{"id":4347,"date":"2020-03-14T18:13:00","date_gmt":"2020-03-14T10:13:00","guid":{"rendered":"https:\/\/pnl-law.com\/blog\/?p=4347"},"modified":"2020-06-08T19:58:10","modified_gmt":"2020-06-08T11:58:10","slug":"voluntary-liquidation-for-individual-debtors-options-for-debtors-in-financial-distress","status":"publish","type":"post","link":"https:\/\/pnl-law.com\/blog\/voluntary-liquidation-for-individual-debtors-options-for-debtors-in-financial-distress\/","title":{"rendered":"Voluntary Liquidation for Individual Debtors: Options for Debtors in Financial Distress"},"content":{"rendered":"\n<p>Voluntary liquidation, as opposed to <a href=\"https:\/\/pnl-law.com\/blog\/involuntary-liquidation-for-individual-debtors-options-for-debtors-in-financial-distress\/\">involuntary liquidation<\/a>, refers to a proceeding initiated by the debtor. An insolvent <a href=\"https:\/\/pnl-law.com\/blog\/glossary-for-the-revised-corporation-code\/#Individual-Debtor\">individual debtor<\/a> may ask the court for protection, through an action for suspension of payments or&nbsp; 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 &#8220;<a href=\"https:\/\/pnl-law.com\/blog\/financial-rehabilitation-and-insolvency-act-fria-of-2010-republic-act-no-10142-full-text\/\">Financial Rehabilitation and Insolvency Act (FRIA) of 2010<\/a>&#8220;, as fleshed out in the <a href=\"https:\/\/pnl-law.com\/blog\/financial-liquidation-and-suspension-of-payments-rules-of-procedure-for-insolvent-debtors-2015-full-text\/\">FLSP Rules<\/a>. Moreover, the discussion below on voluntary insolvency proceedings applies only to individual debtors.<\/p>\n\n\n\n<!--more-->\n\n\n\n<div class=\"wp-block-image is-style-rounded\"><figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"838\" height=\"629\" src=\"https:\/\/pnl-law.com\/blog\/wp-content\/uploads\/2020\/06\/Voluntary-Liquidation-of-Insolvent-Individual-Debtor-under-the-FRIA-Philippines-1.png\" alt=\"Voluntary Liquidation of Insolvent Individual Debtor under the FRIA (Philippines)\" class=\"wp-image-8146\"\/><\/figure><\/div>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>Options &#8211; Corporations:<\/td><td>Other options &#8211; Individuals:<\/td><\/tr><tr><td>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/court-supervised-rehabilitation-proceedings-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">Court-supervised rehabilitation<\/a><br \/>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/pre-negotiated-rehabilitation-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">Pre-negotiated rehabilitation<\/a><br \/>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/out-of-court-or-informal-restructuring-agreements-or-rehabilitation-plans\/\">Informal restructuring<\/a><br \/>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/liquidation-of-insolvent-juridical-debtors-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">Liquidation<\/a><\/td><td>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/suspension-of-payments-of-individual-debtors-options-for-debtors-in-distress\/\">Suspension of payments<\/a><br \/>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/involuntary-liquidation-for-individual-debtors-options-for-debtors-in-financial-distress\/\">Involuntary insolvency<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">WHO MAY FILE PETITION<\/h2>\n\n\n\n<p>An individual debtor whose properties are not sufficient to cover his liabilities, and owing debts exceeding <strong>P500,000<\/strong>, may apply to be discharged from his debts and liabilities by filing a verified petition with the court of the province or city in which he has resided for 6 months prior to the filing of such petition. [See also <a href=\"https:\/\/pnl-law.com\/blog\/jurisdiction-and-nature-of-proceedings-in-financial-liquidation-and-suspension-of-payments\/\">Jurisdiction<\/a>]&nbsp;<\/p>\n\n\n\n<p>[See also <a href=\"https:\/\/pnl-law.com\/blog\/cross-border-rehabilitation-and-insolvency-actions-of-foreign-creditors-and-enforcement-framework-of-foreign-proceedings-in-the-philippines\/\">Cross-Border Rehabilitation and Insolvency: Actions of Foreign Creditors and Enforcement Framework of Foreign Proceedings in the Philippines<\/a>]<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">CONTENTS OF PETITION<\/h2>\n\n\n\n<p>The petition shall indicate the names of at least 3 nominees to the position of liquidator and shall include, as minimum attachments, the following:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>(a) a schedule of debts and liabilities, including a list of creditors with their addresses, amount of claims and collaterals, if any;&nbsp;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(b) an inventory of all the debtor&#8217;s assets, including receivables and claims against third parties;&nbsp;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(c) a schedule of current income and expenditures within 3 months prior to the filing of the petition;&nbsp;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(d) the income tax return of the debtor for the immediately preceding year;&nbsp;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(e) a list of all properties acquired by the debtor in the immediately preceding 2 years;&nbsp;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(f) a list of all properties sold, disposed of, or donated by the debtor in the immediately preceding 2 years; and&nbsp;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(g) a schedule of the debtor&#8217;s executory contracts and unexpired leases.&nbsp;<\/li><\/ul>\n\n\n\n<p>All attachments to the petition shall be deemed part and parcel of the verified petition.&nbsp;<\/p>\n\n\n\n<p>[See also <a href=\"https:\/\/pnl-law.com\/blog\/introduction-to-insolvency-in-the-philippines-suspension-of-payments-financial-rehabilitation-and-liquidation\/\">Introduction to Insolvency in the Philippines: Suspension of Payments, Financial Rehabilitation and Liquidation<\/a>]<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">ACTION ON THE PETITION<\/h2>\n\n\n\n<p>If the court finds the petition sufficient in form and substance, it shall issue the <a href=\"https:\/\/pnl-law.com\/blog\/the-liquidation-order-common-provisions-in-insolvency-proceedings-for-individual-and-juridical-debtors\/\">Liquidation Order<\/a>. Otherwise, the court shall dismiss the petition. The court may take any action necessary for the foregoing purposes but it shall have a maximum period of 10 working days from the date of the filing of the petition to: (a) issue the Liquidation Order; or (b) dismiss the petition.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>Common provisions in insolvency liquidation:<\/td><td>&nbsp;<\/td><\/tr><tr><td>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/the-liquidation-order-common-provisions-in-insolvency-proceedings-for-individual-and-juridical-debtors\/\">Liquidation order<\/a><br \/>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/the-liquidator-common-provisions-in-insolvency-proceedings-for-individual-and-juridical-debtors\/\">The Liquidator<\/a><br \/>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/the-liquidation-plan-common-provisions-in-insolvency-proceedings-for-individual-and-juridical-debtors\/\">Liquidation Plan<\/a><\/td><td>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/determination-of-claims-common-provisions-in-insolvency-proceedings-for-individual-and-juridical-debtors\/\">Determination of claims<\/a><br \/>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/avoidance-proceedings-common-provisions-in-insolvency-proceedings-for-individual-and-juridical-debtors\/\">Avoidance proceedings<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>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&nbsp; voluntary liquidation. Creditors of insolvent debtors, on the other hand, have the option of filing a petition for involuntary liquidation of the [&hellip;]<\/p>\n","protected":false},"author":7,"featured_media":8146,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1281,1,7],"tags":[534,535,1052,1051,1057,1069,537,1070,1077,1076,536,1053],"class_list":["post-4347","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-contracts-and-obligations","category-corporate-investments-law","category-special-projects","tag-business","tag-corporate-rehabilitation","tag-financial-rehabilitation","tag-financial-rehabilitation-and-insolvency-act-fria-of-2010","tag-financial-restructuring","tag-individual-debtors","tag-insolvency","tag-insolvency-proceedings","tag-insolvent-debtors","tag-involuntary-liquidation","tag-rehabilitation","tag-republic-act-no-10142"],"_links":{"self":[{"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/posts\/4347","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/comments?post=4347"}],"version-history":[{"count":7,"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/posts\/4347\/revisions"}],"predecessor-version":[{"id":8147,"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/posts\/4347\/revisions\/8147"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/media\/8146"}],"wp:attachment":[{"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/media?parent=4347"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/categories?post=4347"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/tags?post=4347"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}