SALIENT FEATURES OF Financial Rehabilitation and Insolvency Act of 2010 REPULI! A!T No" 101#2
This new law repealed “The Insolvency Law” (Act No. 1956). 1956) . All other laws orders r!les and re"!lations or parts thereo# inconsistent with any provision o# this Act were li$ewise repealed or %odi#ied %odi#i ed accordin"ly. Th!s& Th!s&
Section 2" Declaration of Policy. ' Policy. ' It is the policy o# the tate to enco!ra"e detors oth *!ridical and nat!ral persons and their creditors to collectively and realistically resolve and ad*!st co%petin" clai%s and property ri"hts. In #!rtherance thereo# the tate shall ens!re a ti%ely #air transparent e##ective and e##icient rehailitation or li+!idation o# detors. The rehailitation or li+!idation shall e %ade with a view to ens!re or %aintain certainly and predictaility in co%%ercial a##airs preserve and %a,i%i-e %a,i %i-e the val!e o# the assets o# these detors reco"ni-e creditor ri"hts and respect priority o# clai%s and ens!re e+!itale treat%ent o# creditors who are si%ilarly sit!ated. hen rehailitation is not #easile it is in the interest o# the tate to #acilities a speedy and orderly li+!idation o# these detor/s assets and the settle%ent o# their oli"ations.
ection 0. Nat!re o# roceedin"s. ' The proceedin"s !nder this Act shall e in re%. 2!risdiction over all persons a##ected y the proceedin"s shall e e considered as ac+!ired !pon p!lication o# the notice o# the co%%ence%ent o# the proceedin"s in any newspaper o# "eneral circ!lation in the hilippines in the %anner prescried y the r!les o# proced!re to e pro%!l"ated y the !pre%e 3o!rt. The proceedin"s shall e cond!cted in a s!%%ary and non'adversarial %anner consistent with the declared policies o# this Act and in accordance with the r!les o# proced!re that the !pre%e 3o!rt %ay pro%!l"ate. 4eanin" o# Insolvent& shall re#er to the #inancial condition o# a detor that is "enerally Insolvent shall !nale to pay its or his liailities as they #all d!e in the ordinary co!rse o# !siness or has liailities that are "reater than its or his assets. ection 5. ,cl!sions. ' The ter% detor does not incl!de an$s ins!rance co%panies pre'need co%panies and national and local "overn%ent a"encies or !nits. , ,. rovided That "overn%ent #inancial instit!tions other than an$s and "overn%ent'owned "overn%ent'owne d or controlled corporations shall e e covered y this Act !nless their speci#ic charter provides otherwise. ection 7. !stantive and roced!ral 3onsolidation. ' ach *!ridical entity shall e considered as a separate entity !nder the proceedin"s in this Act.
8nder these proceedin"s the assets and liailities o# a detor %ay not e co%%in"led or a""re"ated with those o# another !nless the latter is a related enterprise that is owned or controlled directly or indirectly y the sa%e interests& rovided however however That the co%%in"lin" or a""re"ation o# assets and liailities o# the detor with those o# a related enterprise %ay only e allowed where& (a) there was co%%in"lin" in #act o# assets and liailities o# the detor and the related enterprise prior to the co%%ence%ent o# the proceedin"s () the detor and the related enterprise have co%%on creditors and it will e %ore convenient to treat the% to"ether rather than separately (c) the related enterprise vol!ntarily accedes to *oin the detor as party petitioner and to co%%in"le its assets and liailities with the detor/s and (d) The consolidation o# assets and liailities o# the detor and the related enterprise is ene#icial to all concerned and pro%otes the o*ectives o# rehailitation. rovided #inally That nothin" in this section shall prevent the co!rt #ro% *oinin" other entities a##iliated with the detor as parties p!rs!ant to the r!les o# proced!re as %ay e pro%!l"ated y the !pre%e 3o!rt. ection 1:. Liaility o# Individ!al ;etor
AT? II !OURT$SUPER%ISE& RE'AILITATION (A) Initiation roceedin"s. (1) @ol!ntary roceedin"s. ection 1. etition to Initiate @ol!ntary roceedin"s y ;etor. ' hen approved y the owner in case o# a sole proprietorship or y a %a*ority o# the partners in case o# a partnership or in case o# a corporation y a
%a*ority vote o# the oard o# directors or tr!stees and a!thori-ed y the vote o# the stoc$holders representin" at least two'thirds (=0) o# the o!tstandin" capital stoc$ or in case o# nonstoc$ corporation y the vote o# at least two'thirds (=0) o# the %e%ers in a stoc$holder/s or %e%er/s %eetin" d!ly called #or the p!rpose an insolvent detor %ay initiate vol!ntary proceedin"s !nder this Act y #ilin" a petition #or rehailitation with the co!rt and on the "ro!nds hereina#ter speci#ically provided. The petition shall e veri#ied to estalish the insolvency o# the detor and the viaility o# its rehailitation and incl!de whether as an attach%ent or as part o# the ody o# the petition as a %ini%!% the #ollowin"& (a) Identi#ication o# the detor its principal activities and its addresses () tate%ent o# the #act o# and the ca!se o# the detor/s insolvency or inaility to pay its oli"ations as they eco%e d!e (c) The speci#ic relie# so!"ht p!rs!ant to this Act (d) The "ro!nds !pon which the petition is ased (e)
ection 1C. etition to Initiate Invol!ntary roceedin"s. ' The creditor=s/ petition #or rehailitation shall e veri#ied to estalish the s!stantial li$elihood that the detor %ay e rehailitated and incl!de& (a) identi#ication o# the detor its principal activities and its address () the circ!%stances s!##icient to s!pport a petition to initiate invol!ntary rehailitation proceedin"s !nder ection 10 o# this Act (c) the speci#ic relie# so!"ht !nder this Act (d) a ?ehailitation lan (e) the na%es o# at least three (0) no%inees to the position o# rehailitation receiver (#) other in#or%ation that %ay e re+!ired !nder this Act dependin" on the #or% o# relie# re+!ested and (") other doc!%ents re+!ired to e #iled with the petition p!rs!ant to this Act and the r!les o# proced!re as %ay e pro%!l"ated y the !pre%e 3o!rt. (D) Action on the etition and 3o%%ence%ent o# roceedin"s. ection 15. Action on the etition. ' I# the co!rt #inds the petition #or rehailitation to e s!##icient in #or% and s!stance it shall within #ive (5) wor$in" days #ro% the #ilin" o# the petition iss!e a 3o%%ence%ent
de#ined in this Act as well as the proced!ral r!les that the !pre%e 3o!rt will pro%!l"ate (i) s!%%ari-e the re+!ire%ents and deadlines #or creditors to estalish their clai%s a"ainst the detor and direct all creditors to their clai%s with the co!rt at least #ive (5) days e#ore the initial hearin" (*) direct D!rea! o# internal ?even!e (DI?) to #ile and serve on the detor its co%%ent on or opposition to the petition or its clai%=s a"ainst the detor !nder s!ch proced!res as the !pre%e 3o!rt provide ($) prohiit the detor/s s!ppliers o# "oods or services #ro% withholdin" the s!pply o# "oods and services in the ordinary co!rse o# !siness #or as lon" as the detor %a$es pay%ents #or the services or "oods s!pplied a#ter the iss!ance o# the 3o%%ence%ent
(e) consolidate the resol!tion o# all le"al proceedin"s y and a"ainst the detor to the co!rt rovided. >owever That the co!rt %ay allow the contin!ation o# cases on other co!rts where the detor had initiated the s!it. Atte%pts to see$ le"al o# other reso!rce a"ainst the detor o!tside these proceedin"s shall e s!##icient to s!pport a #indin" o# indirect conte%pt o# co!rt. ection 1E. ,ceptions to the tay or !spension
() There is s!##icient %onitorin" y the rehailitation receiver o# the detor/s !siness #or the protection o# creditors (c) The detor has %et with its creditors to the e,tent reasonaly possile in atte%pts to reach consens!s on the proposed ?ehailitation lan (d) The rehailitation receiver s!%its a report ased on preli%inary eval!ation statin" that the !nderlyin" ass!%ptions and the "oals stated in the petitioner/s ?ehailitation lan are realistic reasonale and reasonale or i# not there is in any case a s!stantial li$elihood #or the detor to e s!ccess#!lly rehailitated eca!se a%on" others& (1) there are s!##icient assets with=which to rehailitate the detor () there is s!##icient cash #low to %aintain the operations o# the detor (0) the detor/s partners stoc$holders directors and o##icers have een actin" in "ood #aith and which d!e dili"ence (C) the petition is not s sha% #ilin" intended only to delay the en#orce%ent o# the ri"hts o# the creditor/s or o# any "ro!p o# creditors and (5) the detor wo!ld li$ely e ale to p!rs!e a viale ?ehailitation lan (e) The petition the ?ehailitation lan and the attach%ents thereto do not contain any %aterially #alse or %isleadin" state%ent (#) I# the petitioner is the detor that the detor has %et with its creditor=s representin" at least three'#o!rths (0=C) o# its total oli"ations to the e,tent reasonaly possile and %ade a "ood #aith e##ort to reach a consens!s on the proposed ?ehailitation lan i# the petitioner=s is=are a creditor or "ro!p o# creditors that= the petitioner=s has=have %et with the detor and %ade a "ood #aith e##ort to reach a consens!s on the proposed ?ehailitation lan and (") The detor has not co%%itted acts %isrepresentation or in #ra!d o# its creditor=s or a "ro!p o# creditors. ection . Action at the Initial >earin". ' At the initial hearin" the co!rt shall& (a) deter%ine the creditors who have %ade ti%ely and proper #ilin" o# their notice o# clai%s () hear and deter%ine any o*ection to the +!ali#ications o# the appoint%ent o# the rehailitation receiver and i# necessary appoint a new one in accordance with this Act (c) direct the creditors to co%%ent on the petition and the ?ehailitation lan and to s!%it the sa%e to the co!rt and to the rehailitation receiver within a period o# not %ore than twenty (:) days and (d) direct the rehailitation receiver to eval!ate the #inancial condition o# the detor and to prepare and s!%it to the co!rt within #orty (C:) days #ro% initial hearin" the report provided in ection C hereo#. ection 0. ##ect o# Fail!re to File Notice o# 3lai%. ' A creditor whose clai% is not listed in the sched!le o# dets and liailities and who #ails to #ile a notice o# clai% in accordance with the 3o%%ence%ent
ection C. ?eport o# the ?ehailitation ?eceiver. ' ithin #orty (C:) days #ro% the initial hearin" and with or witho!t the co%%ents o# the creditors or any o# the% the rehailitation receiver shall s!%it a report to the co!rt statin" his preli%inary #indin"s and reco%%endations on whether& (a) the detor is insolvent and i# so the ca!ses thereo# and any !nlaw#!l or irre"!lar act or acts co%%itted y the owner=s o# a sole proprietorship partners o# a partnership or directors or o##icers o# a corporation in conte%plation o# the insolvency o# the detor or which %ay have contri!ted to the insolvency o# the detor () the !nderlyin" ass!%ptions the #inancial "oals and the proced!res to acco%plish s!ch "oals as stated in the petitioner/s ?ehailitation lan are realistic #easile and reasonale (c) there is a s!stantial li$elihood #or the detor to e s!ccess#!lly rehailitated (d) the petition sho!ld e dis%issed and (e) the detor sho!ld e dissolved and=or li+!idated. ection 5. Givin" ;!e 3o!rse to or ;is%issal o# etition or 3onversion o# roceedin"s. ' ithin ten (1:) days #ro% receipt o# the report o# the rehailitation receiver %entioned in ection C hereo# the co!rt %ay& (a) "ive d!e co!rse to the petition !pon a #indin" that& (1) the detor is insolvent and () there is a s!stantial li$elihood #or the detor to e s!ccess#!lly rehailitated (0) dis%iss the petition !pon a #indin" that& () The detor shall co%ply with the provisions o# the ?ehailitation lan and shall ta$e all actions necessary to carry o!t the lan (c) ay%ents shall e %ade to the creditors in accordance with the provisions o# the ?ehailitation lan (d) 3ontracts and other arran"e%ents etween the detor and its creditors shall e interpreted as contin!in" to apply to the e,tent that they do not con#lict with the provisions o# the ?ehailitation lan (e) Any co%pro%ises on a%o!nts or resched!lin" o# ti%in" o# pay%ents y the detor shall e indin" on creditors re"ardless o# whether or not the lan is s!ccess#!lly i%ple%ent and (#) 3lai%s arisin" a#ter approval o# the lan that are otherwise not treated y the lan are not s!*ect to any !spension
ection 70. Acco!ntin" ;ischar"e o# ?ehailitation ?eceiver. ' 8pon the con#ir%ation o# the ?ehailitation lan the rehailitation receiver shall provide a #inal report and acco!ntin" to the co!rt. 8nless the ?ehailitation lan speci#ically re+!ires and descries the role o# the rehailitation receiver a#ter the approval o# the ?ehailitation lan the co!rt shall dischar"e the rehailitation receiver o# his d!ties. (*) Ter%ination o# roceedin"s ection 7C. Ter%ination o# roceedin"s. ' The rehailitation proceedin"s !nder 3hapter II shall !pon %otion y any sta$eholder or the rehailitation receiver e ter%inated y order o# the co!rt either declarin" a s!ccess#!l i%ple%entation o# the ?ehailitation lan or a #ail!re o# rehailitation. There is #ail!re o# rehailitation in the #ollowin" cases& (a) ;is%issal o# the petition y the co!rt () The detor #ails to s!%it a ?ehailitation lan (c) 8nder the ?ehailitation lan s!%itted y the detor there is no s!stantial li$elihood that the detor can e rehailitated within a reasonale period (d) The ?ehailitation lan or its a%end%ent is approved y the co!rt !t in the i%ple%entation thereo# the detor #ails to per#or% its oli"ations there!nder or there is a #ail!re to reali-e the o*ectives tar"ets or "oals set #orth therein incl!din" the ti%elines and conditions #or the settle%ent o# the oli"ations d!e to the creditors and other clai%ants (e) The co%%ission o# #ra!d in sec!rin" the approval o# the ?ehailitation lan or its a%end%ent and (#)
rovided however That i# the ter%ination o# proceedin"s is d!e to #ail!re o# rehailitation or dis%issal o# the petition #or reasons other than technical "ro!nds the proceedin"s shall e i%%ediately converted to li+!idation as provided in ection 9 o# this Act. 3>AT? III PRE$NE(OTIATE& RE'AILITATION ection 76. etition y ;etor. ' An insolvent detor y itsel# or *ointly with any o# its creditors %ay #ile a veri#ied petition with the co!rt #or the approval o# a pre'ne"otiated ?ehailitation lan which has een endorsed or approved y creditors holdin" at least two'thirds (=0) o# the total liailities o# the detor incl!din" sec!red creditors holdin" %ore than #i#ty percent (5:B) o# the total sec!red clai%s o# the detor and !nsec!red creditors holdin" %ore than #i#ty percent (5:B) o# the total !nsec!red clai%s o# the detor. The petition shall incl!de as a %ini%!%& (a) a sched!le o# the detor/s dets and liailities () an inventory o# the detor/s assets (c) the pre'ne"otiated ?ehailitation lan incl!din" the na%es o# at least three (0) +!ali#ied no%inees #or rehailitation receiver and (d) a s!%%ary o# disp!ted clai%s a"ainst the detor and a report on the provisionin" o# #!nds to acco!nt #or appropriate pay%ents sho!ld any s!ch clai%s e r!led valid or their a%o!nts ad*!sted. ection 77. Iss!ance o#
ection 79. <*ection to the etition or ?ehailitation lan. ' Any creditor or other interested party %ay s!%it to the co!rt a veri#ied o*ection to the petition or the ?ehailitation lan not later than ei"ht (E) days #ro% the date o# the second p!lication o# the earin" on the <*ections. ' A#ter receipt o# an o*ection the co!rt shall set the sa%e #or hearin". The date o# the hearin" shall e no earlier than twenty (:) days and no later than thirty (0:) days #ro% the date o# the second p!lication o# the AT? I@ <8T'ADILITATI
(a) The detor %!st a"ree to the o!t'o#'co!rt or in#or%al restr!ct!rin"=wor$o!t a"ree%ent or ?ehailitation lan () It %!st e approved y creditors representin" at least si,ty'seven (67B) o# the sec!red oli"ations o# the detor (c) It %!st e approved y creditors representin" at least seventy'#ive percent (75B) o# the !nsec!red oli"ations o# the detor and (d) It %!st e approved y creditors holdin" at least ei"hty'#ive percent (E5B) o# the total liailities sec!red and !nsec!red o# the detor. ection E5. tandstill eriod. ' A standstill period that %ay e a"reed !pon y the parties pendin" ne"otiation and #inali-ation o# the o!t'o#'co!rt or in#or%al restr!ct!rin"=wor$o!t a"ree%ent or ?ehailitation lan conte%plated herein shall e e##ective and en#orceale not only a"ainst the contractin" parties !t also a"ainst the other creditors& rovided That (a) s!ch a"ree%ent is approved y creditors representin" %ore than #i#ty percent (5:B) o# the total liailities o# the detor () notice thereo# is p!lishin" in a newspaper o# "eneral circ!lation in the hilippines once a wee$ #or two () consec!tive wee$s and (c) the standstill period does not e,ceed one h!ndred twenty (1:) days #ro% the date o# e##ectivity. The notice %!st invite creditors to participate in the ne"otiation #or o!t'o#'co!rt rehailitation or restr!ct!rin" a"ree%ent and noti#y the% that said a"ree%ent will e indin" on all creditors i# the re+!ired %a*ority votes prescried in ection EC o# this Act are %et. ection E6. 3ra% ;own ##ect. ' A restr!ct!rin"=wor$o!t a"ree%ent or ?ehailitation lan that is approved p!rs!ant to an in#or%al wor$o!t #ra%ewor$ re#erred to in this chapter shall have the sa%e le"al e##ect as con#ir%ation o# a lan !nder ection 69 hereo#. The notice o# the ?ehailitation lan or restr!ct!rin" a"ree%ent or lan shall e p!lished once a wee$ #or at least three (0) consec!tive wee$s in a newspaper o# "eneral circ!lation in the hilippines. The ?ehailitation lan or restr!ct!rin" a"ree%ent shall ta$e e##ect !pon the lapse o# #i#teen (15) days #ro% the date o# the last p!lication o# the notice thereo#. ection E7. A%end%ent or 4odi#ication. ' Any a%end%ent o# an o!t'o#'co!rt restr!ct!rin"=wor$o!t a"ree%ent or ?ehailitation lan %!st e %ade in accordance with the ter%s o# the a"ree%ent and with d!e notice on all creditors. ection EE. ##ect o# 3o!rt Action or
li+!idation y #ilin" a petition #or li+!idation with the co!rt. The petition shall e veri#ied shall estalish the insolvency o# the detor and shall contain whether as an attach%ent or as part o# the ody o# the petition (a) a sched!le o# the detor/s dets and liailities incl!din" a list o# creditors with their addresses a%o!nts o# clai%s and collaterals or sec!rities i# any () an inventory o# all its assets incl!din" receivales and clai%s a"ainst third parties and (c) the na%es o# at least three (0) no%inees to the position o# li+!idator. At any ti%e d!rin" the pendency o# co!rt's!pervised or pre'ne"otiated rehailitation proceedin"s the detor %ay also initiate li+!idation proceedin"s y #ilin" a %otion in the sa%e co!rt where the rehailitation proceedin"s are pendin" to convert the rehailitation proceedin"s into li+!idation proceedin"s. The %otion shall e veri#ied shall contain or set #orth the sa%e %atters re+!ired in the precedin" para"raph and state that the detor is see$in" i%%ediate dissol!tion and ter%ination o# its corporate e,istence. I# the petition or the %otion as the case %ay e is s!##icient in #or% and s!stance the co!rt shall iss!e a Li+!idation
their co%%ent on the petition or %otion within #i#teen (15) days #ro% the date o# last p!lication. I# a#ter considerin" the co%%ents #iled the co!rt deter%ines that the petition or %otion is %eritorio!s it shall iss!e the Li+!idation AT? @I INe shall attach to his petition as a %ini%!%& (a) a sched!le o# dets and liailities () an inventory o# assess and (c) a proposed a"ree%ent with his creditors. ection 95. Action on the etition. ' I# the co!rt #inds the petition s!##icient in #or% and s!stance it shall within #ive (5) wor$in" days #ro% the #ilin" o# the petition iss!e an
or disposin" in any %anner o# his property e,cept those !sed in the ordinary operations o# co%%erce or o# ind!stry in which the petitionin" individ!al detor is en"a"ed so lon" as the proceedin"s relative to the s!spension o# pay%ents are pendin" (#) prohiitin" the individ!al detor #ro% %a$in" any pay%ent o!tside o# the necessary or le"iti%ate e,penses o# his !siness or ind!stry so lon" as the proceedin"s relative to the s!spension o# pay%ents are pendin" and (") appointin" a co%%issioner to preside over the creditors/ %eetin". ection 96. Actions !spended. ' 8pon %otion #iled y the individ!al detor the co!rt %ay iss!e an order s!spendin" any pendin" e,ec!tion a"ainst the individ!al detor. rovide That properties held as sec!rity y sec!red creditors shall not e the s!*ect o# s!ch s!spension order. The s!spension order shall lapse when three (0) %onths shall have passed witho!t the proposed a"ree%ent ein" accepted y the creditors or as soon as s!ch a"ree%ent is denied. No creditor shall s!e or instit!te proceedin"s to collect his clai% #ro% the detor #ro% the ti%e o# the #ilin" o# the petition #or s!spension o# pay%ents and #or as lon" as proceedin"s re%ain pendin" e,cept& (a) those creditors havin" clai%s #or personal laor %aintenance e,pense o# last illness and #!neral o# the wi#e or children o# the detor inc!rred in the si,ty (6:) days i%%ediately prior to the #ilin" o# the petition and () sec!red creditors. ection 97. 3reditors/ 4eetin". ' The presence o# creditors holdin" clai%s a%o!ntin" to at least three'#i#ths (0=5) o# the liailities shall e necessary #or holdin" a %eetin". The co%%issioner appointed y the co!rt shall preside over the %eetin" and the cler$ o# co!rt shall act as the secretary thereo# s!*ect to the #ollowin" r!les& (a) The cler$ shall record the creditors present and a%o!nt o# their respective clai%s () The co%%issioner shall e,a%ine the written evidence o# the clai%s. I# the creditors present hold at least three'#i#ths (0=5) o# the liailities o# the individ!al detor the co%%issioner shall declare the %eetin" open #or !siness (c) The creditors and individ!al detor shall disc!ss the propositions in the proposed a"ree%ent and p!t the% to a vote (d) To #or% a %a*ority it is necessary& (1) that two'thirds (=0) o# the creditors votin" !nite !pon the sa%e proposition and () that the clai%s represented y said %a*ority vote a%o!nt to at least three'#i#ths (0=5) o# the total liailities o# the detor %entioned in the petition and (e) A#ter the res!lt o# the votin" has een anno!nced all protests %ade a"ainst the %a*ority vote shall e drawn !p and the co%%issioner and the individ!al detor to"ether with all creditors ta$in" part in the votin" shall si"n the a##ir%ed propositions. No creditor who inc!rred his credit within ninety (9:) days prior to the #ilin" o# the petition shall e entitled to vote. ection 9E. ersons ho 4ay ?e#rain Fro% @otin". ' 3reditors who are !na##ected y the !spension
deter%ined !pon at s!ch %eetin" !t i# they sho!ld *oin in the votin" they shall e o!nd in the sa%e %anner as are the other creditors. ection 99. ?e*ection o# the roposed A"ree%ent. ' The proposed a"ree%ent shall e dee%ed re*ected i# the n!%er o# creditors re+!ired #or holdin" a %eetin" do not attend thereat or i# the two () %a*orities %entioned in ection 97 hereo# are not in #avor thereo#. In s!ch instances the proceedin" shall e ter%inated witho!t reco!rse and the parties concerned shall e at lierty to en#orce the ri"hts which %ay correspond to the%. ection 1::. <*ections. ' I# the proposal o# the individ!al detor or any a%end%ent thereo# %ade d!rin" the creditors/ %eetin" is approved y the %a*ority o# creditors in accordance with ection 97 hereo# any creditor who attended the %eetin" and who dissented #ro% and protested a"ainst the vote o# the %a*ority %ay #ile an o*ection with the co!rt within ten (1:) days #ro% the date o# the last creditors/ %eetin". The ca!ses #or which o*ection %ay e %ade to the decision %ade y the %a*ority d!rin" the %eetin" shall e& (a) de#ects in the call #or the %eetin" in the holdin" thereo# and in the delierations had thereat which pre*!dice the ri"hts o# the creditors () #ra!d!lent connivance etween one or %ore creditors and the individ!al detor to vote in #avor o# the proposed a"ree%ent or (c) #ra!d!lent conveyance o# clai%s #or the p!rpose o# otainin" a %a*ority. The co!rt shall hear and pass !pon s!ch o*ection as soon as possile and in a s!%%ary %anner. In case the decision o# the %a*ority o# creditors to approve the individ!al detor/s proposal or any a%end%ent thereo# %ade d!rin" the creditors/ %eetin" is ann!lled y the co!rt the co!rt shall declare the proceedin"s ter%inated and the creditors shall e at lierty to e,ercise the ri"hts which %ay correspond to the%. ection 1:1. ##ects o# Approval o# roposed A"ree%ent. ' I# the decision o# the %a*ority o# the creditors to approve the proposed a"ree%ent or any a%end%ent thereo# %ade d!rin" the creditors/ %eetin" is !phold y the co!rt or when no opposition or o*ection to said decision has een presented the co!rt shall order that the a"ree%ent e carried o!t and all parties o!nd therey to co%ply with its ter%s. The co!rt %ay also iss!e all orders which %ay e necessary or proper to en#orce the a"ree%ent on %otion o# any a##ected party. The
proceedin"s in the %anner estalished y this Act. ection 1:C. Li+!idation e shall attach to his petition a sched!le o# dets and liailities and an inventory o# assets. The #ilin" o# s!ch petition shall e an act o# insolvency.
(3) In vol!ntary Li+!idation. ection 1:5. etition Acts o# Insolvency. ' Any creditor or "ro!p o# creditors with a clai% o# or with clai%s a""re"atin" at least Five h!ndred tho!sand pesos (hp5:: :::.::) %ay #ile a veri#ied petition #or li+!idation with the co!rt o# the province or city in which the individ!al detor resides. The #ollowin" shall e considered acts o# insolvency and the petition #or li+!idation shall set #orth or alle"e at least one o# s!ch acts& (a) That s!ch person is ao!t to depart or has departed #ro% the ?ep!lic o# the hilippines with intent to de#ra!d his creditors () That ein" asent #ro% the ?ep!lic o# the hilippines with intent to de#ra!d his creditors he re%ains asent (c) That he conceals hi%sel# to avoid the service o# le"al process #or the p!rpose o# hinderin" or delayin" the li+!idation or o# de#ra!din" his creditors (d) That he conceals or is re%ovin" any o# his property to avoid its ein" attached or ta$en on le"al process (e) That he has s!##ered his property to re%ain !nder attach%ent or le"al process #or three (0) days #or the p!rpose o# hinderin" or delayin" the li+!idation or o# de#ra!din" his creditors (#) That he has con#essed or o##ered to allow *!d"%ent in #avor o# any creditor or clai%ant #or the p!rpose o# hinderin" or delayin" the li+!idation or o# de#ra!din" any creditors or clai%ant (") That he has will#!lly s!##ered *!d"%ent to e ta$en a"ainst hi% y de#a!lt #or the p!rpose o# hinderin" or delayin" the li+!idation or o# de#ra!din" his creditors (h) That he has s!##ered or proc!red his property to e ta$en on le"al process with intent to "ive a pre#erence to one or %ore o# his creditors and therey hinder or delay the li+!idation or de#ra!d any one o# his creditors (i) That he has %ade any assi"n%ent "i#t sale conveyance or trans#er o# his estate property ri"hts or credits with intent to hinder or delay the li+!idation or de#ra!d his creditors (*) That he has in conte%plation o# insolvency %ade any pay%ent "i#t "rant sale conveyance or trans#er o# his estate property ri"hts or credits ($) That ein" a %erchant or trades%an he has "enerally de#a!lted in the
pay%ent o# his c!rrent oli"ations #or a period o# thirty (0:) days (l) That #or a period o# thirty (0:) days he has #ailed a#ter de%and to pay any %oneys deposited with hi% or received y hi% in a #id!ciary and (%) That an e,ec!tion havin" een iss!ed a"ainst hi% on #inal *!d"%ent #or %oney he shall have een #o!nd to e witho!t s!##icient property s!*ect to e,ec!tion to satis#y the *!d"%ent. The petitionin" creditor=s shall post a ond in s!ch as the co!rt shall direct conditioned that i# the petition #or li+!idation is dis%issed y the co!rt or withdrawn y the petitioner or i# the detor shall not e declared an insolvent the petitioners will pay to the detor all costs e,penses da%a"es occasioned y the proceedin"s and attorney/s #ees. ection 1:6. owever nothin" contained herein shall a##ect or i%pair the ri"hts o# a sec!red creditor to en#orce his lien in accordance with its ter%s. ection 1:7. ;e#a!lt. ' I# the individ!al detor shall de#a!lt or i# a#ter trial the iss!es are #o!nd in #avor o# the petitionin" creditors the co!rt shall iss!e the Li+!idation eld #or All 3reditors Appeal Donds ,e%ptions to !reties. ' In all cases where property is ta$en into c!stody
y the sheri## i# it does not e%race all the property and e##ects o# the detor not e,e%pt #ro% e,ec!tion any other creditor or creditors o# the individ!al detor !pon "ivin" ond to e approved y the co!rt in do!le the a%o!nt o# their clai%s sin"ly or *ointly shall e entitled to si%ilar orders and to li$e action y the sheri## !ntil all clai%s e provided #or i# there e s!##icient property or e##ects. All property ta$en into c!stody y the sheri## y virt!e o# the "ivin" o# any s!ch onds shall e held y hi% #or the ene#it o# all creditors o# the individ!al detor whose clai%s shall e d!ly proved as provided in this Act. The onds provided #or in this section and the precedin" section to proc!re the order #or c!stody o# the property and e##ects o# the individ!al detor shall e conditioned that i# !pon #inal hearin" o# the petition in insolvency the co!rt shall #ind in #avor o# the petitioners s!ch onds and all o# the% shall e void i# the decision e in #avor o# the individ!al detor the proceedin"s shall e dis%issed and the individ!al detor his heirs ad%inistrators e,ec!tors or assi"ns shall e entitled to recover s!ch s!% o# %oney as shall e s!##icient to cover the da%a"es s!stained y hi% not to e,ceed the a%o!nt o# the respective onds. !ch da%a"es shall e #i,ed and allowed y the co!rt. I# either the petitioners or the detor shall appeal #ro% the decision o# the co!rt !pon #inal hearin" o# the petition the appellant shall e re+!ired to "ive ond to the s!ccess#!l party in a s!% do!le the a%o!nt o# the val!e o# the property in controversy and #or the costs o# the proceedin"s. Any person interested in the estate %ay ta$e e,ception to the s!##iciency o# the s!reties on s!ch ond or onds. hen e,cepted to the petitioner/s s!reties !pon notice to the person e,ceptin" o# not less than two () nor %ore than #ive (5) days %!st *!sti#y as to their s!##iciency and !pon #ail!re to *!sti#y or o# others in their place #ail to *!sti#y at the ti%e and place appointed the *!d"e shall iss!e an AT? @II ?<@II
detor e,cept those that %ay e e,e%pt #ro% e,ec!tion (d) order the p!lication o# the petition or %otion in a newspaper o# "eneral circ!lation once a wee$ #or two () consec!tive wee$s (e) direct pay%ents o# any clai%s and conveyance o# any property d!e the detor to the li+!idator (#) prohiit pay%ents y the detor and the trans#er o# any property y the detor (") direct all creditors to #ile their clai%s with the li+!idator within the period set y the r!les o# proced!re (h) a!thori-e the pay%ent o# ad%inistrative e,penses as they eco%e d!e (i) state that the detor and creditors who are not petitioner=s %ay s!%it the na%es o# other no%inees to the position o# li+!idator and (*) set the case #or hearin" #or the election and appoint%ent o# the li+!idator which date shall not e less than thirty (0:) days nor %ore than #orty'#ive (C5) days #ro% the date o# the last p!lication. ection 110. ##ects o# the Li+!idation
creditor #or the alance. I# its val!e e,ceeds the clai% sec!red the li+!idator %ay convey the property to the creditor and waive the detor/s ri"ht o# rede%ption !pon receivin" the e,cess #ro% the creditor () the li+!idator %ay sell the property and satis#y the sec!red creditor/s entire clai% #ro% the proceeds o# the sale or (0) the sec!re creditor %ay en#orce the lien or #oreclose on the property p!rs!ant to applicale laws. (D) The Li+!idator. ection 115. lection o# Li+!idator. '
which %ay e an enc!%rance on any property sold y hi% (e) to settle all acco!nts etween the detor and his creditors s!*ect to the approval o# the co!rt (#) to recover any property or its val!e #ra!d!lently conveyed y the detor (") to reco%%end to the co!rt the creation o# a creditors/ co%%ittee which will assist hi% in the dischar"e o# the #!nctions and which shall have powers as the co!rt dee%s *!st reasonale and necessary and (h) !pon approval o# the co!rt to en"a"e s!ch pro#essional as %ay e necessary and reasonale to assist hi% in the dischar"e o# his d!ties. In addition to the ri"hts and d!ties o# a rehailitation receiver the li+!idator shall have the ri"ht and d!ty to ta$e all reasonale steps to %ana"e and dispose o# the detor/s assets with a view towards %a,i%i-in" the proceedin"s there#ro% to pay creditors and stoc$holders and to ter%inate the detor/s le"al e,istence.
(;) Avoidance roceedin"s. ection 17. ?escission or N!llity o# 3ertain Transactions. ' Any transaction occ!rrin" prior to the iss!ance o# the Li+!idation
ection 101. ale o# Assets in Li+!idation. ' The li+!idator %ay sell the !nenc!%ered assets o# the detor and convert the sa%e into %oney. The sale shall e %ade at p!lic a!ction. >owever a private sale %ay e allowed with the approval o# the co!rt i# (a) the "oods to e sold are o# a perishale nat!re or are liale to +!ic$ly deteriorate in val!e or are disproportionately e,pensive to $eep or %aintain or () the private sale is #or the est interest o# the detor and his creditors. ith the approval o# the co!rt !nenc!%ered property o# the detor %ay also e conveyed to a creditor in satis#action o# his clai% or part thereo#. ection 10. %anner o# I%ple%entin" the Li+!idation lan. ' The Li+!idator shall i%ple%ent the Li+!idation lan as approved y the co!rt. ay%ents shall e %ade to the creditors only in accordance with the provisions o# the lan. ection 100. 3onc!rrence and re#erence o# 3redits. ' The Li+!idation lan and its I%ple%entation shall ens!re that the conc!rrence and pre#erence o# credits as en!%erated in the 3ivil 3ode o# the hilippines and other relevant laws shall e oserved !nless a pre#erred creditor vol!ntarily waives his pre#erred ri"ht. For p!rposes o# this chapter credits #or services rendered y e%ployees or laorers to the detor shall en*oy #irst pre#erence !nder Article CC o# the 3ivil 3ode !nless the clai%s constit!te le"al liens !nder Article C1 and C thereo#. ection 10C. AT? @III ?<3;ING AN3ILLA?H T< ? INADILITAI
(D) 3ross'Dorder Insolvency roceedin"s. ection 109. Adoption o# 8ncitral 4odel Law on 3ross'Dorder Insolvency. ' !*ect to the provision o# ection 106 hereo# and the r!les o# proced!re that %ay e adopted y the !pre%e 3o!rt the 4odel Law on 3ross'Dorder Insolvency o# the 8nited Nations 3enter #or International Trade and ;evelop%ent is herey adopted as part o# this Act. ection 1C:. Initiation o# roceedin"s. ' The co!rt shall set a hearin" in connection with an insolvency or rehailitation proceedin" ta$in" place in a #orei"n *!risdiction !pon the s!%ission o# a petition y the representative o# the #orei"n entity that is the s!*ect o# the #orei"n proceedin". ection 1C1. rovision o# ?elie#. ' The co!rt %ay iss!e orders& (a) s!spendin" any action to en#orce clai%s a"ainst the entity or otherwise sei-e or #oreclose on property o# the #orei"n entity located in the hilippines () re+!irin" the s!rrender property o# the #orei"n entity to the #orei"n representative or (c) providin" other necessary relie#. ection 1C. Factors in Grantin" ?elie#. ' In deter%inin" whether to "rant relie# !nder this s!chapter the co!rt shall consider (a) the protection o# creditors in the hilippines and the inconvenience in p!rs!in" their clai% in a #orei"n proceedin" () the *!st treat%ent o# all creditors thro!"h resort to a !ni#ied insolvency or rehailitation proceedin"s (c) whether other *!risdictions have "iven reco"nition to the #orei"n proceedin" (d) the e,tent that the #orei"n proceedin" reco"ni-es the ri"hts o# creditors and other interested parties in a %anner s!stantially in accordance with the %anner prescried in this Act and (e) the e,tent that the #orei"n proceedin" has reco"ni-ed and shown de#erence to proceedin"s !nder this Act and previo!s le"islation. 3>AT? 4I3LLAN<8 ?<@II
or #ictitio!s clai% a"ainst the detor #ail to disclose the sa%e to the rehailitation receiver o# li+!idator within one (1) %onth a#ter co%in" to said $nowled"e or elie# or i# he shall atte%pt to acco!nt #or any o# the detors property y #ictitio!s losses or e,pense or (c) i# he shall $nowin"ly violate a prohiition or $nowin"ly #ail to !nderta$e an oli"ation estalished y this Act. osted y hilippine Laws and 3ases ' Atty. 4an!el 2. Laserna 2r. at E&17 4
