11barops_corporaterehabilitation_223to228

8/12/2019 11BAROPS_CorporateRehabilitation_223to228

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Y.O.U.R.S.

CORPORATEREHABILITATION

[AM No. 00-8-10-SC. Nov 21, 2000]

I

COVERAGE

These Rules shall apply to

1. Petitions for rehabilitation filed by

corporations, partnerships, andassociations pursuant to PD 902-A.

2. Cases for rehabilitation transferredfro the !"C to the RTCs pursuant to

RA #$99

II

NATURE OFPROCEEDINGS

Any proceedin% initiated under these Rules shallbe&

1. 'n re. (urisdiction o)er all thoseaffected shall be considered asac*uired upon publication in any

ne+spaper of %eneral circulation2. !uary and non-ad)ersarial in

nature. The follo+in% pleadin%s areprohibited&

a. otion to disiss

b. otion for a bill of particularsc. otion for ne+ trial or for

reconsiderationd. Petition for relief

e. otion for etensionf. eorandu%. otion for postponeent

h. Reply or Re/oinderi. Third party coplaint and/. 'nter)ention.

Any pleadin%, otion, opposition, defense, or

clai filed by any interested party shall besupported by )erified stateents that the

affiant has read the sae and that the factualalle%ations therein are true and correct of his

personal no+led%e or based on authentic recordsand shall contain as annees such docuents as

ay be deeed by the party subittin% the saeas supporti)e of the alle%ations.

IIIPROCEDURE

A. !"#" $o F%&" P"$%$%o'

Petitions for rehabilitation shall be filed in the

RTC ha)in% /urisdiction o)er the territory +herethe debtors principal office is located.

B. !o M() P"$%$%o'

1. Any debtor +ho foresees the ipossibility

of eetin% its debts +hen they respecti)elyfall due, or

2. Any creditor or creditors holdin% at least23 of the debtors total liabilities

C. Co'$"'$* o+ P"$%$%o'

1. Debtor-initiated Petitions

The petition ust be )erified and ust set

forth&

4a5 the nae and business of the

debtor4b5 the nature of the business4c5 the history of the debtor4d5 the cause of its inability to pay its

debts

4e5 all the pendin% actions orproceedin%s no+n to the debtorand the courts or tribunals +herethey are pendin%

4f5 threats or deands to enforceclais or liens a%ainst the debtorand

4%5 the anner by +hich the debtor

ay be rehabilitated and ho+ suchrehabilitation ay benefit the

%eneral body of creditors,eployees, and stocholders.

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Y.O.U.R.S.

The petition shall be accopanied by

the follo+in% docuents&

a. An audited financial stateentas of its last fiscal year

b. 'nteri financial stateents asof the end of the onth prior

to the filin%c. !chedule of Debts and

7iabilitiesd. An 'n)entory of Assets The

'n)entory shall include a!chedule of AccountsRecei)able

e. A rehabilitation plan

f. A !chedule of Payents anddisposition of assets +hich thedebtor ay ha)e effected+ithin B onths iediately

precedin% the filin% of thepetition

%. A !chedule of the Cash lo+ of

the debtor for B onthsiediately precedin% thefilin% of the petition, and a

detailed schedule of thepro/ected cash flo+ for the

succeedin% B onthsh. A !tateent of Possible Clais

by or a%ainst the debtori. An Affida)it of eneral

inancial Condition/. At least B noinees for the

position of RehabilitationRecei)er

. A Certificate attestin%, underoath, that

- the filin% of the petitionhas been duly authorior consented to allactions or attersnecessary and desirable to

rehabilitate the debtor

The petition ust be )erified by anaffida)it of a responsible officer

2. Creditor-initiated Petitions

't is sufficient that the petition is&

accopanied by a

rehabilitation plan and a list of

noinees to the position ofRehabilitation Recei)er and

)erified by a s+orn stateent that

the affiant has read the petition andthat its contents are true andcorrect of his personal no+led%e orbased on authentic records obtained

fro the debtor.

D. R"!(4%&%$($%o' P&('

1. Contents

The rehabilitation plan shall include

4a5 the desired business tar%ets or%oals and the duration andco)era%e of the rehabilitation

4b5 the ters and conditions of such

rehabilitation4c5 the aterial financial

coitents to support therehabilitation plan

4d5 the eans for the eecution ofthe rehabilitation plan

4e5 a li*uidation analysis thatestiates the proportion of the

clais that the creditors andshareholders +ould recei)e if thedebtors properties +ereli*uidated and

4f5 other rele)ant inforation

2. Approval by Court

The court ay appro)e a rehabilitation plane)en o)er the opposition of creditorsholdin% a a/ority of the total liabilities ofthe debtor if, in its /ud%ent, the

rehabilitation of the debtor is feasible andthe opposition of the creditors is anifestly

unreasonable.

'n deterinin% +hether or not theopposition of the creditors is anifestly

unreasonable, the court shall consider thefollo+in%&

a. That the plan +ould liely pro)ide the

ob/ectin% class of creditors +ithcopensation %reater than that +hichthey +ould ha)e recei)ed if the assetsof the debtor +ere sold by a li*uidator

+ithin a three-onth period



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Y.O.U.R.S.

b. That the shareholders or o+ners ofthe debtor lose at least their

controllin% interest as a result ofthe plan and

c. The Rehabilitation Recei)er hasrecoended appro)al of the plan.

3. Effects of the Rehabilitation Plan.

a. The plan and its pro)isions shall be

bindin% upon the debtor and allpersons +ho ay be affected by it

+hether or not such persons ha)eparticipated in the proceedin%s or

opposed the plan or +hether or nottheir clais ha)e been scheduled

b. The debtor shall coply +ith thepro)isions of the plan

c. Payents shall be ade to thecreditors in accordance +ith the

pro)isions of the pland. Contracts and other arran%eents

bet+een the debtor and itscreditors shall be interpreted as

continuin% to apply to the etentthat they do not conflict +ith thepro)isions of the plan and

e. Any coproises on aounts or

reschedulin% of tiin% of payentsby the debtor shall be bindin% oncreditors re%ardless of +hether ornot the plan is successfully

ipleented.

4. Revocation of the Rehabilitation

Plan on Grounds of Fraud.n otion or otu proprio, +ithin 90days fro the appro)al of the

rehabilitation plan, and after notice andhearin%, the court ay re)oe theappro)al thereof on the %round that thesae +as secured throu%h fraud.

5. Alteration or Modification of the

Rehabilitation Plan.

An appro)ed rehabilitation plan ay,on otion, be altered or odified if, inthe /ud%ent of the court, suchalteration or odification is necessary

to achie)e the desired tar%ets or %oalsset forth therein.

E. S$() O#"#

'f the court finds the petition to be sufficient infor and substance, it shall, not later than

days fro the filin% of the petition, issue anrder&

4a5 appointin% a Rehabilitation Recei)er and

fiin% his bond4b5 stayin% enforceent of all clais, a%ainst

the debtor, its %uarantors and sureties notsolidarily liable +ith the debtor

4c5 prohibitin% the debtor fro sellin%,encuberin%, transferrin%, or disposin% ofits properties ecept in the ordinary courseof business

4d5 prohibitin% the debtor fro ain% anypayent of its liabilities outstandin% as atthe date of filin% of the petition

4e5 prohibitin% the debtors suppliers fro

+ithholdin% supply of %oods and ser)ices inthe ordinary course of business for as lon%as the debtor aes payents for such

after the issuance of the stay order4f5 directin% the payent in full of all

adinistrati)e epenses

4%5 fiin% the initial hearin% on the petition4h5 directin% the petitioner to publish the rder

in a ne+spaper of %eneral circulation in thePhilippines once a +ee for 2 consecuti)e

+ees4i5 directin% all creditors and all interested

parties to file and ser)e on the debtor a)erified coent on or opposition to the

petition, and puttin% the on notice thattheir failure to do so +ill bar the froparticipatin% in the proceedin%s and

4/5 directin% the creditors and interested

parties to secure fro the court copies ofthe petition and its annees

Epon otion or otu proprio, the court ay

declare )oid any transfer of property or anyother con)eyance, sale, payent, or a%reeentade in )iolation of its stay order or in )iolationof these Rules.

The stay order shall be effecti)e fro the date

of its issuance until the disissal of the petitionor the terination of the rehabilitation

proceedin%s.

Suspension of Money Claims : PAL vs SpousesKurangking (2002)Issue: WON the proceedings before the trial court (remoney claim vs PA for missing luggage! should havebeen suspended after the court "as informed that arehabilitation receiver had been appointed#



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Y.O.U.R.S.

Ratio / Decision: %he interim rules must be readand applied along "ith &ec '(c! of P )*2+A,directing that upon the appointment of amanagement committee, rehabilitation receiver,board or body pursuant to the decree, -all actions-for claims against the distressed corporation-pending before any court, tribunal, board or bodyshall be suspended accordingly.-

/erily, the claim of private respondents againstpetitioner PA is a money claim for the missingluggages, a financial demand, that the la"re0uires to be suspended pending therehabilitation proceedings. 1n .. omes, 1nc. vs.5A the 5ourt has ratiocinated:

-%he reason for suspending actions is notreally to enable the management committeeor the rehabilitation receiver to substitute thedefendant in any pending action against it.%he real 6ustification is to enable themanagement committee or rehabilitationreceiver to effectively e7ercise its8his po"ersfree from any 6udicial or e7tra 6udicialinterference that might unduly hinder orprevent the 9rescue9 of the debtor company.

Non-suspension of claims againstguarantors / sureties solidarily liable withdebtor : !SS "s #away $%&&'(&ec. '(b! of ule 4 of the 1nterim ules does noten6oin the enforcement of all claims againstguarantors and sureties, but only those claimsagainst guarantors and sureties "ho are notsolidarily liable "ith the debtor.%he prohibition under &ec. '(b! of ule 4 of the1nterim ules does not apply to herein petitioneras the prohibition is on the enforcement of claimsagainst guarantors or sureties of the debtors"hose obligations are not solidary "ith the debtor.%he participating ban;s9 obligation are solidary"ith respondent


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Y.O.U.R.S.

The court shall lie+ise re*uire the !"C to

coent on the petition. The Coissionshall coordinate +ith the %o)ernent

a%ency concerned in appropriate cases forpurposes of filin% its coent.

The petition shall be disissed if no

rehabilitation plan is appro)ed by the courtupon the lapse of 1#0 days fro the dateof the initial hearin%. The court ay %rantan etension beyond this period only if it

appears by con)incin% and copellin%e)idence that the debtor ay successfullybe rehabilitated. 'n no instance, ho+e)er,shall the period for appro)in% or

disappro)in% a rehabilitation plan eceed1# onths fro the date of filin% of thepetition.

H. T"#3%'($%o' o+ P#o/""%'*

'n case of the failure of the debtor to

subit the rehabilitation plan, or

the disappro)al of the plan or

the failure of the rehabilitation because

of failure to achie)e the desired

tar%ets or %oals, or

the failure of the debtor to perfor its

obli%ations under the plan, or

a deterination that the rehabilitation

plan ay no lon%er be ipleented

The court shall upon otion, otu proprio,or upon the recoendation of the

Rehabilitation Recei)er, terinate theproceedin%s.

The proceedin% shall also terinate uponthe successful ipleentation of therehabilitation plan.

Any order issued by the court under

these Rules is iediatelyeecutory.

A petition for re)ie+ or an appeal

therefro shall not stay the

eecution of the order unlessrestrained or en/oined by the

appellate court.

IVREHABILITATION

RECEIVER

A. D%*6(&%+%/($%o'*

A Rehabilitation Recei)er ay be deeed toha)e a conflict of interest if&

a. ?e is a creditor or stocholder of thedebtor

b. ?e is en%a%ed in a line of business +hich

copetes +ith the debtorc. ?e is, or +as +ithin 2 years fro the filin%

of the petition, a director, officer, oreployee of the debtor or any of its

present creditors, or the auditor oraccountant of the debtor

d. ?e is, or +as +ithin 2 years fro the filin%of the petition, an under+riter of theoutstandin% securities of the debtor

e. ?e is related by consan%uinity or affinity

+ithin the fourth ci)il de%ree to anycreditor, stocholder, director, officer,eployee, or under+riter of the debtor or

f. ?e has any other direct or indirect aterial

interest in the debtor or any creditor.

B. Po"#* (' F'/$%o'*

The Rehabilitation Recei)er shall

not tae o)er the ana%eent and controlof the debtor but shall closely o)ersee and

onitor the operations of the debtor durin%the pendency of the proceedin%s.

The Rehabilitation Recei)er shall be

considered as an officer of the court.

?e shall be priarily tased to

study the best +ay to rehabilitate thedebtor and to ensure that the )alue of thedebtors property is reasonably aintained,

as +ell as ipleent the rehabilitation planafter its appro)al.

Accordin%ly, he shall ha)e the follo+in% po+ers

and functions&

a. To )erify the accuracy of the petition

b. To accept and incorporate aendents tothe !chedule of Debts and 7iabilities

c. To recoend to the court the

disallo+ance of clais and re/ection ofaendents to the !chedule of Debts and7iabilities



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Y.O.U.R.S.

d. To subit a re)ised !chedule of Debtsand 7iabilities

e. To in)esti%ate the acts, conduct,properties, liabilities, and financial

condition of the debtor, the operationof its business and the desirability ofthe continuance thereof and, anyother rele)ant atter

f. To eaine under oath the directorsand officers of the debtor and anyother +itnesses that he ay deeappropriate

%. To ae a)ailable to the creditorsdocuents and notices necessary forthe to follo+ and participate in theproceedin%s

h. To report to the court any factascertained by hi pertainin% to thecauses of the debtors probles, fraud,preferences, dispositions,

encubrances, isconduct,isana%eent, and irre%ularitiescoitted by the stocholders,

directors, ana%eent, or any otherperson a%ainst the debtor

i. To eploy such person or persons such

as la+yers, accountants, appraisers,and staff as are necessary in

perforin% his functions/. To onitor the operations of the debtor

. To e)aluate the eistin% assets andliabilities, earnin%s and operations ofthe debtor

l. To deterine and recoend to the

court the best +ay to sal)a%e andprotect the interests of the creditors,stocholders, and the %eneral public

. To study the rehabilitation plan

n. To prohibit any encubrance, transfer,or disposition of the debtors propertyoutside of the ordinary course ofbusiness or +hat is allo+ed by the

courto. To prohibit any payents outside of

the ordinary course of businessp. To ha)e unliited access to the

debtors eployees, preises, boos,records, and financial docuents

durin% business hours*. To inspect, copy, photocopy, or

photo%raph any docuent, paper,boo, account, or letter,

r. To %ain entry into any property for thepurpose of inspectin%, easurin%,sur)eyin%, or photo%raphin% it

s. To tae possession, control, and

custody of the debtors assets

t. To notify counterparties and the court as tocontracts that the debtor has decided to

continue to perfor or breachu. To be notified of, and to attend all eetin%s

of the board of directors and stocholdersof the debtor

). To recoend any odification of anappro)ed rehabilitation plan

+. To brin% to the attention of the court anyaterial chan%e affectin% the debtorsability to eet its obli%ations

. To recoend the appointent of a

ana%eent coitteey. To recoend the terination of the

proceedin%s and the dissolution of thedebtor if he deterines that the

continuance in business of such entity is nolon%er feasible or profitable or no lon%er+ors to the best interest of thestocholders, parties-liti%ants, creditors, or

the %eneral public

11barops_corporaterehabilitation_223to228

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