FRIA Flashcards
🟢 REHABILITATION 🟢
RA 10142 FRIA
for purposes under FRIA, define insolvency
- a debtor, who is either generally unable to pay his or her obligation as they fall due in the ordinary course of business.
- Meaning just LIQUIDITY problems. The debtor has sufficient assets but could not meet his or her or its obligation as they mature because these are solid assets, not liquid assets - liabilities are greater than his or her assets.
Requisites for VOLUNTARY Court-Supervised Rehabilitation (CSR)
- insolvency of the D
- viability of rehab
When can a C or a Gr. of C file for INVOLUNTARY CSR
- with at least 1M, OR
- 25% of subscribed capital stock (SCS), OR
- 25% of partner’s contribution
whichever is higher
Requisites for involuntary court-supervised rehab (ICSR)
section 13
1.
- there is no genuine issue of fact [OR] law on the claim/s of the petitioner/s,
- [AND] that the due and demandable payments thereon have not been made for at least sixty (60) days [OR] that the debtor has failed GENERALLY to meet its liabilities 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 or will render it insolvent.
- substantial likelihood of the D’s rehabilitation, if not then proceed to liquidation
after a verified petition is submitted to court, the court will ideally issue a COMMENECMENT ORDER for the rehabilitation proceedings to start
what are the effects of the CO in sec. 16 of FRIA ?
sec. 16 (par. q) CO which shall include a stay/suspension order which shall:
- suspend all actions or proceedings, in court or otherwise, for the enforcement of claims against the debtor;
- suspend all actions to enforce any judgment, attachment or other provisional remedies against the debtor;
- prohibit the debtor from selling, encumbering, transferring or disposing in any manner any of its properties except in the ordinary course of business; and
- prohibit the debtor from making any payment of its liabilities outstanding as of the commencement date except as may be provided herein.
other effects of CO based on sec. 17 of FRIA
a. vests power upon the RR to **review & obtain all records
b. prohibits extrajudicial activities
c. renders null and void any set-off
d. renders null and void the perfection of any lien
e. consolidates resolution of all legal proceedings
RR - rehab receiver is appointed from the CO
Effects of CO insofar as sec. 19 is concerned
Section 19. Waiver of taxes and Fees Due to the National Government [AND] to Local Government Units (LGUs).
- Issuance of CO & until the approval of the Rehabilitation Plan [OR]
- Issuance of CO & 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 LGUs shall be considered WAIVED not suspended
EXCEPTIONS TO STAY OR SUSPENSION ORDER (SEC.18)
What are not affected by the stay order or suspension order?
- Cases pending appeal before the SC.
- Cases pending or filed at a specialized court or quasi-judicial agency
- Enforcement of claims against sureties and other solidarily liable with the debtor, and third party or accommodation mortgagors.
- Action of customers or clients of a securities market participants for moneys or securities entrusted in the ordinary course of business.
- Actions of licensed broker or dealer to sell pledged securities of a debtor.
- Clearing and settlement of financial transactions.
- Criminal action against individuals.
when does the Cram Down Rule apply?
Notwithstanding the rejection of the Rehabilitation Plan, the court may confirm the Rehabilitation Plan if all of the following circumstances are present:
(a)The Rehabilitation Plan complies with the requirements specified in this Act.
(b) The rehabilitation receiver recommends the confirmation of the Rehabilitation Plan;
(c) The shareholders, owners or partners of the juridical debtor lose at least their controlling interest as a result of the Rehabilitation Plan; and
(d) The Rehabilitation Plan would likely provide the objecting class of creditors with compensation which has a net present value greater than that which they would have received if the debtor were under liquidation.
W/in what time or what is the timeline for the court to approve or confirm the rehab plan?
what happens if no RP is confirmed?
one year from filing of the PEITITION TO CONFIRM REHABILITATION PLAN (not submission of the rehabilitation plan)
[b]
the proceedings, motu proprio or upon motion, be converted into one for liquidation of the D
🟢LIQUIDATION🟢
