21 July 2009

Subic-based Legend International Resorts Inc. suspends operations, places 250 workers on forced leave

Beleaguered hotel and casino operator Legend International Resorts Ltd. (LIRL) has suspended operations of most facilities at its Legenda Resort Hotel here, placing some 250 employees on forced leave since Saturday.

David Maund, a Hong Kong-based liquidator acting as agent for the LIRL, said in a memorandum to Legenda workers that operations will be “temporarily suspended at some of the company’s hotel, food and beverage, and related facilities.”

“The company’s administration and support functions will also be temporarily rationalized commensurately,” he added in the July 17 memo.

According to Maund, the LIRL management “has taken the difficult decision to rationalize the company’s operations” in an effort to “stem losses and preserve the company’s cash reserves.”

As a result, the firm will suspend payment of all wages and benefits to all the affected employees effective on July 18 “and until further notice for a maximum period of up to six months,” Maund added.

“This is not a termination of your employment by the company,” the official assured the affected workers. “Any accrued entitlements as at July 18 will remain intact throughout the period of suspension of wages and benefits in full compliance with law,” he said.

Maund also told the suspended workers that they will be notified should any development arise regarding the status of their employment with the company.

In the same memo to employees, Maund said efforts by the Subic Bay Metropolitan Authority (SBMA) to terminate LIRL’s lease agreement, business registration and permit to operate had led to “a very substantial deterioration in LIRL’s occupancy levels.”

These, along with the closure of the company’s casino operations since May 2006, had placed “further pressure on cash flows,” he added.

The SBMA, however, said in a statement that attributing LIRL’s current woes to SBMA’s efforts to collect payment for the company’s debts was “grossly unfair.”

“The real culprit here is the mismanagement of LIRL, which has caused the company to accrue huge debts to the Philippine government, including unpaid obligations to the SBMA amounting to P850 million,” said lawyer Roy Pastor, manager of the SBMA labor department.

“In fact, the SBMA has worked on a debt-restructuring scheme with the LIRL management, which the company has not complied with,” he added.

Pastor said in face of the suspension of Legenda workers, the SBMA will look into possible labor violations arising from LIRL’s action, “including its alleged failure to file the appropriate notice with the Department of Labor and Employment.”

“The SBMA will definitely not allow these employees to become victims of LIRL’s mismanagement,” Pastor added, saying his department’s retooling program for displaced workers will be made available to Legenda employees.

SBMA labor officials also presided on Monday over the initial conciliation meeting between the LIRL management and workers, when they agreed that the leave credits of the affected employees be converted to cash.

It was also resolved in the meeting that the employees’ “saved funds”—a provident fund drawn from the workers’ salaries—be placed under security bond, and that the affected workers be paid all the wages and benefits due them “when resumption of operations will no longer be possible.”

Present in the meeting were LIRL’s legal counsel Rex Tadena and human resources manager Jennire Torres, as well as eight representatives from the rank of employees (Henry EmpeƱo , Business Mirror)