Virtual Currency (VC) Exchanges in the Philippines: Summary of Guidelines

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A virtual currency exchange (VC exchange) refers to any entity that offers services or engages in activities that provide facility for the conversion or exchange of fiat currency to virtual currency (VC) or vice versa. Before a VC exchange can operate or do business in the Philippines, it must obtain a Certificate of Registration (COR) to operate as a remittance and transfer company (RTC).

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Avoidance Proceedings in Court-Supervised Rehabilitation for Juridical Debtors

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Any transaction occurring prior to commencement date (the date on which the court issues the Commencement Order) entered into by the debtor or involving its funds or assets may be rescinded or declared null and void on the ground that the same was executed with intent to defraud a creditor or creditors or which constitute undue preference of creditors. This is provided in court-supervised rehabilitation proceedings [see Court-Supervised Rehabilitation] under Republic Act No. 10142, also known as the “Financial Rehabilitation and Insolvency Act (FRIA) of 2010“.

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Out-of-Court or Informal Restructuring Agreements or Rehabilitation Plans (OCRA)

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 An out-of-court or informal restructuring agreement or Rehabilitation Plan (OCRA) that meets the minimum requirements is recognized as consistent with the objectives of Republic Act No. 10142, also known as the “Financial Rehabilitation and Insolvency Act (FRIA) of 2010“. Under R.A. 10142, rehabilitation proceedings may be: (a) Out-of-court or informal restructuring agreements or rehabilitation plans; (b) pre-negotiated rehabilitation; (b) court-supervised rehabilitation proceedings.

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Pre-Negotiated Rehabilitation under the Financial Rehabilitation and Insolvency Act (FRIA) of 2010

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Rehabilitation refers to the restoration of the debtor to a condition of successful operation and solvency, if it is shown that its continuance of operation is economically feasible and its creditors can recover by way of the present value of payments projected in the plan, more if the debtor continues as a going concern than if it is immediately liquidated. Under the “Financial Rehabilitation and Insolvency Act (FRIA) of 2010” (Republic Act No. 10142), rehabilitation proceedings may be: (a) Pre-negotiated rehabilitation; (b) Out-of-court or informal restructuring agreements or rehabilitation plans; or (c) Court-supervised rehabilitation proceedings.

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Voluntary Court-Supervised Rehabilitation Proceedings for Insolvent Juridical Debtors

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Rehabilitation proceedings may be voluntary (initiated by the debtor) or involuntary (initiated by the creditor or group of creditors), as provided under Republic Act No. 10142, also known as the “Financial Rehabilitation and Insolvency Act (FRIA) of 2010”. Here are the requirements for initiating voluntary court-supervised rehabilitation proceedings under R.A. 10142. [See also Court-Supervised Rehabilitation Proceedings]. 

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Rehabilitation Plan in Court-Supervised Rehabilitation Proceedings

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Rehabilitation Plan refers to a plan by which the financial well-being and viability of an insolvent debtor can be restored using various means including, but not limited to, debt forgiveness, debt rescheduling, reorganization or quasi-reorganization, dacion en pago, debt-equity conversion and sale of the business (or parts of it) as a going concern, or setting-up of new business entity as prescribed in Republic Act No. 10142, or other similar arrangements as may be approved by the court or creditors.

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Stay Order or Suspension Order in Court-Supervised Rehabilitation Proceedings

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Court-supervised proceedings is one of the options for rehabilitation of insolvent juridical persons under the the Financial Rehabilitation and Insolvency Act (FRIA) of 2010 (Republic Act No. 10142). If the court finds the petition for rehabilitation (see Initiation of Proceedings) to be sufficient in form and substance, it shall, within 5 working days from the filing of the petition, issue a Commencement Order. 

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