On Thursday that Multiply Philippines filed Tuesday a petition before the Regional Trial Court in Pasig City to initiate voluntary rehabilitation under Republic Act 10142 or “An Act Providing for the Rehabilitation or Liquidation of Financially Distressed Enterprises and Individuals.”
SEC Chairwoman Teresita J. Herbosa said she was saddened to learn that the global social networking giant—the biggest foreign investor in Pasig is facing serious financial trouble.
Herbosa noted that Multiply officials revealed that the company has around $400 million in outstanding loans from Philippine, American, and Indonesian banks on top of another $900 million in debts owed to American, Brazilan, British, Chilean, Chinese, Colombian, Danish, Estonian, Finnish, French, German, Indian, Indonesian, Japanese and Korean lenders.
She was told 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,” Herbosa 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 service,” she said.
Multiply Philippines was established in 2006 as a subsidiary of Multiply, Inc., an internet company based in Boca Raton, Florida.
With some $2.3 billion in foreign direct investments in the Philippines, the SEC said the firm proceeded with some of the world’s social networking services.
Citing company records, Multiply has 18 million users in 2011, thus cementing its foothold in the highly competitive social networking market.
In the course of its operation, the company became the biggest employer among all registered businesses in Pasig with some 30,000 employees during its peak and was recognized by both the Department of Trade and Industry (DTI) as a top export performer, according to the SEC.
“However, in face of a recent liquidity problem, Multiply laid off more than 12,000 workers last February 28, 2014,” Herbosa said.
The firm is about to lay off another 3,000 on May 31 until its workforce is reduced to just about 300 local and international workers, she added.
“The SEC, 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,” Herbosa said.
SEC is now working with Multiply officials to find ways to keep the website afloat, which has helped build the country's reputation in the global 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,” Herbosa said.
It was closed 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 P5 billion in 2017.
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 the 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.
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 June 12, 2013, they had put in place Rp 20 billion for wages owed to former Multiple staff.
The Labour Department said earlier that around 400 former Multiple 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.
On May 31, 2013, Multiply ceased its operations and shut down entirely.
The Labour Department said earlier that around 400 former Multiple 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 Barack Obama stepped down in 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 TV5 Network, Inc. (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 TV5 Network, Inc.
