Recovering Victorias Milling agrees to pay subsidiary’s loans
Leading sugar producer Victorias Milling Corp. (VMC) seeks to amend its rehabilitation plan to include about P1.19 billion worth of contingent liabilities currently the subject of ongoing litigation cases with creditor-banks.
VMC recently filed with the Securities and Exchange Commission (SEC) a motion to alter the rehab plan, specifically to address its unresolved and contingent liabilities consisting of refined sugar delivery orders (RSDO) and refined sugar quedans (RSQ). These were purportedly issued by VMC and used by its 51-percent subsidiary North Negros Marketing Co. Inc. (Nonemarco) to secure the latter’s loan with certain banks.
The sugar firm has not honored these as legitimate loans since it’s Nonemarco who contracted them. The parent company also denied liability, arguing that these claims “lacked any factual or legal basis and that the officers who issued them acted fraudulently.”
Several creditor banks have filed collection cases against Nonemarco summing up to P1.19 billion.
This issue had not been settled in VMC’s creditor-driven rehab program. These are deemed by the company as contingent liabilities subject to final judicial resolution.
VMC now seeks to address these liabilities by altering the rehab plan and extending the liabilities to 10 years.
“VMC is offering to pay the banks over 10 years to avoid further litigation and put a closure to this and hopefully to make the rehabilitation successful,” said a source privy to the discussions.
This means that instead of waiting for a final judgment to pay the claims, VMC now agrees to restructuring these liabilities.
In 2015, the SEC special hearing panel ordered VMC to settle the claim of one of the claimant-banks. An appeal filed by VMC was denied by the SEC en banc in 2016. In the same year, the SEC panel also ordered VMC to settle the claim of another bank, an order that was upheld by the en banc.
VMC, in turn, sought the Court of Appeals’ help in 2017 to review both cases.
The appellate court consolidated the cases, and on October 13, 2017, it promulgated a decision granting VMC’s petitions for review, and accordingly, set aside the SEC en banc decisions.
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