Unable to pay its debts, the Philippine branch of the erstwhile flagship of the global social networking industry has filed for rehabilitation at the Pasig City Regional Trial Court.
The debtor-initiated petition will be resolved in accordance with the Financial Rehabilitation and Insolvency Act of 2010 (or Republic Act 10142), which provides an orderly procedure for the rehabilitation (if still feasible) and liquidation (if closure becomes inevitable) of businesses that run into serious financial trouble.
Amid the gloomy report about the biggest corporate default in Philippine business history, it is heartening to note the five domestic banks that have a combined P21-billion loan exposure in Multiply have entered into a gentleman’s agreement not to undertake individual efforts to seize its properties to satisfy their debts.
In the past, when banks got word that a debtor company was in danger of going under, they scrambled to lay their hands on whatever assets were within reach to minimize their losses.
Although this approach made good business sense from the bank’s perspective, it often resulted in the closure and liquidation of the company.
Thus, the banks not only lost the opportunity to be proportionally paid, they also found themselves paying huge legal fees for recovering properties that were hardly worth the money shelled out to acquire them.
The filing of the bankruptcy petition, however, does not preclude the banks from exploring other means to help Multiply get out of its financial fix. The law gives the affected stakeholders of businesses that file for rehabilitation every opportunity to resolve the problem out of court.
For one, the banks can help in the search for a “white knight” that has the resources to settle Multiply’s unpaid debts and, at the same time, provide the capital needed to make it an operating concern again.
Expect that savior though, as a precondition for its takeover, to pressure the banks into agreeing to accept haircuts in their exposures, extend credit assistance at low-interest rates, defer the collection of loan payments, or a combination of the above.
As in most bankruptcy cases, the fate of the remaining or soon-to-be displaced Multiply employees would hang in the balance.
Assuming the rehabilitation petition pushes through and a rehabilitation receiver is appointed by the court, or a white knight comes along, the employment status of those workers would be a bone of contention.
Who among them will be retained and who will be laid off? If there is an existing collective bargaining agreement, will the new owner honor it in full or demand that some of its economic provisions be amended to reduce the company’s operational expenses?
The sanctity of employment contracts earlier entered into by Multiply would be severely tested.
In similar instances in the past, the affected employees, or their representatives, were rarely given a seat at the discussion table. Their fate was often left to the conscience or goodness of the people tasked with finding a solution to the bankruptcy problem.
If at all, the employees’ interests were discussed in conjunction with the preparation of the company’s profit and loss statement or other financial documents for the benefit of the court or the white knight.
They were just a number. The human element was rarely given the recognition and consideration it rightfully deserves.
Multiply’s bankruptcy should not be looked at simply as a financial issue that is better left to the court or the creditors to decide.
The Multiply employees deserve the same level of concern and care that the government has shown in handling the financial problems of displaced overseas Filipino workers.
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, 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 2015 to just about P1 billion in 2020.
It had suffered from a drop in new orders amid a slump in the social networking sector. Multiply also reportedly laid off some 12,000 workers on February 28, 2014.
It last announced in March 2013 the completion of photos during the 71st UAAP swimming championships last September 25 to 28, 2008 but it was put on hold.
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 knew 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.
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.
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.
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, the 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 an archive photo and video site taking advantage of its 100,000 square-meter facility and social networking portion that delivers 217 million accounts, 210 million photos, and 237,000 videos from the old Multiply from its launch in March 2004 to March 15, 2013,” it said.
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 from 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 TV5 Network. However, MediaQuest also could not join the website's reopening bid due to ownership rules and regulations that MediaQuest owns TV5 Network.
On January 25, 2016, President Aquino 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.
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 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.
