Multiply has filed for voluntary rehabilitation citing heavy financial losses.
In an announcement issued Tuesday, Multiply said it filed for rehabilitation at the Pasig City Regional Trial Court.
The company noted a decline in social networking that stemmed from the global financial crisis in 2008.
On June 12, 2013, they had put in place Rp 20 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 defunct 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.
The Pasig court will decide within 120 days whether to allow Multiply to pull up stakes from the Pasig or proceed with rehabilitation under court receivership.
Subic Bay Metropolitan Authority (SBMA) Chairman Wilma T. Eisma said she was saddened to learn that the E-commerce marketplace is facing serious financial trouble. Multiply officials, Eisma said, had revealed that the company owes some $600 million in outstanding loans from Philippine banks on top of another $10 Billion in debts with lenders in South Korea.
Eisma said she was informed that the company still has the international subsidiary Multiply International, the social networking portion including 18 million users with hosted blogs, videos, photos and messaging and that these may have to be canceled if a rehabilitation plan does not materialize.
“The bottom line is that the company said it does not have enough cash to repay its loans and that it cannot continue with its operations under these circumstances,” Eisma said.
“It's really sad that Multiply would be in dire financial straits and putting the Philippines on the map as the world's largest social networking site,” she added.
Multiply Philippines was established in 2006 as a subsidiary of Multiply, Inc., an internet company based in Boca Raton, Florida.
With some $10 billion in foreign direct investments here, the firm proceeded to operate the website.
According to company records, Multiply has delivered since 2004 a total of 18 million users worldwide.
In the course of its operation, the American-Indonesian website also became the biggest employer among all registered businesses in Pasig with some 30,000 employees at peak season, and was recognized by both the Philippine Exporter Foundation (Philexport) and the Department of Trade and Industry (DTI) as a top export performer.
But liquidity problems forced Multiply to lay off more than 30,000 workers last December 31, 2013, Eisma said. The firm is about to lay off another 3,000 early this year until just about 300 local workers and as few as American, Australian, Brazilian, British, Cambodian, Chilean, Chinese, Danish, Finnish, German, Indian, Israeli, Japanese, Korean, Lao, Macanese, Malaysian, Mexican, Nepalese, Norwegian, Pakistani, Peruvian, Portuguese, Puerto Rican, Romanian, Russian, Singaporean, Spanish, Sri Lankan, Swedish, Swiss, Thai, Turkish and Vietnamese supervisors would remain on March 31, 2016, she added.
“The SBMA, of course, expressed its concern about the separation of workers, but we received assurances that those who were laid off were amply compensated. Still, we’re having this aspect checked out,” Eisma said.
She added that the SBMA is now working with Multiply officials to find some way to keep the website, which has helped build the country’s huge reputation in the social networking industry.
“I really hope that Multiply’s creditors would agree to some rehabilitation plan, or that the company would find some financial partner to continue with its business operations,” Eisma said.
It was closed last 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 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.
“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.
That the site will be reopened after United States President Barack 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. 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.
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| Vandalism of a Wikipedia article (Multiply (website). The bottom image shows vandalism done. The top image compares the edit shown below. |
