{"id":4388,"date":"2020-02-15T03:32:00","date_gmt":"2020-02-14T19:32:00","guid":{"rendered":"https:\/\/pnl-law.com\/blog\/?p=4388"},"modified":"2020-06-06T04:49:09","modified_gmt":"2020-06-05T20:49:09","slug":"commencement-order-in-court-supervised-rehabilitation-proceedings","status":"publish","type":"post","link":"https:\/\/pnl-law.com\/blog\/commencement-order-in-court-supervised-rehabilitation-proceedings\/","title":{"rendered":"Commencement Order in Court-Supervised Rehabilitation under the FRIA"},"content":{"rendered":"\n<p>In <a href=\"https:\/\/pnl-law.com\/blog\/court-supervised-rehabilitation-proceedings-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">court-supervised rehabilitation proceedings<\/a>, as opposed to <a href=\"https:\/\/pnl-law.com\/blog\/out-of-court-or-informal-restructuring-agreements-or-rehabilitation-plans\/\">out-of-court restructuring agreements<\/a> or <a href=\"https:\/\/pnl-law.com\/blog\/pre-negotiated-rehabilitation-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">pre-negotiated rehabilitation<\/a>, the court examines the petition to determine if it is sufficient in form and substance (see <a href=\"https:\/\/pnl-law.com\/blog\/initiation-of-court-supervised-rehabilitation-proceedings-for-or-against-juridical-debtors\/\">Initiation of Court-Supervised Proceedings<\/a>). If the petition is sufficient, the court proceeds to issue a <strong>Commencement Order<\/strong>.&nbsp;<\/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=\"867\" height=\"649\" src=\"https:\/\/pnl-law.com\/blog\/wp-content\/uploads\/2020\/06\/Commencement-Order-in-Court-Supervised-Rehabilitation-in-the-Philippines.png\" alt=\"Commencement Order in Court-Supervised Rehabilitation in the Philippines\" class=\"wp-image-7766\"\/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">CONTENTS OF COMMENCEMENT ORDER<\/h2>\n\n\n\n<p>The <strong>Commencement Order<\/strong> shall:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>(a) identify the <a href=\"https:\/\/pnl-law.com\/blog\/juridical-debtors-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">debtor<\/a>, its principal business or activity\/ies and its principal place of business;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(b) summarize the ground\/s for initiating the proceedings;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(c) state the relief sought and any requirement or procedure particular to the relief sought;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(d) state the legal effects of the Commencement Order, including the matters enumerated below;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(e) declare that the <a href=\"https:\/\/pnl-law.com\/blog\/juridical-debtors-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">debtor<\/a> is under rehabilitation;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(f) direct the publication of the Commencement Order in a newspaper of general circulation in the Philippines once a week for at least 2 consecutive weeks, with the first publication to be made within 7 days from the time of its issuance;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(g) if the petitioner is the <a href=\"https:\/\/pnl-law.com\/blog\/juridical-debtors-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">debtor<\/a>, direct the service by personal delivery of a copy of the petition on each creditor holding at least 10% of the total liabilities of the debtor as determined from the schedule attached to the petition within 5 days; if the petitioner\/s is\/are creditor\/s, direct the service by personal delivery of a copy of the petition on the debtor within 5 days;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(h) appoint a <a href=\"https:\/\/pnl-law.com\/blog\/the-rehabilitation-receiver-management-committee-and-creditors-committee-in-corporate-rehabilitation-proceedings\/\">rehabilitation receiver<\/a> who may or may not be from among the nominees of the petitioner\/s;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(i) summarize the requirements and deadlines for creditors to establish their claims against the debtor and direct all creditors to file their claims with the court at least 5 days before the initial hearing;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(j) direct the Bureau of Internal Revenue (BIR) to file and serve on the <a href=\"https:\/\/pnl-law.com\/blog\/juridical-debtors-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">debtor<\/a> its comment on or opposition to the petition or its claim\/s against the debtor;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(k) prohibit the debtor\u2019s suppliers of goods or services from withholding the supply of goods and services in the ordinary course of business for as long as the <a href=\"https:\/\/pnl-law.com\/blog\/juridical-debtors-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">debtor<\/a> makes payments for the services or goods supplied after the issuance of the Commencement Order;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(l) authorize the payment of administrative expenses as they become due;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(m) set the case for initial hearing, which shall not be more than 40 days from the date of filing of the petition for the purpose of determining whether there is substantial likelihood for the debtor to be rehabilitated;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(n) make available copies of the petition and <a href=\"https:\/\/pnl-law.com\/blog\/rehabilitation-plan-in-court-supervised-rehabilitation-proceedings\/\">rehabilitation plan <\/a>for examination and copying by any interested party;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(o) indicate the location or locations at which documents regarding the debtor and the proceedings may be reviewed and copied;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(p) state that any creditor or <a href=\"https:\/\/pnl-law.com\/blog\/juridical-debtors-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">debtor<\/a>, who is not the petitioner, may submit the name or nominate any other qualified person to the position of <a href=\"https:\/\/pnl-law.com\/blog\/rehabilitation-plan-in-court-supervised-rehabilitation-proceedings\/\">rehabilitation receiver<\/a> at least 5 days before the initial hearing;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(q) include a <a href=\"https:\/\/pnl-law.com\/blog\/stay-order-or-suspension-order-in-court-supervised-rehabilitation-proceedings\/\">Stay or Suspension Order<\/a>.&nbsp;<\/li><\/ul>\n\n\n\n<script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script>\n<ins class=\"adsbygoogle\"\n     style=\"display:block; text-align:center;\"\n     data-ad-layout=\"in-article\"\n     data-ad-format=\"fluid\"\n     data-ad-client=\"ca-pub-1132067212867085\"\n     data-ad-slot=\"2973721232\"><\/ins>\n<script>\n     (adsbygoogle = window.adsbygoogle || []).push({});\n<\/script>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>EFFECTS OF COMMENCEMENT ORDER<\/strong><\/h2>\n\n\n\n<p>The court\u2019s issuance of a Commencement Order shall, in addition to the effects of a <a href=\"https:\/\/pnl-law.com\/blog\/stay-order-or-suspension-order-in-court-supervised-rehabilitation-proceedings\/\">Stay or Suspension Order<\/a>:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>(a) vest the <a href=\"https:\/\/pnl-law.com\/blog\/rehabilitation-plan-in-court-supervised-rehabilitation-proceedings\/\">rehabilitation receiver<\/a> with all the powers and functions provided in <a href=\"https:\/\/pnl-law.com\/blog\/financial-rehabilitation-and-insolvency-act-fria-of-2010-republic-act-no-10142-full-text\/\">Republic Act No. 10142<\/a>, such as the right to review and obtain all records to which the debtor\u2019s management and directors have access, including bank accounts of whatever nature of the <a href=\"https:\/\/pnl-law.com\/blog\/juridical-debtors-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">debtor<\/a>, subject to the approval by the court of the performance bond filed by the <a href=\"https:\/\/pnl-law.com\/blog\/rehabilitation-plan-in-court-supervised-rehabilitation-proceedings\/\">rehabilitation receiver<\/a>;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(b) prohibit, or otherwise serve as the legal basis for rendering null and void the results of any extrajudicial activity or process to seize property, sell encumbered property, or otherwise attempt to collect on or enforce a claim against the <a href=\"https:\/\/pnl-law.com\/blog\/juridical-debtors-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">debtor<\/a> after the commencement date unless otherwise allowed under <a href=\"https:\/\/pnl-law.com\/blog\/financial-rehabilitation-and-insolvency-act-fria-of-2010-republic-act-no-10142-full-text\/\">R.A. 10142<\/a>;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(c) serve as the legal basis for rendering null and void any set-off after the commencement date of any debt owed to the debtor by any of the debtor\u2019s creditors;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(d) serve as the legal basis for rendering null and void the perfection of any lien against the debtor\u2019s property after the commencement date; and<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>(e) consolidate the resolution of all legal proceedings by and against the <a href=\"https:\/\/pnl-law.com\/blog\/juridical-debtors-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">debtor<\/a> to the court. However, the court may allow the continuation of cases in other courts where the debtor had initiated the suit.<\/li><\/ul>\n\n\n\n<p>Attempts to seek legal or other recourse against the <a href=\"https:\/\/pnl-law.com\/blog\/juridical-debtors-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">debtor<\/a> outside these proceedings shall be sufficient to support a finding of indirect contempt of court.<\/p>\n\n\n\n<p>Moreover, upon issuance of the Commencement Order by the court, and until the approval of the <a href=\"https:\/\/pnl-law.com\/blog\/rehabilitation-plan-in-court-supervised-rehabilitation-proceedings\/\">Rehabilitation Plan<\/a> or dismissal of the petition, whichever is earlier, the imposition of all taxes and fees, including penalties, interests and charges thereof, due to the national government or to Local Government Units (LGUs) shall be considered waived, in furtherance of the objectives of rehabilitation.<\/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\"><strong>EFFECTIVITY AND DURATION OF COMMENCEMENT ORDER<\/strong><\/h2>\n\n\n\n<p>Unless lifted by the court, the Commencement Order shall be effective for the duration of the <a href=\"https:\/\/pnl-law.com\/blog\/court-supervised-rehabilitation-proceedings-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">rehabilitation proceedings<\/a> for as long as there is a substantial likelihood that the debtor will be successfully rehabilitated. In determining whether there is substantial likelihood for the <a href=\"https:\/\/pnl-law.com\/blog\/juridical-debtors-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">debtor<\/a> to be successfully rehabilitated, the court shall ensure that the following minimum requirements are met:<\/p>\n\n\n\n<p>(a) The proposed <a href=\"https:\/\/pnl-law.com\/blog\/rehabilitation-plan-in-court-supervised-rehabilitation-proceedings\/\">Rehabilitation Plan<\/a> submitted complies with the minimum contents;<\/p>\n\n\n\n<p>(b) There is sufficient monitoring by the <a href=\"https:\/\/pnl-law.com\/blog\/rehabilitation-plan-in-court-supervised-rehabilitation-proceedings\/\">rehabilitation receiver<\/a> of the debtor\u2019s business for the protection of creditors;<\/p>\n\n\n\n<p>(c) The debtor has met with its creditors to the extent reasonably possible in attempts to reach a consensus on the proposed <a href=\"https:\/\/pnl-law.com\/blog\/rehabilitation-plan-in-court-supervised-rehabilitation-proceedings\/\">Rehabilitation Plan<\/a>;<\/p>\n\n\n\n<p>(d) The <a href=\"https:\/\/pnl-law.com\/blog\/rehabilitation-plan-in-court-supervised-rehabilitation-proceedings\/\">rehabilitation receiver<\/a> submits a report, based on preliminary evaluation, stating that the underlying assumptions and the financial goals stated in the petitioner\u2019s <a href=\"https:\/\/pnl-law.com\/blog\/rehabilitation-plan-in-court-supervised-rehabilitation-proceedings\/\">Rehabilitation Plan<\/a> are realistic, feasible and reasonable; or, if not, there is, in any case, a substantial likelihood for the debtor to be successfully rehabilitated because, among others:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>(1) there are sufficient assets with which to rehabilitate the <a href=\"https:\/\/pnl-law.com\/blog\/juridical-debtors-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">debtor<\/a>;<\/li><li>(2) there is sufficient cash flow to maintain the operations of the <a href=\"https:\/\/pnl-law.com\/blog\/juridical-debtors-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">debtor<\/a>;<\/li><li>(3) the debtor\u2019s owner\/s, partners, stockholders, directors and officers have been acting in good faith and with due diligence;<\/li><li>(4) the petition is not a sham filing intended only to delay the enforcement of the rights of the creditor\/s or of any group of creditors; and<\/li><li>(5) the <a href=\"https:\/\/pnl-law.com\/blog\/juridical-debtors-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">debtor<\/a> would likely be able to pursue a viable <a href=\"https:\/\/pnl-law.com\/blog\/rehabilitation-plan-in-court-supervised-rehabilitation-proceedings\/\">Rehabilitation Plan<\/a>;<\/li><\/ul>\n\n\n\n<p>(e) The petition, the <a href=\"https:\/\/pnl-law.com\/blog\/rehabilitation-plan-in-court-supervised-rehabilitation-proceedings\/\">Rehabilitation Plan<\/a> and the attachments thereto do not contain any materially false or misleading statement;<\/p>\n\n\n\n<p>(f) If the petitioner is the <a href=\"https:\/\/pnl-law.com\/blog\/juridical-debtors-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">debtor<\/a>, that the debtor has met with its creditor\/s representing at least three-fourths of its total obligations to the extent reasonably possible and made a good faith effort to reach a consensus on the proposed <a href=\"https:\/\/pnl-law.com\/blog\/rehabilitation-plan-in-court-supervised-rehabilitation-proceedings\/\">Rehabilitation Plan<\/a>; if the petitioner\/s is\/are a creditor or group of creditors, that the petitioner\/s has\/have met with the debtor and made a good faith effort to reach a consensus on the proposed <a href=\"https:\/\/pnl-law.com\/blog\/rehabilitation-plan-in-court-supervised-rehabilitation-proceedings\/\">Rehabilitation Plan<\/a>; and<\/p>\n\n\n\n<p>(g) The <a href=\"https:\/\/pnl-law.com\/blog\/juridical-debtors-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">debtor<\/a> has not committed acts of misrepresentation or in fraud of its creditor\/s or a group of creditors.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>&nbsp;<\/td><td>COURT-SUPERVISED REHABILITATION:<\/td><td>&nbsp;<\/td><\/tr><tr><td>&nbsp;<\/td><td>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/initiation-of-court-supervised-rehabilitation-proceedings-for-or-against-juridical-debtors\/\">Voluntary Court-Supervised Rehabilitation Proceedings for Insolvent Juridical Debtors<\/a><\/td><td>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/involuntary-court-supervised-rehabilitation-proceedings-against-insolvent-juridical-debtors\/\">Involuntary Court-Supervised Rehabilitation Proceedings against Insolvent Juridical Debtors<\/a><\/td><\/tr><tr><td>&nbsp;<\/td><td>PROVISIONS COMMON TO BOTH:<\/td><td>&nbsp;<\/td><\/tr><tr><td>&nbsp;<\/td><td>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/court-supervised-rehabilitation-proceedings-under-the-financial-rehabilitation-and-insolvency-act-fria-of-2010\/\">Action of Court and Proceedings<\/a><\/td><td>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/rehabilitation-plan-in-court-supervised-rehabilitation-proceedings\/\">The Rehabilitation Plan<\/a><\/td><\/tr><tr><td>&nbsp;<\/td><td>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/stay-order-or-suspension-order-in-court-supervised-rehabilitation-proceedings\/\">Stay or Suspension Order<\/a><\/td><td>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/the-rehabilitation-receiver-management-committee-and-creditors-committee-in-corporate-rehabilitation-proceedings\/\">The Rehabilitation Receiver<\/a><\/td><\/tr><tr><td>&nbsp;<\/td><td>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/determination-of-claims-in-court-supervised-financial-rehabilitation-in-the-philippines\/\">Determination of claims<\/a><\/td><td>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/management-committee-in-court-supervised-rehabilitation-in-the-philippines\/\">The Management Committee<\/a><\/td><\/tr><tr><td>&nbsp;<\/td><td>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/secured-creditors-in-court-supervised-rehabilitation-proceedings\/\">Treatment of secured creditors<\/a><\/td><td>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/creditors-committee-in-court-supervised-rehabilitation-in-the-philippines\/\">The Creditor\u2019s Committee<\/a><\/td><\/tr><tr><td>&nbsp;<\/td><td>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/termination-of-court-supervised-rehabilitation-proceedings\/\">Termination of proceedings<\/a><\/td><td>*&nbsp;<a href=\"https:\/\/pnl-law.com\/blog\/avoidance-proceedings-in-court-supervised-rehabilitation-proceedings-for-juridical-persons\/\">Avoidance proceedings<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>In court-supervised rehabilitation proceedings, as opposed to out-of-court restructuring agreements or pre-negotiated rehabilitation, the court examines the petition to determine if it is sufficient in form and substance (see Initiation of Court-Supervised Proceedings). If the petition is sufficient, the court proceeds to issue a Commencement Order.&nbsp;<\/p>\n","protected":false},"author":7,"featured_media":7766,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,7],"tags":[534,1087,535,1085,1052,1051,1057,537,1086,536,1053],"class_list":["post-4388","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate-investments-law","category-special-projects","tag-business","tag-commencement-order","tag-corporate-rehabilitation","tag-court-supervised-rehabilitation","tag-financial-rehabilitation","tag-financial-rehabilitation-and-insolvency-act-fria-of-2010","tag-financial-restructuring","tag-insolvency","tag-pre-negotiated-rehabilitation","tag-rehabilitation","tag-republic-act-no-10142"],"_links":{"self":[{"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/posts\/4388","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=4388"}],"version-history":[{"count":8,"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/posts\/4388\/revisions"}],"predecessor-version":[{"id":7984,"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/posts\/4388\/revisions\/7984"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/media\/7766"}],"wp:attachment":[{"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/media?parent=4388"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/categories?post=4388"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/tags?post=4388"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}