Tuesday, July 12, 2005

Picking Up the Pieces - All the Planholders Are In the Same Boat

Judging by the comments to the last three posts, there seems to be a general feeling of unease as well as impatience on the next steps to be taken.

Prior to the SEC revocation, the battle lines were very clearly marked as well as the offensive moves to be taken. However, it can be said that the success the coalition scored with revocation has brought its own set of complex issues.

Much care and time has been spent in examining the new issues as well as the new concerns brought up by the commentators. At this point, we believe we can state the following since these can be supported with very tight analysis:

a) The selective default situation cannot be allowed to fester. Each day that passes that this situation is left unchallenged creates legal precedents that will make it easier for YGC to default on its obligations to other creditors;

b) The trust agreements are revocable in nature. It is an illusion for the other planholders to think that their particular plans have been "firewalled" by YGC. There is only a single trustor for all of these agreements. At any point in the future, YGC can revoke these agreements and rejuggle the holdings as they see fit. While this may sound inflammatory, it only does so because of the loss of trust that YGC has experienced. If YGC still enjoyed the confidence of the investing public, there would be no questions regarding this ability to rejuggle investments since this is not only the prerogative but the duty of YGC to make sure that the best possible returns are always being achieved by the investment pool(s).

c) As difficult as it is to swallow, it is the who are unavailed or have continuing payments that have the worst of all positions. They face unquantified risks and major uncertainties because default has not only happened but is the preferred strategy of YGC.

From the above points, there is actually commonality of interest FOR ALL PLANHOLDERS. We are all now dealing with a single company...one which is behaving badly and which is creating serious questions about its viability as a going concern.

It is now time for all PLANHOLDERS to step back, take stock, and if they find the above to be the case, to start taking concrete and concerted action.

3 Comments:

At Tuesday, July 12, 2005 6:44:00 PM, Anonymous Anonymous said...

I basically agree to points a and c of the summary analysis. Indeed, we have an ongoing default situation on several policies and unless this situation is immediately corrected,we are open to creation of potentially dangerous legal precedents that may favor or disfavor certain types of policy claimholders.
I feel that the call for concerted action will hinge upon the realization that no single type or class of policy holder is in a superior or inferior position vis a vis the other types. The mere fact that some plans mature at a later date does not place their rights behind those whose plans need to be paid right now.

So for those that realize that we are all on the same boat, some mechanism to aggregate or to act as a single unit needs to be acted upon as quickly as possible.

I have some reservations on item b on regaring the trust agreements. I am glad corporate conscience is aware that it sounds inflammatory. It is because it seems to suggest that the assets are unprotected. For as long as the assets are under trust arrangements, the integrity and value of the assets are protected by the cumulative financial skills of the trust managers. If YGC decides to rejuggle the holdings, they still carry the fiduciary responsibility to protect and conserve these assets. Failure to do so obviously brings another whole layer of actions that can be challenged under legal action.

 
At Tuesday, July 12, 2005 9:23:00 PM, Anonymous Anonymous said...

That was an interesting article in Biznews. Maybe you should publish it as a main post for people to comment on. A copy is in the files section of the egroup. Wanted to copy paste it here but the graphs wouldn't show. How about it?

 
At Wednesday, July 13, 2005 2:33:00 PM, Blogger PEP COALITION said...

Due to the fact that the Yuchengco PR machine is spamming this site again, I regret to inform all of you that posting of comments
has been temporarily suspended for this post.

We have made it clear that we will only allow well reasoned and unemotional comments from both sides of the debate. Posters are urged to think through their comments before hitting the publish button.

 

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