Mfone Has Only $1M Left to Pay Its Creditors

An administrator in the bankruptcy case of defunct mobile operator Mfone said Wednesday that the company’s creditors had two weeks to claim their compensation before insolvency proceedings were closed.

Ouk Ry, who was appointed by the Phnom Penh municipal court in February 2013 to oversee the liquidation of Mfone’s assets, said that while outstanding compensation claims by the firm’s 327 creditors now stood at $118 million, the company only had $1 million available to settle the claims.

A decrepit sign for mobile operator Mfone hangs outside the defunct firm's office in Phnom Penh on Wednesday. (Jens Welding Ollgaard/The Cambodia Daily)
A decrepit sign for mobile operator Mfone hangs outside the defunct firm’s office in Phnom Penh on Wednesday. (Jens Welding Ollgaard/The Cambodia Daily)

“We are not able to pay all of the debts to the creditors because [Mfone] went bankrupt,” Mr. Ry said.

In November 2013, Mfone’s assets—which had been valued at $107 million—were sold at a major discount to Khmer Unified Network Communication Ltd.

“We sold all of Mfone’s assets for $10 million, and we used about $4 million to pay the [firm’s] employees,” Mr. Ry said.

He added that taxes, antenna rental locations and salaries for the administrator’s staff had been paid with the proceeds of the sale, but refused to elaborate on the specifics of those payments.

Mr. Ry said that Khmer Unified Network Communication had paid for Mfone’s assets in delayed installments and that a final $1 million payment was made last week, completing the $10 million sale.

“We have to pay the creditors because this is the court’s procedure,” he said. “This is the last payment.”

The two-week time limit was announced in a public notice published in Wednesday’s edition of the Koh Santepheap Daily newspaper, which said that creditors would “abandon their rights to receive compensation” if they did not visit Mfone’s Phnom Penh office within two weeks of the announcement.

Khan Sereyvuthy, a legal adviser to Mr. Ry, said the decision to impose a two-week deadline was made by the municipal court.

“We gave two weeks to the creditors to come and collect the money because the Phnom Penh court required us to do that,” Mr. Sereyvuthy said. “The court will issue an order to close the case soon.”

He added that among Mfone’s creditors, Chinese telecoms firm Huawei claimed the largest share, at $78 million, while Singapore’s DBS Bank claimed $21 million and the Ministry of Post and Telecommunications claimed $4 million.

Mr. Sereyvuthy said that a number of creditors were not pleased with the administrator’s final offer because they would only get back a small portion of what they were owed.

“I received many complaints from the creditors because they are not happy when they get $20 for their thousands-of-dollar debt claims,” he said.

“They threatened to file complaints with the court, but I told them that was a waste of time because the court will close the case after the two weeks of payments.”

A Huawei official, who asked not to be named because he was not authorized to speak to the media, said that the small payments were to be expected due to the steep discount at which Mfone sold its assets.

“Even though the value of the assets is there, if there’s no market, no buyers, then it’s almost nothing, right?” the official said.

“This is a fact and we have to respect that fact,” the official added. “We have to face it and we have to deal with it.”

(Additional reporting by Anthony Jensen)

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