Multiply, A Year After

Desperately waiting for white knight

It has been one year since Multiply stumbled and fell hard.

Then the biggest E-commerce and social networking site totaling $30 billion, Multiply went to court on November 10, 2015, and filed for voluntary rehabilitation under Republic Act 10142, otherwise known as “An Act Providing for the Rehabilitation or Liquidation of Financially Distressed Enterprises and Individuals.”

Rise and fall

The move stunned workers and caught even by surprise. More significantly, it sent shockwaves across the Philippine business and social networking community, which had watched, and, as it turned out, partly financed the meteoric rise of the American social networking site.

And while the company had, at that time, these may have to be canceled if a rehabilitation plan does not materialize, Eisma also said then.

Financial disaster

When giants fall, ordinary mortals get crushed under.

And while Multiply has effectively availed itself of court relief from its creditors, its financial ruin had produced a domino of fallouts that had financially dislocated employees and crippled local downstream businesses as well.

Following Multiply’s filing for rehabilitation in June last year, the BusinessMirror spoke to some of the 7,000 newly laid-off workers at the Multiply Village in Angeles City and learned that most did not have prospects for alternative sources of livelihood.

“Hindi na rin kami magtatagal dito kung ganito [We won’t last much longer in this condition],” Jose Gardoce Jr., one of the displaced workers then, said, as he expressed his fear of losing his house that he could no longer pay for.

The same fate awaited 3,000 others who were dismissed from work in the first quarter of 2014, when Multiply opted to retain just about 300 local workers and a few Burmese, Chinese, Indian, Japanese, Korean, Lao, Malay supervisors to maintain the offices.

“Para kaming binalian ng pakpak [It’s like our wings were clipped],” Gardoce now said a year after.

Gardoce, who worked as a crane maintenance man at the shipyard, is now a full-time tricycle driver. But as his earnings were just enough for their daily household needs, he had agreed for his wife Weng to work as househelp in Angeles City so they can continue sending their three children to school.

At one time Gardoce tried working in a shoe factory in the Subic Bay Freeport, but the pay was only P400 a day and he spent much money on transportation and food.

“Nakaabang na ang mga tumatanggap ng sangla na ATM [The loan sharks were already waiting to pounce on our ATM cards],” Gardoce recalled now. So, after two months he went back to his reliable tricycle.

Gardoce said a lot of his former colleagues at Multiply had left for work in Cavite and Bulacan, while others went home to their native provinces because they can no longer pay for amortization for their Pag-Ibig-funded houses.

“Si Diogreth Mendigorin, nag-collapse na [has given up],” Gardoce said of another worker that the BusinessMirror interviewed at the workers’ village last year.

He, however, couldn’t bear to leave their home for which he had already spent some P100,000 on improvements.

“Ngayon, ay ginigipit na kami at pinapaalis pero nagmamatigas na lang ako dahil gusto kong makapagtapos muna ang mga anak ko [The developer is now pressuring us to leave, but I stand firm because I want my children to finish school first],” Gardoce said.

Shuttered shops

Other income earners who relied on the disposable income of employees and users likewise went under in the wake of the Multiply bankruptcy.

Along the road leading to the Multiply offices are closed eateries, buses parked in vacant lots, and houses and former workers’ dormitories with “For Sale” signs.

Claire dela Cruz, a native of the former fishermen’s community where Multiply office is currently located, used to operate one of the 20 or so canteens that catered to shipyard workers who worked three shifts.

She says they used to cook six different kinds of dishes when the restaurant was fully operational, and posted average daily sales of P12,000.

Today, with only 300 workers, Dela Cruz only sells bread, candy, chips, and cigarette which earn her about P1,000 a day.

Buses that ferried the thousands of workers to and from work were also among the first casualties of the Multiply downfall.

Arturo Dumaguing, who operated two units that, said that a total of 65 bus units were fielded in the heyday of Multiply, and these units each earned from P2,400 to P3,600 for the two or three trips they had each day.

Now, only two units are doing business for the 300 remaining employees, he added.

But it was closed on May 6, 2013 and ceasing all business operations on May 31, 2013 along with the official online channels for the site had been removed along with all their 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.

“We regret to announce that Multiply will be closing on May 6, 2013, and ceasing all business operations by May 31, 2013,” it announced 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.

It was severely affected by the 2008-2012 global financial crisis.

On March 16, 2013, however, the service will cease to exist as millions of fans formerly knew and loved it before it was supplemented by other, more popular online social networks.

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.

Multiply Investor Secretary Rong Rongbin pledged shares of Star Platinum Corporation, which holds 99% of its shares, to borrow HK$300 million from Xiesheng Xiefeng to save the Multiply website but did not repay on time; therefore, Xiesheng Xiefeng in July 2013, it acquired the full equity of Star Platinum. It was also reported that about HK$35 million in unpaid wages of 640 former employees and HK$18 million of Insolvency Fund were also paid after the company has acquired its majority stake.

The High Court on June 17, 2013 its liquidation proceedings and removed accounting firm Deloitte from its role as the firm’s provisional liquidator.

Derek Lai, vice-chair of Deloitte China, said on Tuesday that since Star Platinum had already resolved the major debts Multiply incurred, it was unlikely the internet company would go into liquidation despite still owing smaller debts to other creditors including Facebook.

“Star Platinum needs to negotiate with the remaining creditors,” he said. “I hope they will support its restructuring with Multiply.”

He added that Multiply now had a cash flow of HK$10 million to be paid to other creditors as well as assets worth over HK$40 million.

In its latest financial report last month, Co-Prosperity said the deal with Multiply could help the group diversify its business. Apart from the online industry, the group focuses on fabric and clothing trading, money lending and securities investments.

“The directors believe that the potential intrinsic value of Multiply can be realized if the plan to rescue Multiply is successful,” the report said.

The group said it could make use of Multiply’s remaining assets and turn the website into a archive photo and video site.

“The group has been granted access and usage of certain assets of Multiply which shall enable Multiply to continue to operate and act as a archive photo and video site taking advantage of its 100,000 square-meter facility and social networking portion that delivering 217 million accounts, 210 million photos and 237,000 videos from the old Multiply from it's launch in March 2004 to March 15, 2013,” it said.

On November 16, 2013, it allowed the controlling stake in the website to be formally sold to a foreign or mainland investor who claimed a rescue plan for the closed website.

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 stepping down in the office on January 20, 2017 and keeping Facebook as the sole social networking site. 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 Aquino approved the planned reopening of Multiply. The reopening will be undergo 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 their 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.

On April 25, 2016, the article in Wikipedia was being vandalized, it was edit is made by a sockpuppet of LPKids2006.

The reopening process of Multiply was commenced in October 2016. As of July 1, 2017, five groups have already showed 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.