Corporate News

By Vince Alvic Alexis F. Nonato, Reporter

Creditors warn investors against bidding for Clark Mimosa estate

Posted on October 17, 2015

CREDITORS of the Mimosa Leisure Estate’s (MLE) original developer warned investors against joining the privatization efforts launched by the Clark Development Corp.

In a notice published in a major newspaper, the developer’s creditors said any lease agreement with the CDC would be null and void due to the government’s failure to take prior agreements with them into account.

On Oct. 27, CDC is due to bid out the property, which it took over in 1999 after developer Mondragon Leisure and Resorts Corp. defaulted on its rental payments.

The special purpose vehicle for secured creditors, however, said it would be forced to foreclose on MLE’s assets and pursue legal action “to protect (their) rights, including that against the colluding winning bidder.”

The notice, signed by Asset Pool “A” (SPV-AMC), Inc. legal counsel Mary Jane G. Rile, claimed the Terms of Reference violated the 2004 memorandum of agreement with CDC on the protection of creditors’ rights.

The creditors, who funded the MLE, held their claims in abeyance in exchange for CDC’s assurance of a percentage of casino proceeds and the protection of their rights in the privatization.

“The present Terms of Reference violates the MOA and not even the Indemnification clause... took into consideration the rights and interest of the secured creditors,” the notice read.

It added that CDC did not inform the public of the existence of liens and encumbrances, and pending foreclosure cases.

The notice pointed out to the Supreme Court’s 2005 decision in the case of G.R. No. 154188, where it upheld creditors’ rights to foreclose the collateral leasehold rights over the MLE.

“While the secured creditors continue to support the privatization efforts of MLE by CDC, it can only do so under conditions that its rights, liens and interests in MLE are protected,” the notice read.

At filing time, BusinessWorld could not reach for comment CDC Vice-President Evangeline G. Tejada, who chairs the agency’s Special Asset Privatization Committee.