di kasali sa board and bar Flashcards
What do you call the financial condition of a debtor that is generally unable to pay its/his liabilities as it falls due in the ordinary course of business?
Insolvent
The approval requirement (voluntary proceeding) in the case of non stock company
Non stock corpo - the vote of at least 2/3s of the members, in a member’s meeting duly called for the purpose.
What is the State’s policy on rehabilitation and insolvency?
To encourage debtors(natural/juridical), and their creditors to collectively and realistically resolve and adjust competing claims and property rights.
What is the relevant statute for the Financial Rehabilitation and Insolvency Act of 2010?
Republic Act No. 10142
How shall rehabilitation/liquidation be facilitated?
- to ensure or maintain certainty and predictability in commercial affairs
- to preserve and maximize the value of assets of these debtors
- to recognize creditor rights and respect priority of claims
- to ensure equitable treatment of creditors who are similarly situated
Proceedings initiated by the insolvent debtor
Voluntary Proceedings
The approval requirement (voluntary proceeding) in the case of a stock corporation
Stock corpo - majority of the vote of the board of directors/trustees and authorized by the vote of the stockholders representing at least 2/3s of the outstanding capital stock, in a stockholder’s meeting duly called for the purpose
How is involuntary proceeding initiated?
Any creditor/group of creditors with a claim/aggregate of whose claims is, at least 1M Pesos/ at least 25% of the subscribed capital stock/partners’ contribution, w/e is higher, may initiate an involuntary proceeding against insolvent debtor by filing a petition of rehabilitation w/ the court.
The requirements before involuntary proceeding petition for rehabilitation can be filed w/ the court
Either must be present:
- No genuine issue of fact on law on the claim/s of the petitioner/s, and that the due and demandable payments thereon have not been made for at least 60 days / that debtor has failed generally to meet its liabs as they fall due ; or
- A creditor other than the petitioner/s, has initiated foreclosure proceedings against the debtor that will prevent the debtor from paying its debts as they become due/ will render it insolvent
What is suspension of payment?
An individual debtor who, possessing sufficient property to cover all his debts but foreseeing the impossibility of meeting them when they respectively fall due, may file a verified petition that he be declared in the state of suspension of payments by the court of the province or city in which he has resides for six (6) months prior to the filing of his petition.
What should be attached in the petition for declaration of the state of suspension of payments?
the petition shall have the following attachments:
- A schedule of assets and liabilities
- An inventory of assets
- A proposed agreement with creditors
The restoration of the debtor to a condition of successful operation and solvency
Rehabilitation
When is rehabilitation possible?
Rehabilitation is possible if it is shown that the debtor’s 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.
A plan by which the financial well-being and viability of an insolvent debtor can be restored using various means.
Rehabilitation Plan
The various means of which an insolvent debtor can be rehabilitated (enumerate 5)
- debt forgiveness
- debt rescheduling
- reorganization or quasi-reorganization
- dacion en pago
- debt-equity conversion
- sale of the business (or parts of it) as a going concern
- setting-up of new business entity as prescribed in the Act
- other similar arrangements as may be approved by the court/creditors
