Tag Archives: rehabilitation

Determination of Claims in Court-Supervised Financial Rehabilitation in the Philippines

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A claim refers to all claims or demands of whatever nature or character against the debtor or its property, whether for money or otherwise, liquidated or unliquidated, fixed or contingent, matured or unmatured, disputed or undisputed, including, but not limited to: (1) all claims of the government, whether national or local, including taxes, tariffs and customs duties; and (2) claims against directors and officers of the debtor arising from acts done in the discharge of their functions falling within the scope of their authority.

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Management Committee in Court-Supervised Rehabilitation in the Philippines

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The management committee is composed of persons, natural or juridical, appointed by the court when proper, in court-supervised rehabilitation. The management committee shall take the place of the management and governing body of the debtor, and assume such powers, rights and responsibilities under the law. These are provided under Republic Act No. 10142, also known as the Financial Rehabilitation and Insolvency Act of 2010 (FRIA) and the Financial Rehabilitation Rules of Procedure (2013) or “FR Rules” (A.M. 12-12-11-SC).

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Creditor’s Committee in Court-Supervised Rehabilitation in the Philippines

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After the petition for court-supervised rehabilitation, whether voluntary or involuntary, is given due course, the court shall issue an order directing the rehabilitation receiver to call a meeting with the debtor and all classes of creditors, to take place in not less than 2 weeks nor more than 4 weeks from the date of the order, to consider the organization of a creditors’ committee. 

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Involuntary Court-Supervised Rehabilitation Proceedings against Insolvent Juridical Debtors

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Involuntary court-supervised rehabilitation proceedings, as opposed to voluntary court-supervised proceedings, is initiated by the creditors. This is provided under Republic Act No. 10142, also known as the Financial Rehabilitation and Insolvency Act (FRIA) of 2010, as fleshed out in the Financial Rehabilitation Rules of Procedure (2013) or “FR Rules” (A.M. 12-12-11-SC).

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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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