In an Out-of-Court or Informal Restructuring Agreements or Rehabilitation Plan (OCRA), the parties may agree on a standstill period, which shall be effective and enforceable not only against the contracting parties but also against the other creditors provided it complies with the following conditions:
- 1. approval of the agreement for a standstill period by creditors representing more than 50% of the total liabilities of the debtor;
- 2. publication of the notice of the agreement in a newspaper of general circulation in the Philippines, once a week for 2 consecutive weeks; and
- 3. the standstill period shall not exceed 120 days from the date of effectivity.
The notice of the standstill agreement, which is published as provided above, shall substantially state the following minimum requirements:
- 1. the identity of the debtor, its principal business or activity/ies, and its principal place of business;
- 2. the total amount of the liabilities of the debtor, classified into secured and unsecured;
- 3. that a contact person is identified, together with his contact details, which should include existing office address, phone numbers, and e-mail addresses;
- 4. that creditors are invited to participate in the negotiations for an OCRA and may do so by contacting the person specified in the notice;
- 5. that the creditors representing more than 50% of the total liabilities of the debtor have agreed to observe a standstill period which shall not exceed one 120 days from its date of effectivity;
- 6. that the terms and conditions agreed upon by the parties shall be strictly observed during the standstill period;
- 7. that the standstill period shall be effective after publication of the notice once a week for 2 consecutive weeks in a newspaper of general circulation in the Philippines; and
- 8. that the OCRA shall be binding on the debtor and all affected persons, including the creditors, whether or not they will participate in the negotiations, if approved by all of the following: (i) the debtor; (ii) the creditors representing at least 67% of the secured obligations of the debtor; (iii) the creditors representing at least 75% of the unsecured obligations of the debtor; and (iii) the creditors holding at least 85% of the total liabilities, secured and unsecured, of the debtor.
EXPIRATION OF STANDSTILL PERIOD
The standstill period shall expire upon:
- (1) the lapse of 120 days from the effectivity of the standstill agreement,
- (2) the effectivity of the OCRA, or
- (3) the termination of the negotiations for the OCRA as declared by creditors representing more than 50% of the total liabilities of the debtor, whichever comes first.
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