Fria-Reviewer.doc

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.

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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 organied 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!lc$ 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.

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To ensure ensure a timely timely,, fair, fair, transpar transparent ent,, effect effective ive and effici efficient ent rehabilitation or liquidation of debtors.

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To ensure ensure or maintain maintain certainly certainly and and predictabil predictability ity in commercia commerciall affairs, preserve and maximie the value of the assets of these debtors, recognie 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.

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S&,, S&,,ar ar$ $-N!" -N!"A A'/ '/er er)a )ar ral 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

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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;

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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;

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 This +utline is based on the codal provisions of epublic %ct -o. -o. 11" 11"2, 2, and and may may be supp supple leme ment nted ed !ith !ith /ean /ean )esa )esarr 0. illanue illanuevas vas )ommercia )ommerciall 0a! evie!, evie!, 2 and 24 5ditions, 5ditions, insofar as the discussions are still applicable.

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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.

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CO?RT CO?RTS?PE S?PERVI RVISED SED REHABILIT REHABILITA ATION TION A. I"ta I"tat! 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.

La4lt$ La4lt$ !# I"'/'&al I"'/'&al De4t!r De4t!r:: O;"er !# a S!le Pr!ret Pr!ret!r)< !r)&re,e"t) % Sec. @* a"' @: consistent !ith F6% if it meets the follo!ing minimum requirements: 1.

The debtor must agree to the out*of*court or informal restructuring&'at!" % Sec. 1 1.

LI?IDATION OF INSOLVENT ?RIDICAL DEBTORS A. V!l&"tar$ L>&'at!" % Sec. 0 1.

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Pett!" #!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&'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&'at!". 1.

Pett!" % 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&'at!r % Sec. 117

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C!&rtA!"te' L>&'at!r % Sec. 118

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Oat< a"' B!"' !# t&'at!r % Sec. 119

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&al#cat!") !# t&'at!r % Sec. 11@

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P!;er): D&te) a"' Re)!")4lte) !# t&'at!r % Sec. 11+ The liquidator shall be deemed an officer of the court !ith the principal duly of preserving and maximiing 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$s assets !ith a vie! to!ards maximiing the proceeds therefrom, to pay creditors and stoc9holders, and to terminate the debtor$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.

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C!,e")at!" !# t&'at!r % Sec. 120

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Re!rt"( Re>&re,e"t) % Sec. 121

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D)c&'at!r % Sec. 122

C. Deter,"at!" !# Cla,)

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Re()tr$ !# Cla,) % Sec. 12*

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