MANILA, Philippines—A Makati court has ordered an international commercial bank to return P233.6 million in loan payments made by a Philippine investment firm after it found that the payments had been covered by a global settlement by their parent companies.
In his 11-page resolution on Aug. 30, Judge Cesar Untalan of the Makati Regional Trial Court Branch 149 ordered Standard Chartered Bank (SCB) to return the payments it had received so far from Philippine Investment (PI) Two under a rehabilitation plan.
SCB is a creditor of PI Two, a Philippine unit of the defunct US investment firm Lehman Brothers Holdings Inc. (LBHI).
After LBHI filed for bankruptcy in New York in 2008, Untalan’s sala became the rehabilitation court to ensure payment of PI Two’s debts to its creditors.
Untalan’s order resolved motions filed by PI Two and another creditor, the Metropolitan Bank and Trust Co., stating that SCB’s parent company and LBHI already had a global settlement in New York, which included SCB’s exposure in PI Two. The settlement was approved by LBHI’s New York Bankruptcy Court in January.
The petitioners argued that given the New York settlement, allowing SCB to continue collecting from PI Two’s rehabilitation proceedings would constitute double payment.
Finding merit in this argument, Untalan decided that “Standard Chartered Bank’s claims against PI Two in this rehabilitation proceedings is now deemed excluded; and Standard Chartered Bank is ordered to return the amounts it already received under the Rehabilitation Plan in the sum of P233,629,672.88 to PI Two.”
“Based on the recent developments that have transpired in the US Bankruptcy Court on the allowed SCB guarantee claim, it has become apparent that so far as the rehabilitation proceedings herein is concerned, that SCB Philippines has been paid and will be paid under future distributions under the Lehman Plan, on account of SCB’s claims in this rehabilitation proceedings. This is the clear and simple implication of the terms set forth in the Stipulation, Agreement and Order that was approved by the US Bankruptcy Court,” Untalan said in his decision.
The order removes SCB’s standing as a creditor to be paid under PI Two’s rehabilitation plan. It also ordered the release from escrow of P34.5 million in loan payments previously earmarked for SCB.