Tag Archives: rehabilitation

Liquidation of Insolvent Juridical Debtors under the Financial Rehabilitation and Insolvency Act (FRIA) of 2010

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Insolvency, or the state of being insolvent, is 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. Insolvency proceedings may cover an individual debtor or a juridical debtor. This article covers only juridical debtors (there are separate rules for voluntary and involuntary liquidation of individual debtors).

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Court-Supervised Rehabilitation in the Philippines: Financial Rehabilitation and Insolvency Act (FRIA)

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Rehabilitation, under the Financial Rehabilitation and Insolvency Act (FRIA) of 2010, 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. The procedure and requirements are discussed below.

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Suspension of Payments of Individual Debtors: Options for Debtors in Distress

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Individual debtors under financial distress may be covered by any of the following options: (a) Suspension of payments; (b) Voluntary liquidation; and (c) Involuntary liquidation. This discussion covers only suspension of payments under Republic Act No. 10142, also known as the “Financial Rehabilitation and Insolvency Act (FRIA) of 2010“, as fleshed out in the FLSP Rules. Moreover, the discussion below on Suspension of Payments applies only to individual debtors.

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Voluntary Liquidation for Individual Debtors: Options for Debtors in Financial Distress

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Voluntary liquidation, as opposed to involuntary liquidation, refers to a proceeding initiated by the debtor. An insolvent individual debtor may ask the court for protection, through an action for suspension of payments or  voluntary liquidation. Creditors of insolvent debtors, on the other hand, have the option of filing a petition for involuntary liquidation of the insolvent individual debtor. This discussion covers only voluntary liquidation in insolvency under Republic Act No. 10142, also known as the “Financial Rehabilitation and Insolvency Act (FRIA) of 2010“, as fleshed out in the FLSP Rules. Moreover, the discussion below on voluntary insolvency proceedings applies only to individual debtors.

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Involuntary Liquidation for Individual Debtors: Options for Debtors in Financial Distress

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Involuntary liquidation, as opposed to voluntary liquidation, refers to a proceeding initiated by creditors. Creditors of insolvent individual debtors may file an action for involuntary liquidation of the insolvent debtor. This discussion covers only involuntary liquidation in insolvency under Republic Act No. 10142, also known as the “Financial Rehabilitation and Insolvency Act (FRIA) of 2010“, as threshed out in the FLSP Rules. Moreover, the discussion below on insolvency proceedings applies only to individual debtors.

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The Liquidation Order: Common Provisions in Insolvency Proceedings for Individual and Juridical Debtors

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Insolvency proceedings may refer to voluntary or involuntary proceedings for individual debtors (see Voluntary liquidation and Involuntary liquidation) or juridical entities (see Liquidation proceedings). The provisions on Liquidation Order are common in all these proceedings, as provided under Republic Act No. 10142, also known as the “Financial Rehabilitation and Insolvency Act (FRIA) of 2010“, and fleshed out in the FLSP Rules. For purposes of these common provisions, the term “debtor” includes individual debtors and other juridical debtors. 

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The Liquidator: Common Provisions in Insolvency Proceedings for Individual and Juridical Debtors

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Insolvency proceedings may refer to voluntary or involuntary proceedings for individual debtors (see Voluntary or involuntary liquidation) or juridical debtors (see Liquidation proceedings). The provisions on the Liquidator are common in all these proceedings, as provided under Republic Act No. 10142, also known as the “Financial Rehabilitation and Insolvency Act (FRIA) of 2010”, and fleshed out in the FLSP Rules. For purposes of these common provisions, the term “debtor” includes individual debtors and other juridical debtors. 

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Determination of Claims: Common Provisions in Insolvency Proceedings for Individual and Juridical Debtors

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Insolvency proceedings may refer to voluntary or involuntary proceedings for individual debtors (see Voluntary or involuntary liquidation) or juridical entities (see Liquidation proceedings). The rules on determination of claims are common in all these proceedings, as provided under Republic Act No. 10142, also known as the “Financial Rehabilitation and Insolvency Act (FRIA) of 2010”, and fleshed out in the FLSP Rules. For purposes of these common provisions, the term “debtor” includes individual debtors and other juridical debtors. 

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The Liquidation Plan: Common Provisions in Insolvency Proceedings for Individual and Juridical Debtors

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Insolvency proceedings may refer to voluntary or involuntary proceedings for individual debtors(see Voluntary or involuntary liquidation) or juridical entities (see Liquidation proceedings). The rules on determination of claims are common in all these proceedings, as provided under Republic Act No. 10142, also known as the “Financial Rehabilitation and Insolvency Act (FRIA) of 2010”, and fleshed out in the FLSP Rules. For purposes of these common provisions, the term “debtor” includes individual debtors and other juridical debtors. 

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Avoidance Proceedings: Common Provisions in Insolvency Proceedings for Individual and Juridical Debtors

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Insolvency proceedings may refer to voluntary or involuntary proceedings for individual debtors (see Voluntary Liquidation Insolvency proceedings may refer to voluntary or involuntary proceedings for individual debtors(see Voluntary liquidation and Involuntary liquidation) or juridical entities (see Liquidation proceedings). The provisions on Liquidation Order are common in all these proceedings, as provided under Republic Act No. 10142, also known as the “Financial Rehabilitation and Insolvency Act (FRIA) of 2010“, and fleshed out in the FLSP Rules. For purposes of these common provisions, the term “debtor” includes individual debtors and other juridical debtors. 

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