ATENEO LAW SCHOOL COMMERCIAL LAW REVIEW FINANCIAL REHABILITATION AND INSOLVENCY ACT OF 20101 I.
accordance !ith the rules of procedure that the (upreme )ourt may promulgate. C.
C!/e ra ra( e+ e+ 1.
I")! I")!l/ l/e" e"tt % Sec. Sec. 3 3++ Insolvent shall refer to the financial condition of a debtor that is generally unable to pay its or his liabilities as they fall due in the ordinary course of business or has liabilities that are greater than its or his assets.
2.
De4t De4t!r !r % Sec Sec.. 53 53++ Debtor shall refer to, unless specifically excluded by a provision of this %ct, a sole proprietorship duly registered !ith the /epartment of Trade and 6ndustry 7/T68, a partnership duly registered !ith the (ecurities and 5xchange )ommission 7(5)8, a corporation duly organied and existing under 'hilippine la!s, or an individual debtor !ho has become insolvent as defined herein.
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E6cl E6cl&) &)! !") ") % Sec Sec.. 7+ The term debtor does not include include ban9s, ban9s, insura insurance nce compa companie nies, s, pre*ne pre*need ed compan companies ies,, and national national and local governmen governmentt agencies agencies or units. units. Provided, That government financial institutions other than ban9s and government*o!ned government*o!ned or controlled corporations shall be covered by this %ct, unless their specific charter provides other!ise.
GENE GENERA RAL L PROV PROVIS ISIO IONS NS A. Declar Declarat at!" !" !# P!l P!lc$ c$ % Sec. Sec. 2: 2: 1.
To encourage encourage debtor debtors, s, both juridi juridical cal and natural natural persons persons,, and their creditors to collectively and realistically resolve and adjust competing claims and property rights.
2.
To ensure ensure a timely timely,, fair, fair, transpar transparent ent,, effect effective ive and effici efficient ent rehabilitation or liquidation of debtors.
3.
To ensure ensure or maintain maintain certainly certainly and and predictabil predictability ity in commercia commerciall affairs, preserve and maximie the value of the assets of these debtors, recognie creditor rights and respect priority of claims, and ensure equitable treatment of creditors !ho are similarly situated.
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#hen rehabi rehabilita litation tion is not not feasible, feasible, to facilit facilitate ate a speedy speedy and orderly liquidation of these debtor$s assets and the settlement of their obligations.
B. Nat&re Nat&re !# !# Pr!cee Pr!cee'"( '"() ) % Sec. *+ 1.
I" Re Re,+ The proceedi proceedings ngs under under this %ct shall shall be in rem. &urisdiction over all persons affected by the proceedings shall be considered as acquired upon publication publication of the notice of the commencem commencement ent of the proceedi proceedings ngs in any ne!spaper ne!spaper of general circulation in the 'hilippines in the manner prescribed by the rules of procedure to be promulgated by the (upreme )ourt.
2.
S&,, S&,,ar ar$ $-N!" -N!"A A'/ '/er er)a )ar ral al++ The The proc procee eedi ding ngs s shal shalll be conduc conducted ted in a summar summary y and non*ad non*adver versar sarial ial manner manner consis consisten tentt !ith !ith the declar declared ed polici policies es of this this %ct %ct and in
D.
De)("at De)("at!" !" !# C!&rt) C!&rt) a"' Pr!,&l( Pr!,&l(at!" at!" !# Pr!ce'& Pr!ce'&ral ral R&le) R&le) % Sec. 8
E.
S&4)t S&4)ta"t a"t/e /e a"' Pr!ce'& Pr!ce'&ral ral C!")!l C!")!l'at 'at!" !" % Sec. Sec. 9+ 9+ 5ach juridical entity shall be considered as a separate entity under the proceedings in this %ct. nder these proceedings, the assets and liabilities of a debtor may not be commingled or aggregated !ith those of another, unless the latter is a related enterprise that is o!ned o!ned or controlle controlled d directly directly or indirectl indirectly y by the same interests interests:: Provided, however, That however, That the commingling or aggregation of assets and liabilities of the debtor !ith those of a related enterprise may only be allo!ed !here: 1.
there there !as comming comminglin ling g in fact fact of assets assets and liabil liabiliti ities es of the debtor and the related enterprise prior to the commencement of the proceedings;
2.
the debtor debtor and the the related related enterpri enterprise se have common common credit creditors ors and it !ill be more convenient to treat them together rather than separately;
1
This +utline is based on the codal provisions of epublic %ct -o. -o. 11" 11"2, 2, and and may may be supp supple leme ment nted ed !ith !ith /ean /ean )esa )esarr 0. illanue illanuevas vas )ommercia )ommerciall 0a! evie!, evie!, 2 and 24 5ditions, 5ditions, insofar as the discussions are still applicable.
2
3.
".
the related related enterpr enterprise ise volunta voluntarily rily accede accedes s to join the debto debtorr as party petitioner and to commingle its assets and liabilities !ith the debtor$s; and the consol consolidati idation on of assets assets and liabi liabiliti lities es of the debtor debtor and and the related enterprise is beneficial to all concerned and promotes the objectives of rehabilitation.
II.
CO?RT CO?RTS?PE S?PERVI RVISED SED REHABILIT REHABILITA ATION TION A. I"ta I"tat! t!" " !# Pr!c Pr!cee' ee'"( "() ) 1.
V!l&"tar$ Pr!cee'"(). a.
Provided, f inally, inally, That nothing in this section shall prevent the court from joining other entities affiliated affiliated !ith the debtor debtor as parties pursuant to the rules of procedure as may be promulgated by the (upreme )ourt. F.
La4lt$ La4lt$ !# I"'/'&al I"'/'&al De4t!r De4t!r:: O;"er !# a S!le Pr!ret Pr!ret!r)< !r)<: : Part"er) " a Part"er)<: !r Drect!r) a"' O##cer) % Sec. 10: 10: 6ndividua 6ndividuall debtor, debtor, o!ner of a sole proprietorsh proprietorship, ip, partners in a partnership, or directors and officers of a debtor shall be liable for double the value of the property sold, embeled or disposed of or double the amount of the transaction involved, !hichever is higher to be recovered for benefit of the debtor and the creditors, if they, having notice of the commencement of the proceedings, or having reason to believe that proceedings are about to be commenced, or in contemplation of the proceedings, !illfully commit the follo!ing acts: 1.
/ispose /ispose or cause cause to be dispose disposed d of any proper property ty of the debtor debtor other than in the ordinary course of business or authorie or approve any transaction in fraud of creditors or in a manner grossly disadvantageous disadvantageous to the debtor and
2.
)once )onceal al or authori authorie e or approv approve e the concealm concealment ent,, from from the creditors, or embeles or misappropriates, any property of the debtor.
The court shall determine the extent of the liability of an o!ner, partner, director or officer under this section. 6n this connection, in case of partnerships and corporations, the court shall consider the amount of the shareholding or partnership or equity interest of such partner, director or officer, the degree of control of such partner, director or officer over the debtor, and the extent of the involvement of such partner, director or debtor in the actual management of the operations of the debtor. G. A&t&t$ E>&t$ % Sec. 11 11
H!; H!; "t "ta ate te' ' % Sec. Sec. 12+ 12+ 'etition to initiate voluntary proceedings filed by debtor, approved by: i.
(ole (ole 'rop 'roprie rietor torshi ship p = by the o!ner o!ner
ii.
'artnershi 'artnership p = by a majority majority of the the partner partners s
iii. (toc9 )orpor )orporatio ation n = by a majority majority vote vote of the board board of dire direct ctor ors s and and auth author ori ied ed by the the vote vote of the the stoc9holders representing at least t!o*thirds 72<38 of the outsta outstandi nding ng capita capitall stoc9 stoc9 in a stoc9h stoc9hold older$ er$s s meeting duly called for the purpose, iv. iv.
-on*(t -on*(toc9 oc9 )orpo )orporat ration ion = by a majori majority ty vote of the board of trustees and authoried by the vote of at least t!o*thirds 72<38 of the members, in a member$s meeting duly called for the purpose.
N!te+ % group group of debtors may jointly jointly file a petition petition for rehabi rehabilit litati ation on under under this this %ct %ct !hen !hen one or more more of its members foresee the impossibility of meeting debts !hen they respectively fall due, and the financial distress !ould li9ely li9ely adversel adversely y affect affect the financial financial condition condition and
Gr!&"')+ 6nso 6nsolv lven ency cy rehabilitation
of
debt debtor or
and and
viab viabil ilit ity y
of
c.
C!"t C!"te" e"t) t) !# Pet Pett t! !" " % Sec. Sec. 12+ 12+ The petition petition shall shall be verified to establish the insolvency of the debtor and the viability of its rehabilitation, and include, !hether as an attachment or as part of the body of the petition, as a minimum the follo!ing:
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i. 6dentification of the debtor, its principal activities and its addresses; ii.
(tatement of the fact of and the cause of the debtor$s insolvency or inability to pay its obligations as they become due;
iii.
The specific relief sought pursuant to this %ct;
iv.
The grounds upon !hich the petition is based;
v.
+ther information that may be required under this %ct depending on the form of relief requested;
vi.
(chedule of the debtor$s debts and liabilities including a list of creditors !ith their addresses, amounts of claims and collaterals, or securities, if any;
ii.
c.
vii. %n inventory of all its assets including receivables and claims against third parties; viii. % ehabilitation 'lan;
2.
ix.
The names of at least three 738 nominees to the position of rehabilitation receiver; and
x.
+ther documents required to be filed !ith the petition pursuant to this %ct and the rules of procedure as may be promulgated by the (upreme )ourt.
I"/!l&"tar$ Pr!cee'"(). a.
4.
H!; "tate' % Sec. 1*: >y petition for rehabilitation filed by %ny creditor or group of creditors !ith a claim of, or the aggregate of !hose claims is, at least +ne ?illion 'esos 7'hp1,,.8 or at least t!enty*five percent 72@A8 of the subscribed capital stoc9 or partners$ contributions, !hichever is higher, Crc&,)ta"ce) Nece))ar$ Pr!cee'"() % Sec. 1*: i.
t!
I"tate
C!"te"t) !# Pett!" % Sec. 1+ The petition shall be verified to establish the substantial li9elihood that the debtor may be rehabilitated, and include: i.
identification of the debtor its principal activities and its address;
ii.
the circumstances sufficient to support a petition to initiate involuntary rehabilitation proceedings under (ection 13 of this %ct;
iii.
the specific relief sought under this %ct;
iv.
a ehabilitation 'lan;
v.
the names of at least three 738 nominees to the position of rehabilitation receiver;
vi. other information that may be required under this %ct depending on the form of relief requested; and vii. other documents required to be filed !ith the petition pursuant to this %ct and the rules of procedure as may be promulgated by the (upreme )ourt. B.
Act!" !" t
I"/!l&"tar$
there is no genuine issue of fact on la! on the claim
a creditor, other than the petitioner
2.
Act!" !" t
#ithin @ !or9ing days
a.
6f petition for rehabilitation sufficient in form and substance, court shall issue )ommencement +rder; or
b.
6f petition deficient in form or substance, court may, in its discretion, give the petitioner
C!,,e"ce,e"t !# Pr!cee'"() a"' I))&a"ce !# a C!,,e"ce,e"t Or'er % Sec. 18: The rehabilitation
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proceedings shall commence upon the issuance of the )ommencement +rder 7See Sec. 18 for contents8 !hich shall, among others, appoint rehabilitation receiver, and include a Sta$ !r S&)e")!" Or'er !hich shall: a.
suspend all actions or proceedings, in court or other!ise, for the enforcement of claims against the debtor;
b.
suspend all actions to enforce any judgment, attachment or other provisional remedies against the debtor;
c.
d.
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prohibit the debtor from selling, encumbering, transferring or disposing in any manner any of its properties except in the ordinary course of business; and prohibit the debtor from ma9ing any payment of its liabilities outstanding as of the commencement date except as may be provided herein.
E##ect) !# t
serve as the legal basis for rendering null and void any setoff after the commencement date of any debt o!ed to the debtor by any of the debtor$s creditors;
d.
serve as the legal basis for rendering null and void the perfection of any lien against the debtor$s property after the commencement date; and
e.
consolidate the resolution of all legal proceedings by and against the debtor to the court 'rovided. Co!ever, That the court may allo! the continuation of cases on other courts !here the debtor had initiated the suit.
N!te+ %ttempts to see9 legal of other resource against the debtor outside these proceedings shall be sufficient to support a finding of indirect contempt of court. .
E6cet!") t! t
to cases already pending appeal in the (upreme )ourt as of commencement date Provided, That any final and executory judgment arising from such appeal shall be referred to the court f or appropriate action;
b.
subject to the discretion of the court, to cases pending or filed at a specialied court or quasi*judicial agency !hich, upon determination by the court is capable of resolving the claim more quic9ly, fairly and efficiently than the court: Provided, That any final and executory judgment of such court or agency shall be referred to the court and shall be treated as a non*disputed claim;
c.
to the enforcement of claims against sureties and other persons solidarily liable !ith the debtor, and third party or accommodation mortgagors as !ell as issuers of letters of credit, unless the property subject of the third party or accommodation mortgage is necessary for the rehabilitation of the debtor as determined by the court upon recommendation by the rehabilitation receiver;
d.
to any form of action of customers or clients of a securities mar9et participant to recover or other!ise claim moneys and securities entrusted to the latter in the ordinary course of the latter$s business as !ell as any action of such securities mar9et participant or the appropriate regulatory agency or self*regulatory organiation to pay or settle such claims or liabilities;
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e.
f.
g.
to the actions of a licensed bro9er or dealer to sell pledged securities of a debtor pursuant to a securities pledge or margin agreement for the settlement of securities transactions in accordance !ith the provisions of the (ecurities egulation )ode and its implementing rules and regulations; the clearing and settlement of financial transactions through the facilities of a clearing agency or similar entities duly authoried, registered and
ang9o (entral ng 'ilipinas 7>('8 and the (5) as !ell as any form of actions of such agencies or entities to reimburse themselves for any transactions settled for the debtor; and any criminal action against individual debtor or o!ner, partner, director or officer of a debtor shall not be affected by any proceeding commend under t his %ct.
7.
Wa/er !# ta6e) a"' Fee) D&e t! t
8.
Alcat!" !# Sta$ !r S&)e")!" Or'er t! G!/er",e"t F"a"cal I")tt&t!"). % Sec. 20
9.
E##ect/t$ a"' D&rat!" !# C!,,e"ce,e"t Or'er % Sec. 21: nless lifted by the court, the )ommencement +rder shall be for the effective for the duration of the rehabilitation proceedings for as long as there is a substantial li9elihood that the debtor !ill be successfully rehabilitated. See Sec. 21 for minimum requirements to determining !hether there is substantial li9elihood for the debtor to be successfully rehabilitated.
@.
Act!" at t
determine the creditors !ho have made timely and proper filing of their notice of claims;
b.
hear and determine any objection to the qualifications of the appointment of the rehabilitation receiver and, if necessary appoint a ne! one in accordance !ith this %ct;
.
c.
direct the creditors to comment on the petition and the ehabilitation 'lan, and to submit the same to the court and to the rehabilitation receiver !ithin a period of not more than t!enty 728 days; and
d.
direct the rehabilitation receiver to evaluate the financial condition of the debtor and to prepare and submit to the court !ithin forty 7"8 days from initial hearing the report provided in (ection 2" hereof.
E##ect !# Fal&re t! Fle N!tce !# Cla, % Sec. 2*: % creditor !hose claim is not listed in the schedule of debts and liabilities and !ho fails to file a notice of claim in accordance !ith the )ommencement +rder but subsequently files a belated claim shall not be entitled to participate in the rehabilitation proceedings but shall be entitled t o receive distributions arising therefrom.
10. Re!rt !# t
b.
give due course to the petition upon a finding that: i.
the debtor is insolvent; and
ii.
there is a substantial li9elihood for the debtor to be successfully rehabilitated;
dismiss the petition upon a finding that: i.
debtor is not insolvent;
ii.
the petition is a sham filing intended only to delay the enforcement of the rights of the creditor
iii.
the petition, the ehabilitation 'lan and the attachments thereto contain any materially false or misleading statements; or
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iv. c.
the debtor has committed acts of misrepresentation or in fraud of its creditor
disqualifications as its representative, it being understood that the juridical entity and the representative
convert the proceedings into one for the liquidation of the debtor upon a finding that: i. ii.
the debtor is insolvent; and
4.
there is no substantial li9elihood for the debtor to be successfully rehabilitated as determined in accordance !ith the rules to be promulgated by the (upreme )ourt.
11. Pett!" G/e" D&e C!&r)e % Sec. 28+ 6f the petition is given due course, the court shall direct the rehabilitation receiver to revie!, revise and
W
ii,
+f good moral character and !ith ac9no!ledged integrity, impartiality and independence;
iii.
Cas the requisite 9no!ledge of insolvency and other relevant commercial la!s, rules and procedures, as !ell as the relevant training and
iv.
Cas no conflict of interest: 'rovided, That such conflict of interest may be !aived, expressly or impliedly, by a party !ho may be prejudiced thereby.
v.
+ther qualifications and disqualifications of the rehabilitation receiver shall be set forth in procedural rules, ta9ing into consideration the nature of the business of the debtor and the need to protect the interest of all sta9eholders concerned.
I"tal A!"t,e"t % Sec. *0
'.
P!;er): D&te) a"' Re)!")4lte) % Sec. *1: /eemed an officer of the court !ith the principal duty of preserving and maximiing the value of the assets of the debtor during the rehabilitation proceedings, determining the viability of the rehabilitation of the debtor, preparing and recommending a ehabilitation 'lan to the court, and implementing the approved ehabilitation 'lan. See Sec. *1 for enumeration.
e.
Re,!/al = Sec. *2: The rehabilitation receiver may be removed at any time by the court either motu proprio or upon motion by any creditor
Re
'hilippine citien or resident for B months immediately preceding his nomination
c.
C. T
&al#cat!") % Sec. 2+ i.
7
such grounds as the rules of procedure may provide !hich shall include, but are not limited to, the follo!ing: i.
#.
(.
<.
.
6ncompetence, gross negligence, failure to perform or failure to exercise the proper degree of care in the performance of his duties and po!ers;
ii.
0ac9 of a particular or specialied competency required by the specific case;
iii.
6llegal acts or conduct in the performance of his duties and po!ers;
iv.
0ac9 of qualif ication disqualification;
v.
)onflict of interest that arises after his appointment; and
vi.
?anifest lac9 of independence that is detrimental to the general body of the sta9eholders.
or
presence
of
any
2.
C!,e")at!" a"' Ter,) !# Ser/ce % Sec. **: reasonable fees and expenses from the debtor according to the terms approved by the court after notice and hearing. (uch costs shall be considered administrative expenses. Oat< a"' B!"' !# t
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i.
%ctual or imminent danger of dissipation, loss, !astage or destruction of the debtors assets or other properties;
ii.
'aralyation of the business operations of the debtor; or
iii.
Eross mismanagement of the debtor. or fraud or other !rongful conduct on the part of, or gross or !illful violation of this %ct by. existing management of the debtor +r the o!ner, partner, director, officer or representative
Ma"a(e,e"t C!,,ttee a.
R!le !# t
4.
&al#cat!") !# Me,4er) !# t
C!,,!" Pr!/)!") a.
E,l!$,e"t !# Pr!#e))!"al) % Sec. *: allo!ed upon approval of the court, and after notice and hearing.
4.
C!"#lct !# I"tere)t % Sec. 0: -o person may be appointed as a rehabilitation receiver, member of a management committee, or be employed by the rehabilitation receiver or the management committee if he has a conflict of interest. %n individual shall be deemed to have a conflict of interest if he is so situated as to be materially influenced in the exercise of his judgment for or against any party to the proceedings. See Sec. 0 for enumeration. )onflict of interest must be disclosed.
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c.
.
2.
Re()tr$ !# Cla,) % Sec. : #ithin t!enty 728 days from his assumption into office, the rehabilitation receiver shall establish a preliminary registry of claims. The rehabilitation receiver shall ma9e the registry available for public inspection and provide publication notice to the debtor, creditors and sta9eholders on !here and !hen they may inspect it. %ll claims included in the registry of claims must be duly supported by sufficient evidence.
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O!)t!" !r C
*.
Ae al % S ec . 8: %ny decision of the rehabilitation receiver regarding a claim may be appealed to the court.
Cre't!r) C!,,ttee a.
4.
D.
I,,&"t$ % Sec. 1: for act done or omitted to be done by them in good faith in connection !ith the exercise of their po!ers and functions under F6% or other actions duly approved by the court.
C!")tt&t!" % Sec. 2+ %fter the creditors$ meeting called pursuant to (ec. B3, the creditors belonging to a class may formally organie a committee among themselves. 6n addition, the creditors may, as a body, agree to form a creditors$ committee composed of a representative from each class of creditors 7secured, unsecured, trade creditors and suppliers, employees8. R!l e % Sec. *+ To assist the rehabilitation receiver in communicating !ith the creditors and shall be the primary liaison bet!een the rehabilitation receiver and the creditors. The creditors$ committee cannot exercise or !aive any right or give any consent on behalf of any creditor unless specifically authoried in !riting by such creditor. The creditors$ committee may be authoried by the court or by the rehabilitation receiver to perform such other tas9s and functions as may be defined by the procedural rules in order to facilitate the rehabilitation process.
E.
G!/er"a"ce 1.
Deter,"at!" !# Cla,) 1.
De#"t!" !# Cla, % Sec. c3+ Claim shall refer to all claims or demands of !hatever nature or character against the debtor or its property, !hether for money or other!ise, liquidated or unliquidated, fixed or contingent, matured or unmatured, disputed or undisputed, including, but not limited to; 718 all claims of the government, !hether national or local, including taxes, tariffs and customs duties; and 728 claims against directors and officers of the debtor arising from acts done in the discharge of their functions falling !ithin the scope of their authority: Provided, That, this inclusion does not prohibit the creditors or third parties from filing cases against the directors and officers acting in their personal capacities.
Ma"a(e,e"t % Sec. 9+ nless other!ise provided herein, the management of the juridical debtor shall remain !ith the existing management subject to the applicable la!
F. ?)e: Pre)er/at!" a"' D)!)al !# A))et) a"' Treat,e"t !# A))et) a"' Cla,) a#ter C!,,e"ce,e"t Date. 1.
?)e !r D)!)t!" !# A))et) % Sec. @+ 5xcept as other!ise provided herein, no funds or property of the debtor shall he used or disposed of except in the ordinary course of business
9
of the debtor, or unless necessary to finance the administrative expenses of the rehabilitation proceedings. 2.
Sale !# A))et) % Sec. + The court, upon application of the rehabilitation receiver, may authorie the sale of unencumbered property of the debtor outside the ordinary course of business upon a sho!ing that the property, by its nature or because of other circumstance, is perishable, costly to maintain, susceptible to devaluation or other!ise in jeopardy.
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Sale !r D)!)al !# E"c&,4ere' Pr!ert$ !# t
.
A))et) !# De4t!r Hel' 4$ T<r' Parte) % Sec. 71
7.
Re)c))!" !r N&llt$ !# Sale: Pa$,e"t: Tra")#er !r C!"/e$a"ce !# A))et) % Sec. 72: The court may rescind or declare as null and void any sale, payment, transfer or conveyance of the debtor$s unencumbered property or any encumbering thereof by the debtor or its agents or representatives after the commencement date !hich are not in the ordinary course of the business of the debtor: Provided, however, That the unencumbered property may be sold, encumbered or other!ise disposed of upon order of the court after notice and hearing: a.
if such are in the interest of administering the debtor and facilitating the preparation and implementation of a ehabilitation 'lan;
b.
in order to provide a substitute lien, mortgage or pledge of property under this %ct;
c.
for payments made to meet administrative expenses as they arise;
d.
for payments to victims of quasi delicts upon a sho!ing that the claim is valid and the debtor has insurance to reimburse the debtor for the payments made;
e.
for payments made to repurchase property of the debtor that is auctioned off in a judicial or extrajudicial sale under. This %ct; or
f.
for payments made to reclaim property of the debtor held pursuant to a possessory lien.
8.
A))et) S&4ect t! Ra' O4)!le)ce"ce: Derecat!" a"' D,"&t!" !# Val&e. % Sec. 7*
9.
P!)tc!,,e"ce,e"t I"tere)t % Sec. 7+ The rate and term of interest, if any, on secured and unsecured claims shall be determined and provided for in the approved ehabilitation 'lan.
@.
P!)tc!,,e"ce,e"t L!a") a"' O4l(at!") % Sec. 77+ #ith the approval of the court upon the recommendation of the rehabilitation receiver, the debtor, in order to enhance its rehabilitation. may: a.
enter into credit arrangements; or
b.
enter into credit arrangements, secured by mortgages of its unencumbered property or secondary mortgages of encumbered property !ith the approval of senior secured parties !ith regard to the encumbered property; or
c.
incur other obligations as may be essential for its rehabilitation.
N!te+ The payment of the foregoing obligations shall be considered administrative expenses under this %ct. .
Treat,e"t !# E,l!$ee): Cla,) % Sec. 78+ Compensation of employees required t o carry on the business shall be considered an administrative expense. )laims of separation pay for months !or9ed prior to the commencement date shall be considered a pre* ommencement claim. )laims for salary and separation pay for !or9 performed after the commencement date shall be an administrative expense.
10. Treat,e"t !# C!"tract) % Sec. 79+ nless cancelled by virtue of a final judgment of a court of competent jurisdiction issued prior to the issuance of the )ommencement +rder, or at anytime thereafter by the court before !hich the rehabilitation proceedings are pending, all valid and subsisting contracts of the debtor !ith creditors and other third parties as at the commencement date shall continue in force: Provided, That !ithin 4 days follo!ing the commencement of proceedings,
10
the debtor, !ith the consent of the rehabilitation receiver, shall notify each contractual counter*party of !hether it is confirming the particular contract. )ontractual obligations of the debtor arising or performed during this period, and after!ards for confirmed contracts, shall be considered administrative expenses. )ontracts not confirmed !ithin the required deadline shall be considered terminated. )laims for actual damages, if any, arising as a result of the election to terminate a contract shall be considered a pre*commencement claim against the debtor. -othing contained herein shall prevent the cancellation or termination of any contract of the debtor for any ground provided by la!. G. A/!'a"ce Pr!cee'"() 1.
Re)c))!" !r N&llt$ !# Certa" Prec!,,e"ce,e"t Tra")act!") % Sec. 7@+ %ny transaction occurring prior to commencement date entered into by the debtor or involving its funds or assets may be rescinded or declared null and void on the ground that the same !as executed !ith intent to defraud a creditor or creditors or !hich constitute undue preference of creditors. (ee (ec. @D for enumeration of disputable presumption of such design. N!te+ Provided, however, That nothing in this section shall prevent the court from rescinding or declaring as null and void a transaction on other grounds provided by relevant legislation and jurisprudence: Provided, further, That the provisions of the )ivil )ode on rescission shall in any case apply to these transactions.
2.
Act!") #!r Re)c))!" !r N&llt$ % Sec. 7
is not necessary for rehabilitation of the debtor exceeds the fair mar9et value of the said property. See Sec. 81 for enumeration of factors. I.
A',")trat!" !# Pr!cee'"(). 1.
C!"te"t) !# a Re
2.
C!")<at!" ;t< De4t!r a"' Cre't!r) % Sec. 8*
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Cre't!r Ar!/al !# Re
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S&4,))!" !# Re
7.
Fl"( !# O4ect!") t! Re
8.
Hear"( !" t
9.
C!"#r,at!" !# t
@.
E##ect !# C!"#r,at!" !# t
The ehabilitation 'lan and its provisions shall be binding upon the debtor and all persons !ho may be affected by . it, including the creditors, !hether or not such persons have participated in the proceedings or opposed the ehabilitation 'lan or !hether or not their claims have been scheduled;
b.
The debtor shall comply !ith the provisions of the ehabilitation 'lan and shall ta9e all actions necessary to carry out the 'lan;
c.
'ayments shall be made to the creditors in accordance !ith the provisions of t he ehabilitation 'lan;
H. Treat,e"t !# Sec&re' Cre't!r) 1.
N! D,"&t!" !# Sec&re' Cre't!r R(
d.
2.
Lac5 !# A'e>&ate Pr!tect!" % Sec. 81: The court, on motion or motu proprio, may terminate, modify or set conditions for the continuance of suspension of payment, or relieve a claim from the coverage thereof, upon sho!ing that: 7a8 a creditor does not have adequate protection over property securing its claim; or7b8 the value of a claim secured by a lien on property !hich
)ontracts and other arrangements bet!een the debtor and its creditors shall be interpreted as continuing to apply to the extent that they do not conflict !ith the provisions of the ehabilitation 'lan;
e.
%ny compromises on amounts or rescheduling of timing of payments by the debtor shall be binding on creditors regardless of !hether or not the 'lan is successfully implement; and
11
f.
.
)laims arising after approval of the 'lan that are other!ise not treated by the 'lan are not subject to any (uspension +rder.
La4lt$ !# Ge"eral Part"er) !# a Part"er)< #!r ?"a' Bala"ce) ?"'er a" Ar!/e' Pla" % Sec. 90
7e8 The commission of fraud in securing the approval of the ehabilitation 'lan or its amendment; and 7f8 2.
10. Treat,e"t !# A,!&"t) !# I"'e4te'"e)) !r O4l(at!") F!r(/e" !r Re'&ce' % Sec. 91 11. Per!' #!r C!"#r,at!" !# t
Act!" !# C!&rt &!" Ter,"at!" % Sec. 9: pon a breach of, or upon a failure of the ehabilitation 'lan the court, upon motion by an affected party may: i.
6ssue an order directing that the breach be cured !ithin a specified period of time, falling !hich the proceedings may be converted to a liquidation;
ii.
6ssue an order converting the proceedings to a liquidation;
iii.
%llo! the debtor or rehabilitation receiver to submit amendments to the ehabilitation 'lan, the approval of !hich shall be governed by the same requirements for the approval of a ehabilitation 'lan under this subchapter;
iv.
6ssue any other order to remedy the breach consistent !ith the present regulation, other applicable la! and the best interests of the creditors; or
v.
5nforce the applicable provisions of the ehabilitation 'lan through a !rit of execution.
12. Acc!&"t"( D)c
Ter,"at!" !# Pr!cee'"() 1.
Ter,"at!" !# Pr!cee'"() % Sec. 9: The rehabilitation proceedings under )hapter 66 shall, upon motion by any sta9eholder or the rehabilitation receiver be terminated by order of the court either declaring a successful implementation of the ehabilitation 'lan or a failure of rehabilitation. There is failure of rehabilitation in the follo!ing cases: 7a8 /ismissal of the petition by the court; 7b8 The debtor fails to submit a ehabilitation 'lan; 7c8 nder the ehabilitation 'lan submitted by the debtor, there is no substantial li9elihood that the debtor can be rehabilitated !ithin a reasonable period; 7d8 The ehabilitation 'lan or its amendment is approved by the court but in the implementation thereof, the debtor fails to perform its obligations thereunder or there is a failure to realie the objectives, targets or goals set forth therein, including the timelines and conditions for the settlement of the obligations due to the creditors and other claimants;
*.
+ther analogous circumstances as may be defined by the rules of procedure.
E##ect) !# Ter,"at!" % Sec. 97: Termination of the proceedings shall result in the f ollo!ing: 7a8 The discharge of the rehabilitation receiver subject to his submission of a final accounting; and 7b8 The lifting of the (tay +rder and any other court order holding in abeyance any action for the enforcement of a claim against the debtor. Provided, however, That if the termination of proceedings is due to failure of rehabilitation or dismissal of the petition for reasons other than technical grounds, the proceedings shall be immediately converted to liquidation as provided in (ection 42 of this %ct.
III. PRENEGOTIATED REHABILITATION
12
A. I"tat!" !# Pr!cee'"() % Sec. 98 1.
W
creditors holding at least 2<3 of the total liabilities of the debtor,
b.
including secured creditors holding more than @A of the total secured claims of the debtor and
c.
unsecured creditors holding more than @A of the total unsecured claims of the debtor.
2. C!"te"t) !# Pett!"+ minimum:
The petition shall include as a
a.
a schedule of the debtor$s debts and liabilities;
b.
an inventory of the debtor$s assets;
c.
the pre*negotiated ehabilitation 'lan, including the names of at least 3 qualified nominees for rehabilitation receiver; and
d.
a summary of disputed claims against the debtor and a report on the provisioning of funds to account for appropriate payments should any such claims be ruled valid or their amounts adjusted.
B. I))&a"ce !# Or'er % Sec. 99: #ithin @ !or9ing days, and after determination that the petition is sufficient in form and substance, the court shall issue an +rder !hich shall:
@.
direct the service by personal delivery of a copy of the petition on each creditor !ho is not a petitioner holding at least 1A of the total liabilities of the debtor, as determined in the schedule attached to the petition, !ithin 3 days;
B.
state that copies of the petition and the ehabilitation 'lan are available for examination and copying by any interested party;
.
state that creditors and other interested parties opposing the petition or ehabilitation 'lan may file their objections or comments thereto !ithin a period of not later than 2 days from the second publication of the +rder;
D.
appoint a rehabilitation receiver, if provided for in the 'lan; and
4.
include a (uspension or (tay +rder as described in this %ct.
C. Ar!/al !# t
O4ect!" t! t
The allegations in the petition or the ehabilitation 'lan or the attachments thereto are materially false or misleading;
2.
The majority of any class of creditors do not in fact support the ehabilitation 'lan;
3.
The ehabilitation 'lan fails to accurately account for a claim against the debtor and the claim in not categorically declared as a contested claim; or The support of the creditors, or any of them !as induced by fraud.
1.
identify the debtor, its principal business of activity
2.
declare that the debtor is under rehabilitation;
3.
summarie the ground.
".
".
direct the publication of the +rder in a ne!spaper of general circulation in the 'hilippines once a !ee9 for at least 2 consecutive !ee9s, !ith the first publication to be made !ithin days from the time of its issuance;
N!te+ )opies of any objection to the petition of the ehabilitation 'lan shall be served on the debtor, the rehabilitation receiver 7if applicable8, the secured creditor !ith the largest claim and !ho
13
supports the ehabilitation 'lan, and the unsecured creditor !ith the largest claim and !ho supports the ehabilitation 'lan. E.
Hear"( !" t
2.
F.
6f the court finds merit in the objection = it shall direct the debtor, !hen feasible to cure the detect !ithin a reasonable period.
".
B. Sta"')tll Per!' % Sec. @7+ % standstill period that may be agreed upon by the parties pending negotiation and finaliation of the out* of*court or informal restructuring
6f the court determines that the debtor or creditors supporting the ehabilitation 'lan acted in bad faith, or that the objection is non*curable = the court may order the conversion of the proceedings into liquidation. % finding by the court that the objection has no substantial merit, or that the same has been cured shall be deemed an approval of the ehabilitation 'lan.
Per!' #!r Ar!/al !# Re
G. E##ect !# Ar!/al % Sec. @2+ (ame legal effect as confirmation of a 'lan under )hapter 66. IV. O?TOFCO?RT OR INFORMAL RESTR?CT?RING AGREEMENTS OR REHABILITATION PLANS A. O&t!#C!&rt !r I"#!r,al Re)tr&ct&r"( A(ree,e"t) a"' Re&re,e"t) % Sec. @* a"' @: consistent !ith F6% if it meets the follo!ing minimum requirements: 1.
The debtor must agree to the out*of*court or informal restructuring
2.
6t must be approved by creditors representing at least BA of the secured obligations of the debtor;
3.
6t must be approved by creditors representing at least @A of the unsecured obligations of the debtor; and
6t must be approved by creditors holding at least D@A of the total liabilities, secured and unsecured, of the debtor.
1.
such agreement is approved by creditors representing more than @A of the t otal liabilities of the debtor;
2.
notice thereof is publishing in a ne!spaper of general circulation in the 'hilippines once a !ee9 for 2 consecutive !ee9s; and
3.
the standstill period does not exceed 12 days from the date of effectivity.
N!te+ The notice must invite creditors to participate in the negotiation for out*of*court rehabilitation or restructuring agreement and notify them that said agreement !ill be binding on all creditors if the required majority votes prescribed in (ection D" are met. C. Cra, D!;" E##ect % Sec. @8+ % restructuring
E##ect !# C!&rt Act!" !r Ot
14
relevant party is able to secure a temporary restraining order or injunctive relief from the )ourt of %ppeals. F.
V.
C!&rt A)))ta"ce % Sec. @+ The insolvent debtor and
B.
I"/!l&"tar$ L>&'at!" % Sec. 1 1.
LI?IDATION OF INSOLVENT ?RIDICAL DEBTORS A. V!l&"tar$ L>&'at!" % Sec. 0 1.
2.
*.
Pett!" #!r L>&'at!"+ Three 738 or more creditors the aggregate of !hose claims is at least either +ne million pesos or at least 2@A of the subscribed capital stoc9 or partner$s contributions of the debtor, !hichever is higher, may apply for and see9 the liquidation of an insolvent debtor by filing a petition for liquidation of the debtor !ith the court. The petition shall sho! that: a.
there is no genuine issue of fact or la! on the claims
b.
there is no substantial li9elihood that the debtor may be rehabilitated.
Pett!" #!r L>&'at!"+ %n insolvent debtor may apply f or liquidation by filing a petition for liquidation !ith the court. The petition shall be verified, shall establish the insolvency of the debtor and shall contain: a.
a schedule of the debtor$s debts and liabilities including a list of creditors !ith their addresses, amounts of claims and collaterals, or securities, if any;
b.
an inventory of all its assets including receivables and claims against third parties; and
c.
the names of at least three 738 nominees to the position of liquidator.
2.
M!t!" #!r L>&'at!"+ %t any time during the pendency of court*supervised or pre*negotiated rehabilitation proceedings, the debtor may also initiate liquidation proceedings by filing a motion in the same court !here the rehabilitation proceedings are pending to convert the rehabilitation proceedings into liquidation proceedings. The motion: a.
shall be verified;
b.
shall contain or set forth the same matters required in the preceding paragraph; and
c.
shall state that the debtor is see9ing immediate dissolution and termination of its corporate existence.
Act!" !" Pett!" !r M!t!"+ 6f the petition or the motion is sufficient in form and substance, the court shall issue a 0iquidation +rder mentioned in (ection 112.
*.
M!t!" #!r L>&'at!"+ %t any time during the pendency of or after a rehabilitation court*supervised or pre*negotiated rehabilitation proceedings, three 738 or more creditors !hose claims is at least either +ne million pesos or at least 2@A of the subscribed capital or partner$s contributions of the debtor, !hichever is higher, may also initiate liquidation proceedings by filing a motion in the same court !here the rehabilitation proceedings are pending to convert the rehabilitation proceedings into liquidation proceedings. The motion: a.
shall be verified;
b.
shall contain or set forth the same matters required in the preceding paragraph; and
c.
state that the movants are see9ing the immediate liquidation of the debtor.
Act!" !" Pett!" a"' M!t!"+ 6f the petition or motion is sufficient in form and substance, the court shall issue an +rder: a.
directing the publication of the petition or motion in a ne!spaper of general circulation once a !ee9 for t!o 728 consecutive !ee9s; and
15
b.
directing the debtor and all creditors !ho are not the petitioners to file their comment on the petition or motion !ithin fifteen 71@8 days from the date of last publication.
6f, after considering the comments filed, the court determines that the petition or motion is meritorious, it shall issue the 0iquidation +rder mentioned in (ection 112. B. I"/!l&"tar$ L>&'at!" % Sec. 1 1.
Pett!" #!r L>&'at!"+ Three 738 or more creditors the aggregate of !hose claims is at least either +ne million pesos or at least 2@A of the subscribed capital stoc9 or partner$s contributions of the debtor, !hichever is higher, may apply for and see9 the liquidation of an insolvent debtor by filing a petition for liquidation of the debtor !ith the court. The petition shall sho! that: a.
there is no genuine issue of fact or la! on the claims
b.
there is no substantial li9elihood that the debtor may be rehabilitated.
C. C!"/er)!" 4$ t&'at!" Pr!cee'"() % Sec. 2+ 1.
/uring the pendency of court*supervised or pre*negotiated rehabilitation proceedings, the court may order the conversion of rehabilitation proceedings to liquidation proceedings pursuant to a.
(ection 2@7c8;
b.
(e ct ion 2 ;
c.
(ection @; or
d
(ection 4; or
2.
a t a ny o the r t im e u po n t he r ecom me nd at ion of t he rehabilitation receiver that the rehabilitation of the debtor is not feasible.
Thereupon, the court shall issue the 0iquidation +rder mentioned in (ection 112. D. P!;er) !# t
16
VI. INSOLVENCY OF INDIVID?AL DEBTORS
or of industry in !hich the petitioning individual debtor is engaged so long as the proceedings relative to the suspension of payments are pending;
A. S&)e")!" !# Pa$,e"t). 1.
2.
Pet t !" % Se c. + %n individual debtor !ho, possessing sufficient property to cover all his debts but foreseeing the impossibility of meeting them !hen they respectively fall due, may file a verified petition that he be declared in the state of suspension of payments by the court of the province or city in !hich he has resides for B months prior to the filing of his petition. Ce shall attach to his petition, as a minimum: a.
a schedule of debts and liabilities;
b.
an inventory of assets; and
c.
a proposed agreement !ith his creditors.
*.
Act!" !" t
calling a meeting of all the creditors named in the schedule of debts and liabilities at such time not less than 1@ days nor more than " days from the date of such +rder and designating the date, time and place of the meeting;
b.
directing such creditors to prepare and present !ritten evidence of their claims before the scheduled creditors$ meeting;
c.
directing the publication of the said order in a ne!spaper of general circulation published in the province or city in !hich the petition is filed once a !ee9 for 2 consecutive !ee9s, !ith the first publication to be made !ithin days from the time of the issuance of the +rder;
d.
e.
directing the cler9 of court to cause the sending of a copy of the +rder by registered mail, postage prepaid, to all creditors named in the schedule of debts and liabilities; forbidding the individual debtor from selling, transferring, encumbering or disposing in any manner of his property, except those used in the ordinary operations of commerce
f.
prohibiting the individual debtor from ma9ing any payment outside of the necessary or legitimate expenses of his business or industry, so long as the proceedings relative to the suspension of payments are pending; and
g.
appointing a commissioner to preside over the creditors$ meeting.
Act!") S&)e"'e' % Sec. 8+ pon motion filed by the individual debtor, the court may issue an order suspending any pending execution against the individual debtor. 'rovided, That properties held as security by secured creditors shall not be the subject of such suspension order. The suspension order shall lapse !hen 3 months shall have passed !ithout the proposed agreement being accepted by the creditors or as soon as such agreement is denied. N!te+ -o creditor shall sue or institute proceedings to collect his claim from the debtor from the time of the filing of the petition for suspension of payments and for as long as proceedings remain pending except:
.
a.
those creditors having claims for personal labor, maintenance, expense of last illness and funeral of the !ife or children of the debtor incurred in the B days immediately prior to the filing of the petition; and
b.
secured creditors.
Cre't!r) Meet"( % Sec. 9+ a.
&!r&, = The presence of creditors holding claims amounting to at least 3<@ of the liabilities shall be necessary for holding a meeting.
4.
W
17
c.
V!t"(+ The creditors and individual debtor shall discuss the propositions in the proposed agreement and put them to a vote. To form a majority, it is necessary: i.
that 2<3 of the creditors voting unite upon the same proposition; and
ii.
that the claims represented by said majority vote amount to at least 3<@ of the total liabilities of the debtor mentioned in the petition
N!te+ 6n case the decision of the majority of creditors to approve the individual debtor$s proposal or any amendment thereof made during the creditors$ meeting is annulled by the court, the court shall declare the proceedings terminated and the creditors shall be at liberty to exercise the rights !hich may correspond to them. @.
E##ect) !# Ar!/al !# Pr!!)e' A(ree,e"t % Sec. 101+ a.
6f the decision of the majority of the creditors to approve the proposed agreement or any amendment thereof made during the creditors$ meeting is upheld by the court, or !hen no opposition or objection to said decision has been presented, the court shall order that the agreement be carried out and all parties bound thereby to comply !ith its terms.
b.
The court may also issue all orders !hich may be necessary or proper to enforce the agreement on motion of any affected party.
c.
The +rder confirming the approval of the proposed agreement or any amendment thereof made during the creditors$ meeting shall be binding upon all creditors !hose claims are included in the schedule of debts and liabilities submitted by the individual debtor and !ho !ere properly summoned, but not upon:
N!te+ -o creditor !ho incurred his credit !ithin ninety 748 days prior to the filing of the petition shall be entitled to vote. '.
Pr !t e)t )+ %fter the result of the voting has been announced, all protests made against the majority vote shall be dra!n up, and the commissioner and the individual debtor together !ith all creditors ta9ing part in the voting shall sign the affirmed propositions.
7.
Per)!") W
8.
Reect!" !# t
9.
O4ect!") % Sec. 100+ 6f the proposal of the individual debtor, or any amendment thereof made during the creditors$ meeting, is approved by the majority of creditors in accordance !ith (ection 4, any creditor !ho attended the meeting and !ho dissented from and protested against the vote of the majority may file an objection !ith the court !ithin 1 days from the date of the last creditors$ meeting. 7(ee Sec. 100 for causes for objections.8
.
i.
those creditors having claims for personal labor, maintenance, expenses of last illness and funeral of the !ife or children of the debtor incurred in the B days immediately prior to the filing of the petition; and
ii.
secured creditors !ho failed to attend the meeting or refrained from voting therein.
Fal&re !# I"'/'&al De4t!r t! Per#!r, A(ree,e"t % Sec. 102+ 6f the individual debtor fails, !holly or in part, to perform the agreement decided upon at the meeting of the creditors, all the rights !hich the creditors had against the individual debtor before the agreement shall revest in them. 6n such case the individual debtor may be made subject to the insolvency proceedings in the manner established by t his %ct.
18
B. V!l&"tar$ L>&'at!". 1.
2.
Pett!" % Sec. 10*+ %n individual debtor !hose properties are not sufficient to cover his liabilities, and o!ing debts exceeding Five hundred thousand pesos, may apply to be discharged from his debts and liabilities by filing a verified petition !ith the court of the province or city in !hich he has resided for B months prior to the filing of such petition. Ce shall attach to his petition a schedule of debts and liabilities and an inventory of assets. The filing of such petition shall be an act of insolvency. L>&'at!" Or'er % Sec. 10+ 6f the court finds the petition sufficient in form and substance it shall, !ithin @ !or9ing days issue the 0iquidation +rder mentioned in (ection 112.
C. I"/!l&"tar$ L>&'at!". 1.
Pett!" % Sec. 107+ %ny creditor or group of creditors !ith a claim of, or !ith claims aggregating at least Five hundred thousand pesos may file a verified petition for liquidation !ith the court of the province or city in !hich the individual debtor resides. The follo!ing shall be considered acts of insolvency, and the petition for liquidation shall set forth or allege at least one of such acts: 7I,!rta"t+ See Sec. 107 #!r e"&,erat!" !# act) !# ")!l/e"c$8 N!te+ The petitioning creditor
2.
Or'er t! I"'/'&al De4t!r t! S
*.
De#a< % Sec. 109+ 6f the individual debtor shall default or if, after trial, the issues are found in favor of the petitioning creditors the court shall issue the 0iquidation +rder mentioned in (ection 112.
.
A4)e"t I"'/'&al De4t!r % Sec. 10@
7.
All Pr!ert$ Ta5e" t! 4e Hel' #!r All Cre't!r) Aeal B!"') E6e,t!") t! S&rete) % Sec. 10:
8.
Sale ?"'er E6ec&t!" % Sec. 110
VII. PROVISIONS COMMON TO LI?IDATION IN INSOLVENCY A. T&'at!" Or'er. 1.
C!"te"t) !# L>&'at!" Or'er % Sec. 112
2.
E##ect) !# t&'at!" Or'er % Sec. 11*+ pon the issuance of the 0iquidation +rder: a.
the juridical debtor shall be deemed dissolved and its corporate or juridical existence terminated;
b.
legal title to and control of all the assets of the debtor, except those that may be exempt from execution, shall be deemed vested in the liquidator or, pending his election or appointment, !ith the court;
c.
all contracts of the debtor shall be deemed terminated and
d.
no separate action for the collection of an unsecured claim shall be allo!ed. (uch actions already pending !ill be transferred to the 0iquidator for him to accept and settle or contest. 6f the liquidator contests or disputes the claim, the court shall allo!, hear and resolve such contest except !hen the case is already on appeal. 6n such a case, the suit may proceed to judgment, and any final and executor judgment therein for a claim against the debtor shall be filed and allo!ed in court; and
19
e. no foreclosure proceeding shall be allo!ed for a period of 1D days. *.
R(
B. T&'at!r. 1.
Elect!" !# L>&'at!r % Sec. 117
2.
C!&rtA!"te' L>&'at!r % Sec. 118
*.
Oat< a"' B!"' !# t&'at!r % Sec. 119
.
&al#cat!") !# t&'at!r % Sec. 11@
7.
P!;er): D&te) a"' Re)!")4lte) !# t&'at!r % Sec. 11+ The liquidator shall be deemed an officer of the court !ith the principal duly of preserving and maximiing the value and recovering the assets of the debtor, !ith the end of liquidating them and discharging to the extent possible all the claims against the debtor. 7(ee Sec. 11 for enumeration of po!ers.8 6n addition to the rights and duties of a rehabilitation receiver, the liquidator, shall have the right and duty to ta9e all reasonable steps to manage and dispose of the debtor$s assets !ith a vie! to!ards maximiing the proceeds therefrom, to pay creditors and stoc9holders, and to terminate the debtor$s legal existence. +ther duties of the liquidator in accordance !ith this section may be established by procedural rules. % liquidator shall be subject to removal pursuant to procedures for removing a rehabilitation receiver.
8.
C!,e")at!" !# t&'at!r % Sec. 120
9.
Re!rt"( Re>&re,e"t) % Sec. 121
@.
D)c&'at!r % Sec. 122
C. Deter,"at!" !# Cla,)
1.
Re()tr$ !# Cla,) % Sec. 12*
2.
R(
*.
O!)t!" !r C
.
S&4,))!" !# D)&te' Cla, t! t
D. A/!'a"ce Pr!cee'"()
E.
1.
Re)c))!" !r N&llt$ !# Certa" Tra")act!") % Sec. 129+ %ny transaction occurring prior to the issuance of the 0iquidation +rder or, in case of the conversion of the rehabilitation proceedings prior to the commencement date, entered into by the debtor or involving its assets, may be rescinded or declared null and void on the ground that the same !as executed !ith intent to defraud a creditor or creditors or !hich constitute undue preference of creditors. The presumptions set forth in (ection @D hereof shall apply.
2.
Act!") #!r Re)c))!" !r N&llt$ % Sec. 12@
T&'at!" Pla" 1.
T&'at!" Pla" % Sec. 12+ #ithin three 738 months from his assumption into office, the 0iquidator shall submit a 0iquidation 'lan to the court. The 0iquidation 'lan shall, as a minimum enumerate all the assets of the debtor and a schedule of liquidation of the assets and payment of the claims.
2.
E6e,t Pr!ert$ t! 4e Set Aart % Sec. 1*0
*.
Sale !# A))et) " L>&'at!" % Sec. 1*1+ The liquidator may sell the unencumbered assets of the debtor and convert the same into money. The sale shall be made at public auction. Co!ever, a private sale may be allo!ed !ith the approval of the court if; a.
the goods to be sold are of a perishable nature, or are lia bl e t o qu ic9 ly d et er io rat e i n v al ue , or a re disproportionately expensive to 9eep or maintain; or
b. the private sale is for the best interest of the debtor and his creditors.
20
N!te+ #ith the approval of the court, unencumbered property of the debtor may also be conveyed to a creditor in satisfaction of his claim or part thereof. .
7.
8.
9.
Ma""er !# I,le,e"t"( t&'at!" Pla" % Sec. 1*2+ The 0iquidator shall implement the 0iquidation 'lan as approved by the court. 'ayments shall be made to the creditors only in accordance !ith the provisions of the 'lan. C!"c&rre"ce a"' Pre#ere"ce !# Cre't) % Sec. 1**+ The 0iquidation 'lan and its 6mplementation shall ensure that the concurrence and preference of credits as enumerated in the )ivil )ode of the 'hilippines and other relevant la!s shall be observed, unless a preferred creditor voluntarily !aives his preferred right. For purposes of this chapter, credits for services rendered by employees or laborers to the debtor shall enjoy first preference under %rticle 22"" of the )ivil )ode, unless the claims constitute legal liens under %rticle 22"1 and 22"2 thereof. Or'er Re,!/"( t
G. L>&'at!" !# a Sec&rte) Mar5et Partca"t % Sec. 1*8
1.
Pr!/)!" !# A)))ta"ce % Sec. 1*9
2.
Alcat!" !# Rele/a"t Le()lat!" % Sec. 1*@
B. Cr!))B!r'er I")!l/e"c$ Pr!cee'"() 1.
A'!t!" !# ?"ctral I")!l/e"c$ % Sec. 1*
M!'el
La;
2.
I"tat!" !# Pr!cee'"() % Sec. 10
!"
Cr!))B!r'er
Pr!/)!" !# Rele# % Sec. 11
.
Fact!r) " Gra"t"( Rele# % Sec. 12
I. F?NDS FOR REHABILITATION OF GOVERNMENTOWNED AND CONTROLLED CORPORATIONS % Sec. 1* .
MISCELLANEO?S PROVISIONS A.
Alca4lt$ !# Pr!/)!") % Sec. 1
B. Pe"alte) % Sec. 17 C.
Alcat!" t! Pe"'"( I")!l/e"c$: S&)e")!" !# Pa$,e"t) a"' Re
D. Alcat!" t! Pe"'"( C!"tract) % Sec. 19+ This %ct shall apply to all contracts of the debtor regardless of the date of perfection. E.
Reeat"( Cla&)e % Sec. 1@+ The 6nsolvency 0a! 7%ct -o. 14@B8. %s amended is hereby repealed. %ll other la!s, orders, rules and regulations or parts thereof inconsistent !ith any provision of this %ct are hereby repealed or modified accordingly.
F.
Seara4lt$ Cla&)e % Sec. 1
VIII. PROCEEDINGS ANCILLARY TO OTHER INSOLVENCY OR REHABILITAION PROCEEDINGS A. Ba"5) a"' Ot
*.
G. E##ect/t$ Cla&)e % Sec. 170
