies filed with the Regional Trial Court in Makati City a case for the declaration of liability with prayer for the issuance of a temporary restraining order and/or preliminary injunction to prevent the EIB’s rehabilitation through the purchase of assets and assumption of liabilities.

The case stemmed from the reported losses Forum Holdings and its sister companies incurred when EIB Securities, an affiliate of the bank, allegedly sold DMCI shares without their consent.