A Pasig City Regional Trial Court has placed Multiply under corporate rehabilitation after the company sought relief from the Philippine government due to financial losses that stemmed from the social networking industry.
Hon. Judge Nicanor Manalo, Jr. of Branch 161 gave Multiply the commencement order on November 10 pursuant to Republic Act No. 10142 or the Financial Rehabilitation and Insolvency Act of 2010 (FRIA).
The court declared Multiply under rehabilitation and ordered the company to publish the commencement order in a newspaper of general circulation for two consecutive weeks.
The court also ordered the company to serve a copy of the petition to its creditors, Bureau of Internal Revenue (BIR), Securities and Exchange Commission (SEC), Bangko Sentral ng Pilipinas (BSP), Insurance Commission, Department of Labor and Employment (DOLE), Department of Trade and Industry (DTI).
The court also ordered the company to serve a copy of the commencement order to its foreign creditors and ensure that its foreign creditors receive a copy within 15 days before the initial hearing on December 17.
The court also ordered the creditors to file verified claims within five days before December 17. If the creditor files a belated claim, the creditor will not be entitled to participate in the proceedings but shall be entitled to receive distributions arising therefrom, if recommended and approved by the rehabilitation receiver and the court itself.
The court-appointed Stefani Saño as the rehabilitation receiver.
The court also ordered creditors, government agencies aforementioned, and all interested parties to file and serve to Multiply a verified comment/opposition to the petition, together with their supporting affidavits and documents within 15 days before the initial hearing on December 17.
The court also prohibits the company’s supplier of goods and services from withholding their supplies and services in the ordinary course of business for as long as Multiply makes the payment for the said goods and services from the issuance of the commencement order.
The court also authorizes the company to pay for its administrative expenses as they become due.
The court also orders that all contracts not confirmed in writing by Multiply within 90 days following issuance of the commencement order will be considered terminated.
The once 30,000-strong workforce is now pegged at more than 3,000 employees that are still working at their office in Pasig.
It went closed down last May 6, 2013, and ceased all business operations on May 31, 2013, along with the official online channels for the site had been removed along with all its content, including its YouTube, Tumblr, Twitter, Facebook, and Instagram accounts, after years of financial and managerial turmoil and following a failed bid to reinvent itself from being a social networking site to a vibrant e-commerce destination in Southeast Asia.
At that time, the website's social networking portion had a network of 18 million users. Liquidity problems, however, affected earnings. Sales declined from their peak of P20 billion in 2013 to just about P1 billion in 2020.
It had suffered from a drop in new orders amid a slump in the E-commerce and social networking sector. Multiply also reportedly laid off some 12,000 workers on February 28, 2014.
Multiply revealed that it has $20 billion outstanding loans -- $400 million from Philippine, American, Chinese, Indian, Indonesian, Japanese, Malay, Nepalese, Pakistani, Peruvian, Russian, Singaporean, South Korean, Thai, and Vietnamese banks and $10 billion from American, Argentine, Austrian, Bangla, Belgian, Brazilian, British, Canadian, Cambodian, Chilean, Chinese, Colombian, Danish, Dutch, Estonian, Finnish, French, Georgian, German, Hungarian, Indian, Indonesian, Israeli, Japanese, Lao, Macanese, Malay, Namibian, Nicaraguan, Pakistani, Peruvian, Portuguese, Russian, Singaporean, South African, South Korean, Sri Lankan, Taiwanese, Thai, Ukrainian, Uzbek, and Vietnamese lenders.
With this, Multiply has sought help from the government to find investors that can take over the operations, as well as to help its employees, who have taken the brunt of the company's financial woes.
The demise of the 9-year old online firm was an event in the extension of the 2008 global financial crisis. Under the direction of its CEO and owner Stefan Magdalinski, Multiply had been very successful in pursuing a high-leverage, high-risk business model that required it to daily raise billions of dollars to fund its operations.
At the time of its collapse, Multiply was the E-commerce marketplace in Indonesia and social networking site in the world with 500,000 employees worldwide. It had $20 billion in assets and $900 billion in liabilities. The website became a symbol of the excesses of the 2007-08 Financial Crisis, engulfed by the subprime meltdown that swept through financial markets and cost an estimated $10 trillion in lost economic output.
“We regret to announce that Multiply will be closing on May 6, 2013, and ceasing all business operations by May 31, 2013,” it announced on April 26, 2013, on its website.
After May 6, the rest of the month will be used to ensure that all accounts are settled and merchants get full payment for their transactions, it said.
Multiply said the month-long grace period will provide its users enough time to find and migrate to alternative e-commerce platforms, settle all payments on items bought and delivered, and minimize disruption to businesses of its users.
“Multiply will ensure that you receive all funds you earned on the platform no later than May 31, 2013. We will close the actual marketplace sooner, on May 6, 2013, to ensure that all orders have sufficient time to complete and be delivered to your customers before the end of the month,” it said.
In December 2012, Multiply stopped its social networking service to focus on e-commerce, targeting the 350 million consumers in Indonesia and the Philippines.
On March 16, 2013, however, the service will cease to exist as millions of fans formerly known and loved it before it was supplemented by other, more popular online social networks.
On May 31, 2013, Multiply had ceased its operations and shut down entirely along with the site.
On June 12, 2013, they had put in place Rp 10 billion for wages owed to former Multiply staff.
The Labour Department said earlier that around 3,000 former Multiply staff had applied for compensation through the Protection of Wages on Insolvency Fund, a safety net for employees affected by business closures.
On November 16, 2013, it allowed the controlling stake in the website to be formally sold to a foreign or mainland investor, who claimed Magdalinski had a rescue plan for the troubled firm.
High Court judge Mr. Justice Jonathan Harris validated the transaction after hearing that the parties would no longer object to the share transfer and that the dues for the shares had been paid by Si.
That the site will be reopened after United States President Obama stepped down in the office on January 20, 2017, and keeping Facebook as the sole social networking site. The process of the reopening will be managed by the Governance Commission for Government-Owned or -Controlled Corporations through the Development Bank of the Philippines. Business tycoon Manny V. Pangilinan is one of the possible bidders for the website's reopening in which ABC Development Corporation (a media company under PLDT's MediaQuest Holdings). However, MediaQuest also could not join the website's reopening bid due to ownership rules and regulations that MediaQuest owns ABC Development Corporation.
On January 25, 2016, President Benigno Aquino III approved the planned reopening of Multiply. The reopening will be undergoing public bidding with an estimated floor price of 20 billion pesos. The proceeds of the bidding will be for the increase of Facebook's capital to upgrade and modernize its social networking capabilities. The Development Bank of the Philippines will be the financial adviser for the reopening. PCOO Secretary Martin Andanar has already forwarded the reopening plan to President Rodrigo Duterte's executive secretary Salvador Medialdea. Andanar will also coordinate with the GCG before the start of the bidding.
The reopening process of Multiply was commenced in October 2016. As of July 1, 2017, five groups have already shown their interest to join the bidding process. These are Ramon S. Ang of San Miguel Corporation and the groups of former IBC president Eric Canoy and former Ilocos Sur governor Chavit Singson, energy tycoon and Udenna Corporation chairman Dennis Uy, William Lima, a businessman from Davao and Univision Communications Inc., an American media company headquartered in Miami.
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