Financial Rehabilitation and Insolvency Act

7/21/2019 Financial Rehabilitation and Insolvency Act

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Republic of the PhilippinesCONGRESS OF THE PHILIPPINESMetro Manila

Fourteenth CongressThird Regular Session

Begun and held in Metro Manila, on Monday, the twenty-seventh day of July, two thousand nine.

REPUBLIC ACT No. !"#

AN ACT PRO$I%ING FOR THE REHABILITATION OR LI&UI%ATION OF FINANCIALL' %ISTRESSE%ENTERPRISES AN% IN%I$I%UALS

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

CHAPTER IGENERAL PRO$ISIONS

Se(tion .Title.- This Act shall be nown as the "Financial Rehabilitation and Insolvency Act (FRIA)of 2010".

Se(tion #.Declaration of Policy.- !t is the policy of the "tate to encourage debtors, both #uridical andnatural persons, and their creditors to collectively and realistically resolve and ad#ust co$peting clai$sand property rights. !n furtherance thereof, the "tate shall ensure a ti$ely, fair, transparent, effective andefficient rehabilitation or li%uidation of debtors. The rehabilitation or li%uidation shall be $ade with a viewto ensure or $aintain certainly and predictability in co$$ercial affairs, preserve and $a&i$i'e the valueof the assets of these debtors, recogni'e creditor rights and respect priority of clai$s, and ensure

e%uitable treat$ent of creditors who are si$ilarly situated. (hen rehabilitation is not feasible, it is in theinterest of the "tate to facilities a speedy and orderly li%uidation of these debtor)s assets and thesettle$ent of their obligations.

Se(tion ).ature of Proceedings.- The proceedings under this Act shall be in re$. Jurisdiction over allpersons affected by the proceedings shall be considered as ac%uired upon publication of the notice of theco$$ence$ent of the proceedings in any newspaper of general circulation in the Philippines in the$anner prescribed by the rules of procedure to be pro$ulgated by the "upre$e *ourt.

The proceedings shall be conducted in a su$$ary and non-adversarial $anner consistent with thedeclared policies of this Act and in accordance with the rules of procedure that the "upre$e *ourt $aypro$ulgate.

Se(tion ".Definition of Terms.- As used in this Act, the ter$+

a!dministrative e"pensesshall refer to those reasonable and necessary e&penses+

incurred or arising fro$ the filing of a petition under the provisions of this Act/

0 arising fro$, or in connection with, the conduct of the proceedings under this Act,including those incurred for the rehabilitation or li%uidation of the debtor/

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1 incurred in the ordinary course of business of the debtor after the co$$ence$entdate/

2 for the pay$ent of new obligations obtained after the co$$ence$ent date to financethe rehabilitation of the debtor/

3 incurred for the fees of the rehabilitation receiver or li%uidator and of the professionalsengaged by the$/ and

4 that are otherwise authori'ed or $andated under this Act or such other e&penses as$ay be allowed by the "upre$e *ourt in its rules.

b!ffiliateshall refer to a corporation that directly or indirectly, through one or $oreinter$ediaries, is controlled by, or is under the co$$on control of another corporation.

c Claimshall refer to all clai$s or de$ands of whatever nature or character against the debtoror its property, whether for $oney or otherwise, li%uidated or unli%uidated, fi&ed or contingent,$atured or un$atured, disputed or undisputed, including, but not li$ited to/ all clai$s of thegovern$ent, whether national or local, including ta&es, tariffs and custo$s duties/ and 0 clai$s

against directors and officers of the debtor arising fro$ acts done in the discharge of theirfunctions falling within the scope of their authority+Provided#That, this inclusion does not prohibitthe creditors or third parties fro$ filing cases against the directors and officers acting in theirpersonal capacities.

d Commencement dateshall refer to the date on which the court issues the *o$$ence$ent5rder, which shall be retroactive to the date of filing of the petition for voluntary or involuntaryproceedings.

e Commencement $rdershall refer to the order issued by the court under "ection 4 of this Act.

f Controlshall refer to the power of a parent corporation to direct or govern the financial and

operating policies of an enterprise so as to obtain benefits fro$ its activities. *ontrol is presu$edto e&ist when the parent owns, directly or indirectly through subsidiaries or affiliates, $ore thanone-half 60 of the voting power of an enterprise unless, in e&ceptional circu$stances, it canclearly be de$onstrated that such ownership does not constitute control. *ontrol also e&ists evenwhen the parent owns one-half 60 or less of the voting power of an enterprise when there ispower+

over $ore than one-half 60 of the voting rights by virtue of an agree$ent withinvestors/

0 to direct or govern the financial and operating policies of the enterprise under astatute or an agree$ent/

1 to appoint or re$ove the $a#ority of the $e$bers of the board of directors ore%uivalent governing body/ or

2 to cast the $a#ority votes at $eetings of the board of directors or e%uivalent governingbody.

g Courtshall refer to the court designated by the "upre$e *ourt to hear and deter$ine, at thefirst instance, the cases brought under this Act.

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h Creditorshall refer to a natural or #uridical person which has a clai$ against the debtor thatarose on or before the co$$ence$ent date.

i Date of li%uidationshall refer to the date on which the court issues the 7i%uidation 5rder.

# Daysshall refer to calendar days unless otherwise specifically stated in this Act.

Debtorshall refer to, unless specifically e&cluded by a provision of this Act, a soleproprietorship duly registered with the 8epart$ent of Trade and !ndustry 8T!, a partnership dulyregistered with the "ecurities and 9&change *o$$ission "9*, a corporation duly organi'edand e&isting under Philippine laws, or an individual debtor who has beco$e insolvent as definedherein.

l &ncumbered propertyshall refer to real or personal property of the debtor upon which a lienattaches.

$ 'eneral unsecured creditorshall refer to a creditor whose clai$ or a portion thereof itsneither secured, preferred nor subordinated under this Act.

n 'roup of debtorsshall refer to and can cover only+ corporations that are financially relatedto one another as parent corporations, subsidiaries or affiliates/ 0 partnerships that are owned$ore than fifty percent 3:; by the sa$e person/ and 1 single proprietorships that are ownedby the sa$e person. (hen the petition covers a group of debtors, all reference under these rulesto debtor shall include and apply to the group of debtors.

o (ndividual debtorshall refer to a natural person who is a resident and citi'en of the Philippinesthat has beco$e insolvent as defined herein.

p (nsolventshall refer to the financial condition of a debtor that is generally unable to pay its orhis liabilities as they fall due in the ordinary course of business or has liabilities that are greaterthan its or his assets.

% (nsolvent debtor)s estateshall refer to the estate of the insolvent debtor, which includes all theproperty and assets of the debtor as of co$$ence$ent date, plus the property and assetsac%uired by the rehabilitation receiver or li%uidator after that date, as well as all other propertyand assets in which the debtor has an ownership interest, whether or not these property andassets are in the debtor)s possession as of co$$ence$ent date+ Provided#That trust assets andbail$ent, and other property and assets of a third party that are in the possession of the debtor asof co$$ence$ent date, are e&cluded therefro$.

r (nvoluntary proceedingsshall refer to proceedings initiated by creditors.

s *iabilitiesshall refer to $onetary clai$s against the debtor, including stocholder)s advancesthat have been recorded in the debtor)s audited financial state$ents as advances for future

subscriptions.

t *ienshall refer to a statutory or contractual clai$ or #udicial charge on real or personal propertythat legality entities a creditor to resort to said property for pay$ent of the clai$ or debt securedby such lien.

u *i%uidationshall refer to the proceedings under *hapter < of this Act.

v *i%uidation $rdershall refer to the 5rder issued by the court under "ection 0 of this Act.

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w *i%uidatorshall refer to the natural person or #uridical entity appointed as such by the courtand entrusted with such powers and duties as set forth in this Act+ Provided#That, if the li%uidatoris a #uridical entity, it $ust designated a natural person who possesses all the %ualifications andnone of the dis%ualifications as its representative, it being understood that the #uridical entity andthe representative are solidarity liable for all obligations and responsibilities of the li%uidator.

& $fficershall refer to a natural person holding a $anage$ent position described in orconte$plated by a #uridical entity)s articles of incorporation, bylaws or e%uivalent docu$ents,e&cept for the corporate secretary, the assistant corporate secretary and the e&ternal auditor.

y $rdinary course of businessshall refer to transactions in the pursuit of the individual debtor)sor debtor)s business operations prior to rehabilitation or insolvency proceedings and on ordinarybusiness ter$s.

' $+nership interest shallrefer to the ownership interest of third parties in property held by thedebtor, including those covered by trust receipts or assign$ents of receivables.

aa Parentshall refer to a corporation which has control over another corporation either directlyor indirectly through one or $ore inter$ediaries.

bb Party to the proceedingsshall refer to the debtor, a creditor, the unsecured creditors)co$$ittee, a staeholder, a party with an ownership interest in property held by the debtor, asecured creditor, the rehabilitation receiver, li%uidator or any other #uridical or natural person whostands to be benefited or in#ured by the outco$e of the proceedings and whose notice ofappearance is accepted by the court.

cc Possessory lienshall refer to a lien on property, the possession of which has beentransferred to a creditor or a representative or agent thereof.

dd Proceedingsshall refer to #udicial proceedings co$$enced by the court)s acceptance of apetition filed under this Act.

ee Property of othersshall refer to property held by the debtor in which other persons have anownership interest.

ff Publication noticeshall refer to notice through publication in a newspaper of generalcirculation in the Philippines on a business day for two 0 consecutive wees.

gg Rehabilitationshall refer to the restoration of the debtor to a condition of successful operationand solvency, if it is shown that its continuance of operation is econo$ically feasible and itscreditors can recover by way of the present value of pay$ents pro#ected in the plan, $ore if thedebtor continues as a going concern than if it is i$$ediately li%uidated.

hh Rehabilitation receivershall refer to the person or persons, natural or #uridical, appointed as

such by the court pursuant to this Act and which shall be entrusted with such powers and dutiesas set forth herein.

ii Rehabilitation Planshall refer to a plan by which the financial well-being and viability of aninsolvent debtor can be restored using various $eans including, but not li$ited to, debtforgiveness, debt rescheduling, reorgani'ation or %uasi-reorgani'ation, dacion en pago, debt-e%uity conversion and sale of the business or parts of it as a going concern, or setting-up of newbusiness entity as prescribed in "ection 40 hereof, or other si$ilar arrange$ents as $ay beapproved by the court or creditors.

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## Secured claimshall refer to a clai$ that is secured by a lien.

Secured creditorshall refer to a creditor with a secured clai$.

ll Secured partyshall refer to a secured creditor or the agent or representative of such securedcreditor.

$$ Securities mar,et participantshall refer to a broer dealer, underwriter, transfer agent orother #uridical persons transacting securities in the capital $aret.

nn Sta,eholdershall refer, in addition to a holder of shares of a corporation, to a $e$ber of anonstoc corporation or association or a partner in a partnership.

oo Subsidiaryshall refer to a corporation $ore than fifty percent 3:; of the voting stoc ofwhich is owned or controlled directly or indirectly through one or $ore inter$ediaries by anothercorporation, which thereby beco$es its parent corporation.

pp -nsecured claimshall refer to a clai$ that is not secured by a lien.

%% -nsecured creditorshall refer to a creditor with an unsecured clai$.

rr oluntary proceedingsshall refer to proceedings initiated by the debtor.

ss oting creditorshall refer to a creditor that is a $e$ber of a class of creditors, the consent ofwhich is necessary for the approval of a Rehabilitation Plan under this Act.

Se(tion *.&"clusions.- The ter$ debtor does not include bans, insurance co$panies, pre-needco$panies, and national and local govern$ent agencies or units.

=or purposes of this section+

a Ban shall refer to any duly licensed ban or %uasi-ban that is potentially or actually sub#ectto conservatorship, receivership or li%uidation proceedings under the >ew *entral Ban ActRepublic Act >o. ?431 or successor legislation/

b !nsurance co$pany shall refer to those co$panies that are potentially or actually sub#ect toinsolvency proceedings under the !nsurance *ode Presidential 8ecree >o. 24: or successorlegislation/ and

c Pre-need co$pany shall refer to any corporation authori'ed6licensed to sell or offer to sell pre-need plans.

Provided#That govern$ent financial institutions other than bans and govern$ent-owned or controlled

corporations shall be covered by this Act, unless their specific charter provides otherwise.

Se(tion +.Designation of Courts and Promulgation of Procedural Rules. - The "upre$e *ourt shalldesignate the court or courts that will hear and resolve cases brought under this Act and shall pro$ulgatethe rules of pleading, practice and procedure to govern the proceedings brought under this Act.

Se(tion ,.Substantive and Procedural Consolidation.- 9ach #uridical entity shall be considered as aseparate entity under the proceedings in this Act. @nder these proceedings, the assets and liabilities of adebtor $ay not be co$$ingled or aggregated with those of another, unless the latter is a related

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enterprise that is owned or controlled directly or indirectly by the sa$e interests+ Provided# ho+ever#Thatthe co$$ingling or aggregation of assets and liabilities of the debtor with those of a related enterprise$ay only be allowed where+

a there was co$$ingling in fact of assets and liabilities of the debtor and the related enterpriseprior to the co$$ence$ent of the proceedings/

b the debtor and the related enterprise have co$$on creditors and it will be $ore convenient totreat the$ together rather than separately/

c the related enterprise voluntarily accedes to #oin the debtor as party petitioner and toco$$ingle its assets and liabilities with the debtor)s/ and

d The consolidation of assets and liabilities of the debtor and the related enterprise is beneficialto all concerned and pro$otes the ob#ectives of rehabilitation.

Provided# finally#That nothing in this section shall prevent the court fro$ #oining other entities affiliatedwith the debtor as parties pursuant to the rules of procedure as $ay be pro$ulgated by the "upre$e*ourt.

Se(tion -.Decisions of Creditors.- 8ecisions of creditors shall be $ade according to the relevantprovisions of the *orporation *ode in the case of stoc or nonstoc corporations or the *ivil *ode in thecase of partnerships that are not inconsistent with this Act.

Se(tion .Creditors Representatives.- *reditors $ay designate representatives to vote or otherwise acton their behalf by filing notice of such representation with the court and serving a copy on therehabilitation receiver or li%uidator.

Se(tion !.*iability of (ndividual Debtor# $+ner of a Sole Proprietorship# Partners in a Partnership# orDirectors and $fficers.- !ndividual debtor, owner of a sole proprietorship, partners in a partnership, ordirectors and officers of a debtor shall be liable for double the value of the property sold, e$be''led or

disposed of or double the a$ount of the transaction involved, whichever is higher to be recovered forbenefit of the debtor and the creditors, if they, having notice of the co$$ence$ent of the proceedings, orhaving reason to believe that proceedings are about to be co$$enced, or in conte$plation of theproceedings, willfully co$$it the following acts+

a 8ispose or cause to be disposed of any property of the debtor other than in the ordinarycourse of business or authori'e or approve any transaction in fraud of creditors or in a $annergrossly disadvantageous to the debtor and6or creditors/ or

b *onceal or authori'e or approve the conceal$ent, fro$ the creditors, or e$be''les or$isappropriates, any property of the debtor.

The court shall deter$ine the e&tent of the liability of an owner, partner, director or officer under this

section. !n this connection, in case of partnerships and corporations, the court shall consider the a$ountof the shareholding or partnership or e%uity interest of such partner, director or officer, the degree ofcontrol of such partner, director or officer over the debtor, and the e&tent of the involve$ent of suchpartner, director or debtor in the actual $anage$ent of the operations of the debtor.

Se(tion .!uthori/ation to &"change Debt for &%uity.- >otwithstanding applicable baning legislation tothe contrary, any ban, whether universal or not, $ay ac%uire and hold an e%uity interest or invest$ent ina debtor or its subsidiaries when conveyed to such ban in satisfaction of debts pursuant to aRehabilitation or 7i%uidation Plan approved by the court+ Provided#That such ownership shall be sub#ect

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to the ownership li$its applicable to universal bans for e%uity invest$ents and+ Provided# further#Thatany e%uity invest$ent or interest ac%uired or held pursuant to this section shall be disposed by the banwithin a period of five 3 years or as $ay be prescribed by the Monetary Board.

CHAPTER IICOURT/SUPER$ISE% REHABILITATION

0A1 Initiation Pro(eedings.

01 $oluntar2 Pro(eedings.

Se(tion #.Petition to (nitiate oluntary Proceedings by Debtor.- (hen approved by the owner in caseof a sole proprietorship, or by a $a#ority of the partners in case of a partnership, or in case of acorporation, by a $a#ority vote of the board of directors or trustees and authori'ed by the vote of thestocholders representing at least two-thirds 061 of the outstanding capital stoc, or in case of nonstoccorporation, by the vote of at least two-thirds 061 of the $e$bers, in a stocholder)s or $e$ber)s$eeting duly called for the purpose, an insolvent debtor $ay initiate voluntary proceedings under this Actby filing a petition for rehabilitation with the court and on the grounds hereinafter specifically provided. Thepetition shall be verified to establish the insolvency of the debtor and the viability of its rehabilitation, and

include, whether as an attach$ent or as part of the body of the petition, as a $ini$u$ the following+

a !dentification of the debtor, its principal activities and its addresses/

b "tate$ent of the fact of and the cause of the debtor)s insolvency or inability to pay itsobligations as they beco$e due/

c The specific relief sought pursuant to this Act/

d The grounds upon which the petition is based/

e 5ther infor$ation that $ay be re%uired under this Act depending on the for$ of relief

re%uested/

f "chedule of the debtor)s debts and liabilities including a list of creditors with their addresses,a$ounts of clai$s and collaterals, or securities, if any/

g An inventory of all its assets including receivables and clai$s against third parties/

h A Rehabilitation Plan/

i The na$es of at least three 1 no$inees to the position of rehabilitation receiver/ and

# 5ther docu$ents re%uired to be filed with the petition pursuant to this Act and the rules of

procedure as $ay be pro$ulgated by the "upre$e *ourt.

A group of debtors $ay #ointly file a petition for rehabilitation under this Act when one or $ore of its$e$bers foresee the i$possibility of $eeting debts when they respectively fall due, and the financialdistress would liely adversely affect the financial condition and6or operations of the other $e$bers of thegroup and6or the participation of the other $e$bers of the group is essential under the ter$s andconditions of the proposed Rehabilitation Plan.

0#1 In3oluntar2 Pro(eedings.

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Se(tion ).Circumstances ecessary to (nitiate (nvoluntary Proceedings.- Any creditor or group ofcreditors with a clai$ of, or the aggregate of whose clai$s is, at least 5ne Million PesosPhp,:::,:::.:: or at least twenty-five percent 03; of the subscribed capital stoc or partners)contributions, whichever is higher, $ay initiate involuntary proceedings against the debtor by filing apetition for rehabilitation with the court if+

a there is no genuine issue of fact on law on the clai$6s of the petitioner6s, and that the due andde$andable pay$ents thereon have not been $ade for at least si&ty 4: days or that the debtorhas failed generally to $eet its liabilities as they fall due/ or

b a creditor, other than the petitioner6s, has initiated foreclosure proceedings against the debtorthat will prevent the debtor fro$ paying its debts as they beco$e due or will render it insolvent.

Se(tion ".Petition to (nitiate (nvoluntary Proceedings.- The creditor6s) petition for rehabilitation shall beverified to establish the substantial lielihood that the debtor $ay be rehabilitated, and include+

a identification of the debtor its principal activities and its address/

b the circu$stances sufficient to support a petition to initiate involuntary rehabilitation

proceedings under "ection 1 of this Act/

c the specific relief sought under this Act/

d a Rehabilitation Plan/

e the na$es of at least three 1 no$inees to the position of rehabilitation receiver/

f other infor$ation that $ay be re%uired under this Act depending on the for$ of reliefre%uested/ and

g other docu$ents re%uired to be filed with the petition pursuant to this Act and the rules of

procedure as $ay be pro$ulgated by the "upre$e *ourt.

0B1 A(tion on the Petition and Co44en(e4ent o5 Pro(eedings.

Se(tion *.!ction on the Petition.- !f the court finds the petition for rehabilitation to be sufficient in for$and substance, it shall, within five 3 woring days fro$ the filing of the petition, issue a *o$$ence$ent5rder. !f, within the sa$e period, the court finds the petition deficient in for$ or substance, the court $ay,in its discretion, give the petitioner6s a reasonable period of ti$e within which to a$end or supple$ent thepetition, or to sub$it such docu$ents as $ay be necessary or proper to put the petition in proper order. !nsuch case, the five 3 woring days provided above for the issuance of the *o$$ence$ent 5rder shallbe reconed fro$ the date of the filing of the a$ended or supple$ental petition or the sub$ission of suchdocu$ents.

Se(tion +.Commencement of Proceedings and (ssuance of a Commencement $rder.- Therehabilitation proceedings shall co$$ence upon the issuance of the *o$$ence$ent 5rder, which shall+

a identify the debtor, its principal business or activity6ies and its principal place of business/

b su$$ari'e the ground6s for initiating the proceedings/

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c state the relief sought under this Act and any re%uire$ent or procedure particular to the reliefsought/

d state the legal effects of the *o$$ence$ent 5rder, including those $entioned in "ection ?hereof/

e declare that the debtor is under rehabilitation/

f direct the publication of the *o$$ence$ent 5rder in a newspaper of general circulation in thePhilippines once a wee for at least two 0 consecutive wees, with the first publication to be$ade within seven ? days fro$ the ti$e of its issuance/

g !f the petitioner is the debtor direct the service by personal delivery of a copy of the petition oneach creditor holding at least ten percent :; of the total liabilities of the debtor as deter$inedfro$ the schedule attached to the petition within five 3 days/ if the petitioner6s is6are creditor6s,direct the service by personal delivery of a copy of the petition on the debtor within five 3 days/

h appoint a rehabilitation receiver who $ay or not be fro$ a$ong the no$inees of thepetitioner6s and who shall e&ercise such powers and duties defined in this Act as well as the

procedural rules that the "upre$e *ourt will pro$ulgate/

i su$$ari'e the re%uire$ents and deadlines for creditors to establish their clai$s against thedebtor and direct all creditors to their clai$s with the court at least five 3 days before the initialhearing/

# direct Bureau of internal Revenue B!R to file and serve on the debtor its co$$ent on oropposition to the petition or its clai$6s against the debtor under such procedures as the "upre$e*ourt provide/

prohibit the debtor)s suppliers of goods or services fro$ withholding the supply of goods andservices in the ordinary course of business for as long as the debtor $aes pay$ents for the

services or goods supplied after the issuance of the *o$$ence$ent 5rder/

l authori'e the pay$ent of ad$inistrative e&penses as they beco$e due/

$ set the case for initial hearing, which shall not be $ore than forty 2: days fro$ the date offiling of the petition for the purpose of deter$ining whether there is substantial lielihood for thedebtor to be rehabilitated/

n $ae available copies of the petition and rehabilitation plan for e&a$ination and copying byany interested party/

o indicate the location or locations at which docu$ents regarding the debtor and theproceedings under Act $ay be reviewed and copied/

p state that any creditor or debtor who is not the petitioner, $ay sub$it the na$e or no$inateany other %ualified person to the position of rehabilitation receiver at least five 3 days before theinitial hearing/

% include s "tay or "uspension 5rder which shall+

suspend all actions or proceedings, in court or otherwise, for the enforce$ent ofclai$s against the debtor/

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0 suspend all actions to enforce any #udg$ent, attach$ent or other provisionalre$edies against the debtor/

1 prohibit the debtor fro$ selling, encu$bering, transferring or disposing in any $annerany of its properties e&cept in the ordinary course of business/ and

2 prohibit the debtor fro$ $aing any pay$ent of its liabilities outstanding as of theco$$ence$ent date e&cept as $ay be provided herein.

Se(tion ,.&ffects of the Commencement $rder.- @nless otherwise provided for in this Act, the court)sissuance of a *o$$ence$ent 5rder shall, in addition to the effects of a "tay or "uspension 5rderdescribed in "ection 4 hereof+

a vest the rehabilitation with all the powers and functions provided for this Act, such as the rightto review and obtain records to which the debtor)s $anage$ent and directors have access,including ban accounts or whatever nature of the debtor sub#ect to the approval by the court ofthe perfor$ance bond filed by the rehabilitation receiver/

b prohibit or otherwise serve as the legal basis rendering null and void the results of any

e&tra#udicial activity or process to sei'e property, sell encu$bered property, or otherwise atte$ptto collection or enforce a clai$ against the debtor after co$$ence$ent date unless otherwiseallowed in this Act, sub#ect to the provisions of "ection 3: hereof/

c serve as the legal basis for rendering null and void any setoff after the co$$ence$ent date ofany debt owed to the debtor by any of the debtor)s creditors/

d serve as the legal basis for rendering null and void the perfection of any lien against thedebtor)s property after the co$$ence$ent date/ and

e consolidate the resolution of all legal proceedings by and against the debtor to the courtProvided. owever, That the court $ay allow the continuation of cases on other courts where the

debtor had initiated the suit.

Atte$pts to see legal of other resource against the debtor outside these proceedings shall be sufficientto support a finding of indirect conte$pt of court.

Se(tion -.&"ceptions to the Stay or Suspension $rder.- The "tay or "uspension 5rder shall not apply+

a to cases already pending appeal in the "upre$e *ourt as of co$$ence$entdate Provided#That any final and e&ecutory #udg$ent arising fro$ such appeal shall be referredto the court for appropriate action/

b sub#ect to the discretion of the court, to cases pending or filed at a speciali'ed court or %uasi-#udicial agency which, upon deter$ination by the court is capable of resolving the clai$ $ore

%uicly, fairly and efficiently than the court+ Provided#That any final and e&ecutory #udg$ent ofsuch court or agency shall be referred to the court and shall be treated as a non-disputed clai$/

c to the enforce$ent of clai$s against sureties and other persons solidarily liable with thedebtor, and third party or acco$$odation $ortgagors as well as issuers of letters of credit, unlessthe property sub#ect of the third party or acco$$odation $ortgage is necessary for therehabilitation of the debtor as deter$ined by the court upon reco$$endation by the rehabilitationreceiver/

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d to any for$ of action of custo$ers or clients of a securities $aret participant to recover orotherwise clai$ $oneys and securities entrusted to the latter in the ordinary course of the latter)sbusiness as well as any action of such securities $aret participant or the appropriate regulatoryagency or self-regulatory organi'ation to pay or settle such clai$s or liabilities/

e to the actions of a licensed broer or dealer to sell pledged securities of a debtor pursuant to a

securities pledge or $argin agree$ent for the settle$ent of securities transactions in accordancewith the provisions of the "ecurities Regulation *ode and its i$ple$enting rules and regulations/

f the clearing and settle$ent of financial transactions through the facilities of a clearing agencyor si$ilar entities duly authori'ed, registered and6or recogni'ed by the appropriate regulatoryagency lie the Bango "entral ng Pilipinas B"P and the "9* as well as any for$ of actions ofsuch agencies or entities to rei$burse the$selves for any transactions settled for the debtor/ and

g any cri$inal action against individual debtor or owner, partner, director or officer of a debtorshall not be affected by any proceeding co$$end under this Act.

Se(tion .0aiver of ta"es and 1ees Due to the ational 'overnment and to *ocal 'overnment -nits2*'-s3. - @pon issuance of the *o$$ence$ent 5rder by the court, and until the approval of the

Rehabilitation Plan or dis$issal of the petition, whichever is earlier, the i$position of all ta&es and feesincluding penalties, interests and charges thereof due to the national govern$ent or to 7@s shall beconsidered waived, in furtherance of the ob#ectives of rehabilitation.

Se(tion #!.!pplication of Stay or Suspension $rder to 'overnment 1inancial (nstitutions.- Theprovisions of this Act concerning the effects of the *o$$ence$ent 5rder and the "tay or "uspension5rder on the suspension of rights to foreclose or otherwise pursue legal re$edies shall apply togovern$ent financial institutions, notwithstanding provisions in their charters or other laws to the contrary.

Se(tion #.&ffectivity and Duration of Commencement $rder.- @nless lifted by the court, the*o$$ence$ent 5rder shall be for the effective for the duration of the rehabilitation proceedings for aslong as there is a substantial lielihood that the debtor will be successfully rehabilitated. !n deter$iningwhether there is substantial lielihood for the debtor to be successfully rehabilitated, the court shall

ensure that the following $ini$u$ re%uire$ents are $et+

a The proposed Rehabilitation Plan sub$itted co$plies with the $ini$u$ contents prescribedby this Act/

b There is sufficient $onitoring by the rehabilitation receiver of the debtor)s business for theprotection of creditors/

c The debtor has $et with its creditors to the e&tent reasonably possible in atte$pts to reachconsensus on the proposed Rehabilitation Plan/

d The rehabilitation receiver sub$its a report, based on preli$inary evaluation, stating that the

underlying assu$ptions and the goals stated in the petitioner)s Rehabilitation Plan are realisticreasonable and reasonable or if not, there is, in any case, a substantial lielihood for the debtor tobe successfully rehabilitated because, a$ong others+

there are sufficient assets with6which to rehabilitate the debtor/

0 there is sufficient cash flow to $aintain the operations of the debtor/

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1 the debtor)s, partners, stocholders, directors and officers have been acting in goodfaith and which due diligence/

2 the petition is not s sha$ filing intended only to delay the enforce$ent of the rights ofthe creditor)s or of any group of creditors/ and

3 the debtor would liely be able to pursue a viable Rehabilitation Plan/

e The petition, the Rehabilitation Plan and the attach$ents thereto do not contain any $ateriallyfalse or $isleading state$ent/

f !f the petitioner is the debtor, that the debtor has $et with its creditor6s representing at leastthree-fourths 162 of its total obligations to the e&tent reasonably possible and $ade a good faitheffort to reach a consensus on the proposed Rehabilitation Plan if the petitioner6s is6are a creditoror group of creditors, that6 the petitioner6s has6have $et with the debtor and $ade a good faitheffort to reach a consensus on the proposed Rehabilitation Plan/ and

g The debtor has not co$$itted acts $isrepresentation or in fraud of its creditor6s or a group ofcreditors.

Se(tion ##.!ction at the (nitial Hearing.- At the initial hearing, the court shall+

a deter$ine the creditors who have $ade ti$ely and proper filing of their notice of clai$s/

b hear and deter$ine any ob#ection to the %ualifications of the appoint$ent of the rehabilitationreceiver and, if necessary appoint a new one in accordance with this Act/

c direct the creditors to co$$ent on the petition and the Rehabilitation Plan, and to sub$it thesa$e to the court and to the rehabilitation receiver within a period of not $ore than twenty 0:days/ and

d direct the rehabilitation receiver to evaluate the financial condition of the debtor and to prepareand sub$it to the court within forty 2: days fro$ initial hearing the report provided in "ection 02hereof.

Se(tion #).&ffect of 1ailure to 1ile otice of Claim.- A creditor whose clai$ is not listed in the scheduleof debts and liabilities and who fails to file a notice of clai$ in accordance with the *o$$ence$ent 5rderbut subse%uently files a belated clai$ shall not be entitled to participate in the rehabilitation proceedingsbut shall be entitled to receive distributions arising therefro$.

Se(tion #".Report of the Rehabilitation Receiver.- (ithin forty 2: days fro$ the initial hearing and withor without the co$$ents of the creditors or any of the$, the rehabilitation receiver shall sub$it a report tothe court stating his preli$inary findings and reco$$endations on whether+

a the debtor is insolvent and if so, the causes thereof and any unlawful or irregular act or actsco$$itted by the owner6s of a sole proprietorship partners of a partnership or directors or officersof a corporation in conte$plation of the insolvency of the debtor or which $ay have contributed tothe insolvency of the debtor/

b the underlying assu$ptions, the financial goals and the procedures to acco$plish such goalsas stated in the petitioner)s Rehabilitation Plan are realistic, feasible and reasonable/

c there is a substantial lielihood for the debtor to be successfully rehabilitated/

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d the petition should be dis$issed/ and

e the debtor should be dissolved and6or li%uidated.

Se(tion #*.'iving Due Course to or Dismissal of Petition# or Conversion of Proceedings. - (ithin ten: days fro$ receipt of the report of the rehabilitation receiver $entioned in "ection 02 hereof the court

$ay+

a give due course to the petition upon a finding that+

the debtor is insolvent/ and

0 there is a substantial lielihood for the debtor to be successfully rehabilitated/

b dis$iss the petition upon a finding that+

debtor is not insolvent/

0 the petition iC a sha$ filing intended only to delay the enforce$ent of the rights of thecreditor6s or of any group of creditors/

1the petition, the Rehabilitation Plan and the attach$ents thereto contain any $ateriallyfalse or $isleading state$ents/ or

2the debtor has co$$itted acts of $isrepresentation or in fraud of its creditor6s or agroup of creditors/

cconvert the proceedings into one for the li%uidation of the debtor upon a finding that+

the debtor is insolvent/ and

0there is no substantial lielihood for the debtor to be successfully rehabilitated asdeter$ined in accordance with the rules to be pro$ulgated by the "upre$e *ourt.

Se(tion #+.Petition 'iven Due Course. - !f the petition is given due course, the court shall direct therehabilitation receiver to review, revise and6or reco$$end action on the Rehabilitation Plan and sub$itthe sa$e or a new one to the court within a period of not $ore than ninety D: days.

The court $ay refer any dispute relating to the Rehabilitation Plan or the rehabilitation proceedingspending before it to arbitration or other $odes of dispute resolution, as provided for under Republic Act>o. D0C3, 5r the Alternative 8ispute Resolution Act of 0::2, should it deter$ine that such $ode willresolve the dispute $ore %uicly, fairly and efficiently than the court.

Se(tion #,.Dismissal of Petition.- !f the petition is dis$issed pursuant to paragraph b of "ection 03hereof, then the court $ay, in its discretion, order the petitioner to pay da$ages to any creditor or to thedebtor, as the case $ay be, who $ay have been in#ured by the filing of the petition, to the e&tent of anysuch in#ury.

0C1 The Reha6ilitation Re(ei3er7 8anage4ent Co44ittee and Creditors9 Co44ittee.

Se(tion #-.0ho 4ay Serve as a Rehabilitation Receiver. - Any %ualified natural or #uridical person $ayserve as a rehabilitation receiver+ Provided#That if the rehabilitation receiver is a #uridical entity, it $ust

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designate a natural person6s who possess6es all the %ualifications and none of the dis%ualificationEs as itsrepresentative, it being understood that the #uridical entity and the representative6s are solidarily liable forall obligations and responsibilities of the rehabilitation receiver.

Se(tion #.5ualifications of a Rehabilitation Receiver. - The rehabilitation receiver shall have thefollowing $ini$u$ %ualifications+

aA citi'en of the Philippines or a resident of the Philippines in the si& 4 $onths i$$ediatelypreceding his no$ination/

b5f good $oral character and with acnowledged integrity, i$partiality and independence/

cas the re%uisite nowledge of insolvency and other relevant co$$ercial laws, rules andprocedures, as well as the relevant training and6or e&perience that $ay be necessary to enablehi$ to properly discharge the duties and obligations of a rehabilitation receiver/ and

das no conflict of interest+ Provided, That such conflict of interest $ay be waived, e&pressly ori$pliedly, by a party who $ay be pre#udiced thereby.

5ther %ualifications and dis%ualificationEs of the rehabilitation receiver shall be set forth in proceduralrules, taing into consideration the nature of the business of the debtor and the need to protect theinterest of all staeholders concerned.

Se(tion )!.(nitial !ppointment of the Rehabilitation Receiver.- The court shall initially appoint therehabilitation receiver, who $ayor $ay not be fro$ a$ong the no$inees of the petitioner, owever, at theinitial hearing of the petition, the creditors and the debtor who are not petitioners $ay no$inate otherpersons to the position. The court $ay retain the rehabilitation receiver initially appointed or appointanother who $ayor $ay not be fro$ a$ong those no$inated.

!n case the debtor is a securities $aret participant, the court shall give priority to the no$inee of theappropriate securities or investor protection fund.

!f a %ualified natural person or entity is no$inated by $ore than fifty percent 3:; of the securedcreditors and the general unsecured creditors, and satisfactory evidence is sub$itted, the court shallappoint the creditors) no$inee as rehabilitation receiver.

Se(tion ).Po+ers# Duties and Responsibilities of the Rehabilitation Receiver.- The rehabilitationreceiver shall be dee$ed an officer of the court with the principal duty of preserving and $a&i$i'ing thevalue of the assets of the debtor during the rehabilitation proceedings, deter$ining the viability of therehabilitation of the debtor, preparing and reco$$ending a Rehabilitation Plan to the court, andi$ple$enting the approved Rehabilitation Plan, To this end, and without li$iting the generality of theforegoing, the rehabilitation receiver shall have the following powers, duties and responsibilities+

aTo verify the accuracy of the factual allegations in the petition and its anne&es/

bTo verify and correct, if necessary, the inventory of all of the assets of the debtor, and theirvaluation/

cTo verify and correct, if necessary, the schedule of debts and liabilities of the debtor/

dTo evaluate the validity, genuineness and true a$ount of all the clai$s against the debtor/

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eTo tae possession, custody and control, and to preserve the value of all the property of thedebtor/

fTo sue and recover, with the approval of the court, all a$ounts owed to, and all propertiespertaining to the debtor/

gTo have access to all infor$ation necessary, proper or relevant to the operations and businessof the debtor and for its rehabilitation/

h To sue and recover, with the. approval of the court, all property or $oney of the debtor paid,transferred or disbursed in fraud of the debtor or its creditors, or which constitute unduepreference of creditor6s/

i To $onitor the operations and the business of the debtor to ensure that no pay$ents ortransfers of property are $ade other than in the ordinary course of business/

# (ith the court)s approval, to engage the services of or to e$ploy persons or entities to assisthi$ in the discharge of his functions/

To deter$ine the $anner by which the debtor $ay be best rehabilitated, to review reviseand6or reco$$end action on the Rehabilitation Plan and sub$it the sa$e or a new one to thecourt for approval/

To i$ple$ent the Rehabilitation Plan as approved by the court, if C: provided under theRehabilitation Plan/

$ To assu$e and e&ercise the powers of $anage$ent of the debtor, if directed by the courtpursuant to "ection 14 hereof/

n To e&ercise such other powers as $ay, fro$ ti$e to ti$e, be conferred upon hi$ by the court/and

To sub$it a status report on the rehabilitation proceedings every %uarter or as $ay be re%uired bythe courtmotu proprio. or upon $otion of any creditor. or as $ay be provided, in the RehabilitationPlan.

@nless appointed by the court, pursuant to "ection 14 hereof, the rehabilitation receiver shall nottae over the $anage$ent and control of the debtor but $ay reco$$end the appoint$ent of a$anage$ent co$$ittee over the debtor in the cases provided by this Act.

Se(tion )#.Removal of the Rehabilitation Receiver.F The rehabilitation receiver $ay be re$oved at anyti$e by the court either motu proprio or upon $otion by any creditor6s holding $ore than fifty percent3:; of the total obligations of the debtor, on such grounds as the rules of procedure $ay provide whichshall include, but are not li$ited to, the following+

a !nco$petence, gross negligence, failure to perfor$ or failure to e&ercise the proper degree ofcare in the perfor$ance of his duties and powers/

b 7ac of a particular or speciali'ed co$petency re%uired by the specific case/

c !llegal acts or conduct in the perfor$ance of his duties and powers/

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d 7ac of %ualification or presence of any dis%ualification/

e *onflict of interest that arises after his appoint$ent/ and

f Manifest lac of independence that is detri$ental to the general body of the staeholders.

Se(tion )).Compensation and Terms of Service. The rehabilitation receiver and his direct e$ployees orindependent contractors shall be entitled to co$pensation for reasonable fees and e&penses fro$ thedebtor according to the ter$s approved by the court after notice and hearing. Prior to such hearing, therehabilitation receiver and his direct e$ployees shall be entitled to reasonable co$pensation basedon %uantum meruit. "uch costs shall be considered ad$inistrative e&penses.

Se(tion )".$ath and Bond of the Rehabilitation Receiver. Prior to entering upon his powers, duties andresponsibilities, the rehabilitation receiver shall tae an oath and file a bond, in such a$ount to be fi&ed bythe court, conditioned upon the faithful and proper discharge of his powers, duties and responsibilities.

Se(tion )*.acancy. - !ncase the position of rehabilitation receiver is vacated for any reason whatsoever.the court shall direct the debtor and the creditors to sub$it the na$e6s of their no$inee6s to the position.The court $ay appoint any of the %ualified no$inees. or any other person %ualified for the position.

Se(tion )+.Displacement of &"isting 4anagement by the Rehabilitation Receiver or 4anagementCommittee.F @pon $otion of any interested party, the court $ay appoint and direct the rehabilitationreceiver to assu$e the powers of $anage$ent of the debtor, or appoint a $anage$ent co$$ittee thatwill undertae the $anage$ent of the debtor. upon clear and convincing evidence of any of the followingcircu$stances+

a Actual or i$$inent danger of dissipation, loss, wastage or destruction of the debtorEs assets orother properties/

b Paraly'ation of the business operations of the debtor/ or

c ross $is$anage$ent of the debtor. or fraud or other wrongful conduct on the part of, orgross or willful violation of this Act by. e&isting $anage$ent of the debtor 5r the owner, partner,director, officer or representative6s in $anage$ent of the debtor.

!n case the court appoints the rehabilitation receiver to assu$e the powers of $anage$ent of the debtor.the court $ay+

re%uire the rehabilitation receiver to post an additional bond/

0 authori'e hi$ to engage the services or to e$ploy persona or entities to assist hi$ in thedischarge of his $anagerial functions/ and

1 authori'e a co$$ensurate increase in his co$pensation.

Se(tion ),.Role of the 4anagement Committee.F (hen appointed pursuant to the foregoing section, the$anage$ent co$$ittee shall tae the place of the $anage$ent and the governing body of the debtorand assu$e their rights and responsibilities.

The specific powers and duties of the $anage$ent co$$ittee, whose $e$bers shall be considered asofficers of the court, shall be prescribed by the procedural rules.

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Se(tion )-.5ualifications of 4embers of the 4anagement Committee. - The %ualifications anddis%ualificationEs of the $e$bers of the $anage$ent co$$ittee shall be set forth in the procedural rules,taing into consideration the nature of the business of the debtor and the need to protect the interest of allstaeholders concerned.

Se(tion ).&mployment of Professionals. - @pon approval of the court, and after notice and hearing, the

rehabilitation receiver or the $anage$ent co$$ittee $ay e$ploy speciali'ed professionals and othere&perts to assist each in the perfor$ance of their duties. "uch professionals and other e&perts shall beconsidered either e$ployees or independent contractors of the rehabilitation receiver or the $anage$entco$$ittee, as the case $ay be. The %ualifications and dis%ualificationEs of the professionals and e&perts$ay be set forth in procedural rules, taing into consideration the nature of the business of the debtor andthe need to protect the interest of all staeholders concerned.

Se(tion "!.Conflict of (nterest. - >o person $ay be appointed as a rehabilitation receiver, $e$ber of aG$anage$ent co$$ittee, or be e$ployed by the rehabilitation receiver or the $anage$ent co$$ittee ifhe has a conflict of interest.

An individual shall be dee$ed to have a conflict of interest if he is so situated as to be $ateriallyinfluenced in the e&ercise of his #udg$ent for or against any party to the proceedings. (ithout li$iting the

generality of the foregoing, an individual shall be dee$ed to have a conflict of interest if+

a he is a creditor, owner, partner or stocholder of the debtor/

b he is engaged in a line of business which co$petes with that of the debtor/

c he is, or was, within five 3 years fro$ the filing of the petition, a director, officer, owner,partner or e$ployee of the debtor or any of the creditors, or the auditor or accountant of thedebtor/

d he is, or was, within two 0 years fro$ the filing of the petition, an underwriter of theoutstanding securities of the debtor/

e he is related by consanguinity or affinity within the fourth civil degree to any individual creditor,owners of a sale proprietorship-debtor, partners of a partnership- debtor or to any stocholder,director, officer, e$ployee or underwriter of a corporation-debtor/ or

f he has any other direct or indirect $aterial interest in the debtor or any of the creditors.

Any rehabilitation receiver, $e$ber of the $anage$ent co$$ittee or persons e$ployed or contracted bythe$ possessing any conflict of interest shall $ae the appropriate disclosure either to the court or to thecreditors in case of out-of-court rehabilitation proceedings. Any party to the proceeding adversely affectedby the appoint$ent of any person with a conflict of interest to any of the positions enu$erated above $ayhowever waive his right to ob#ect to such appoint$ent and, if the waiver is unreasonably withheld, thecourt $ay disregard the conflict of interest, taing into account the general interest of the staeholders.

Se(tion ".(mmunity. - The rehabilitation receiver and all persons e$ployed by hi$, and the $e$bers ofthe $anage$ent co$$ittee and all persons e$ployed by it, shall not be sub#ect to any action. clai$ orde$and in connection with any act done or o$itted to be done by the$ in good faith in connection withthe e&ercise of their powers and functions under this Act or other actions duly approved by thecourt.6a+p77il

Se(tion "#.Creditors) Committee. - After the creditors) $eeting called pursuant to "ection 41 hereof, thecreditors belonging to a class $ay for$ally organi'e a co$$ittee a$ong

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the$selves. !n addition, the creditors $ay, as a body, agree to for$ a creditors) co$$ittee co$posed of arepresentative fro$ each class of creditors, such as the following+

a "ecured creditors/

b @nsecured creditors/

c Trade creditors and suppliers/ and

d 9$ployees of the debtor.

!n the . election of the creditors) representatives, the rehabilitation receiver or his representative shallattend such $eeting and e&tend the appropriate assistance as $ay be defined in the procedural rules.

Se(tion ").Role of Creditors) Committee. - The creditors) co$$ittee when constituted pursuant to"ection 20 of this Act shall assist the rehabilitation receiver in co$$unicating with the creditors and shallbe the pri$ary liaison between the rehabilitation receiver and the creditors. The creditors) co$$itteecannot e&ercise or waive any right or give any consent on behalf of any creditor unless specificallyauthori'ed in writing by such creditor. The creditors) co$$ittee $ay be authori'ed by the court or by therehabilitation receiver to perfor$ such other tass and functions as $ay be defined by the proceduralrules in order to facilitate the rehabilitation process.

0%1 %eter4ination o5 Clai4s.

Se(tion "".Registry of Claims. - (ithin twenty 0: days fro$ his assu$ption into office, the rehabilitationreceiver shall establish a preli$inary registry of clai$s. The rehabilitation receiver shall $ae the registryavailable for public inspection and provide

publication notice to the debtor, creditors and staeholders on where and when they $ay inspect it. Allclai$s included in the registry of clai$s $ust be duly supported by sufficient evidence.

Se(tion "*.$pposition or Challenge of Claims.F (ithin thirty 1: days fro$ the e&piration of the periodstated in the i$$ediately preceding section, the debtor, creditors, staeholders and other interestedparties $ay sub$it a challenge to clai$6s to the court, serving a certified copy on the rehabilitationreceiver and the creditor holding the challenged clai$6so @pon the e&piration of the thirty 1:-day period,the rehabilitation receiver shall sub$it to the court the registry of clai$s which shall include undisputedclai$s that have not been sub#ect to challenge.

Se(tion "+.!ppeal. - Any decision of the rehabilitation receiver regarding a clai$ $ay be appealed to thecourt.

0E1 Go3ernan(e.

Se(tion ",.4anagement. - @nless otherwise provided herein, the $anage$ent of the #uridical debtorshall re$ain with the e&isting $anage$ent sub#ect to the applicable law6s and agree$ent6s, if any, on theelection or appoint$ent of directors, $anagers 5r $anaging partner. owever, all disburse$ents,pay$ents or sale, disposal, assign$ent, transfer or encu$brance of property , or any other act affectingtitle or interest in property, shall be sub#ect to the approval of the rehabilitation receiver and6or the court,as provided in the following subchapter.

0F1 Use7 Preser3ation and %is:osal o5 Assets and Treat4ent o5 Assets and Clai4s a5terCo44en(e4ent %ate.

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Se(tion "-.-se or Disposition of !ssets. - 9&cept as otherwise provided herein, no funds or property ofthe debtor shall he used or disposed of e&cept in the ordinary course of business of the debtor, or unlessnecessary to finance the ad$inistrative e&penses of the rehabilitation proceedings.

Se(tion ".Sale of !ssets. - The court, upon application of the rehabilitation receiver, $ay authori'e thesale of unencu$bered property of the debtor outside the ordinary course of business upon a showing that

the property, by its nature or because of other circu$stance, is perishable, costly to $aintain, susceptibleto devaluation or otherwise in#eopardy.

Se(tion *!.Sale or Disposal of &ncumbered Property of the Debtor and !ssets of Third Parties Held byDebtor.The court $ay authori'e the sale, transfer, conveyance or disposal of encu$bered property of thedebtor, or property of others held by the debtor where there is a security interest pertaining to third partiesunder a financial, credit or other si$ilar transactions if, upon application of the rehabilitation receiver andwith the consent of the affected owners of the property, or secured creditor6s in the case of encu$beredproperty of the debtor and, after notice and hearing, the court deter$ines that+

a such sale, transfer, conveyance or disposal is necessary for the continued operation of thedebtor)s business/ and

b the debtor has $ade arrange$ents to provide a substitute lien or ownership right thatprovides an e%ual level of security for the counter-party)s clai$ or right.

Provided# That properties held by the debtor where the debtor has authority to sell such as trust receipt orconsign$ent arrange$ents $ay be sold or disposed of by the .debtor, if such sale or disposal isnecessary for the operation of the debtor)s business, and the debtor has $ade arrange$ents to provide asubstitute lien or ownership right that provides an e%ual level of security for the counter-party)s clai$ orright.

"ale or disposal of property under this section shall not give rise to any cri$inal liability under applicablelaws.

Se(tion *.!ssets of Debtor Held by Third Parties.F !n the case of possessory pledges, $echanic)s liensor si$ilar clai$s, third parties who have in their possession or control property of the debtor shall nottransfer, conveyor otherwise dispose of the sa$e to persons other than the debtor, unless upon priorapproval of the rehabilitation receiver. The rehabilitation receiver $ay also+

a de$and the surrender or the transfer of the possession or control of such property to therehabilitation receiver or any other person, sub#ect to pay$ent of the clai$s secured by anypossessory !ien6s thereon/

b allow said third parties to retain possession or control, if such an arrange$ent would $oreliely preserve or increase the value of the property in %uestion or the total value of the assets ofthe debtor/ or

c undertae any ot!er disposition of the said property as $ay be beneficial for the rehabilitationof the debtor, after notice and hearing, and approval of the court.

Se(tion *#.Rescission or ullity of Sale# Payment# Transfer or Conveyance of !ssets. - The court $ayrescind or declare as null and void any sale, pay$ent, transfer or conveyance of the debtor)sunencu$bered property or any encu$bering thereof by the debtor or its agents or representatives afterthe co$$ence$ent date which are not in the ordinary course of the business of the debtor+ Provided#ho+ever# That the unencu$bered property $ay be sold, encu$bered or otherwise disposed of uponorder of the court after notice and hearing+

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a if such are in the interest of ad$inistering the debtor and facilitating the preparation andi$ple$entation of a Rehabilitation Plan/

b in order to provide a substitute lien, $ortgage or pledge of property under this Act/

c for pay$ents $ade to $eet ad$inistrative e&penses as they arise/

d for pay$ents to victi$s of %uasi delicts upon a showing that the clai$ is valid and the debtorhas insurance to rei$burse the debtor for the pay$ents $ade/

e for pay$ents $ade to repurchase property of the debtor that is auctioned off in a #udicial ore&tra#udicial sale under. This Act/ or

f for pay$ents $ade to reclai$ property of the debtor held pursuant to a possessory lien.

Se(tion *).!ssets Sub8ect to Rapid $bsolescence# Depreciation and Diminution of alue. - @pon theapplication of a secured creditor holding a lien against or holder of an ownership interest in property heldby the debtor that is sub#ect to potentially rapid obsolescence, depreciation or di$inution in value, thecourt shall, after notice and hearing, order the debtor or rehabilitation receiver to tae reasonable stepsnecessary to prevent the depreciation. !f depreciation cannot be avoided and such depreciation is

#eopardi'ing the security or property interest of the secured creditor or owner, the court shall+

a allow the encu$bered property to be foreclosed upon by the secured creditor according to therelevant agree$ent between the debtor and the secured creditor, applicable rules of procedureand relevant legislation+ Provided. That the proceeds of the sale will be distributed in accordancewith the order prescribed under the rules of concurrence and preference of credits/ or

b upon $otion of, or with the consent of the affected secured creditor or interest owner. orderthe conveyance of a lien against or ownership interest in substitute property of the debtor to thesecured creditor+ Provided. That other creditors holding liens on such property, if any, do notob#ect thereto, or, if such property is not available/

c order the conveyance to the secured creditor or holder . of an ownership interest of a lien onthe residual funds fro$ the sale of encu$bered property during the proceedings/ or

d allow the sale or disposition of the property+ Provided. That the sale or disposition will$a&i$i'e the value of the property for the benefit of the secured creditor and the debtor, and theproceeds of the sale will be distributed in accordance with the order prescribed under the rules ofconcurrence and preference of credits.

Se(tion *".Post9commencement (nterest. - The rate and ter$ of interest, if any, on secured andunsecured clai$s shall be deter$ined and provided for in the approved Rehabilitation Plan.

Se(tion **.Post9commencement *oans and $bligations. - (ith the approval of the court upon the

reco$$endation of the rehabilitation receiver, the debtor, in order to enhance its

rehabilitation. $ay+

a enter into credit arrange$ents/ or

b enter into credit arrange$ents, secured by $ortgages of its unencu$bered property orsecondary $ortgages of encu$bered property with the approval of senior secured parties withregard to the encu$bered property/ or

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c incur other obligations as $ay be essential for its rehabilitation.

The pay$ent of the foregoing obligations shall be considered ad$inistrative e&penses under this Act.

Se(tion *+.Treatment of &mployees# Claims. *o$pensation of e$ployees re%uired to carry on thebusiness shall be considered an ad$inistrative e&pense. *lai$s of separation pay for $onths wored

prior to the co$$ence$ent date shall be considered a pre- o$$ence$ent clai$. *lai$s for salary andseparation pay for wor perfor$ed after the co$$ence$ent date shall be an ad$inistrative e&pense.

Se(tion *,.Treatment of Contracts. - @nless cancelled by virtue of a final #udg$ent of a court ofco$petent #urisdiction issued prior to the issuance of the *o$$ence$ent 5rder, or at anyti$e thereafterby the court before which the rehabilitation proceedings are pending, all valid and subbsisting contracts ofthe debtor with creditors and other third parties as at the co$$ence$ent date shall continue inforce+ Provided# That +ithin ninety 2;3days following the co$$ence$ent of proceedings, the debtor, withthe consent of the rehabilitation receiver, shall notify each contractual counter-party of whether it isconfir$ing the particular contract. *ontractual obligations of the debtor arising or perfor$ed during thisperiod, and afterwards for confir$ed contracts, shall be considered ad$inistrative e&penses. *ontractsnot confir$ed within the re%uired deadline shall be considered ter$inated. *lai$s for actual da$ages, ifany, arising as a result of the election to ter$inate a contract shall be considered a pre-co$$ence$ent

clai$ against the debtor. >othing contained herein shall prevent the cancellation or ter$ination of anycontract of the debtor for any ground provided by law.

0G1 A3oidan(e Pro(eedings.

Se(tion *-.Rescission or ullity of Certain Pre-co$$ence$ent Transactions.Any transaction occurringprior to co$$ence$ent date entered into by the debtor or involving its funds or assets $ay be rescindedor declared null and void on the ground that the sa$e was e&ecuted with intent to defraud a creditor orcreditors or which constitute undue preference of creditors. (ithout li$iting the generality of theforegoing, a disputable presu$ption of such design shall arise if the transaction+

a provides unreasonably inade%uate consideration to the debtor and is e&ecuted within ninetyD: days prior to the co$$ence$ent date/

b involves an accelerated pay$ent of a clai$ to a creditor within ninety D: days prior to theco$$ence$ent date/

c provides security or additional security e&ecuted within ninety D: days prior to theco$$ence$ent date/

d involves creditors, where a creditor obtained, or received the benefit of, $ore than itsprorata share in the assets of the debtor, e&ecuted at a ti$e when the debtor was insolvent/ or

e is intended to defeat, delay or hinder the ability of the creditors to collect clai$s where theeffect of the transaction is to put assets of the debtor beyond the reach of creditors or to

otherwise pre#udice the interests of creditors.

Provided# ho+ever# That nothing in this section shall prevent the court fro$ rescinding or declaring as nulland void a transaction on other grounds provided by relevant legislation and #urisprudence+ Provided#further# That the provisions of the *ivil *ode on rescission shall in any case apply to these transactions.

Se(tion *.!ctions for Rescission or ullity. - a The rehabilitation receiver or, with his confor$ity, anycreditor $ay initiate and prosecute any action to rescind, or declare null and void any transaction

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described in "ection 3C hereof. !f the rehabilitation receiver does not consent to the filing or prosecution ofsuch action,

b !f leave of court is granted under subsection a, the rehabilitation receiver shall assign and transfer tothe creditor all rights, title and interest in the chose in action or sub#ect $atter of the proceeding, includingany docu$ent in support thereof.

c Any benefit derived fro$ a proceeding taen pursuant to subsection a, to the e&tent of his clai$ andthe costs, belongs e&clusively to the creditor instituting the proceeding, and the surplus, if any, belongs tothe estate.

d (here, before an order is $ade under subsection a, the rehabilitation receiver or li%uidator signifiesto the court his readiness to institute the proceeding for the benefit of the creditors, the order shall fi& theti$e within which he shall do so and, $ that case, the benefit derived fro$ the proceeding, if institutedwithin the ti$e li$its so fi&ed, belongs to the estate.

0H1 Treat4ent o5 Se(ured Creditors.

Se(tion +!.o Diminution of Secured Creditor Rights. The issuance of the *o$$ence$ent 5rder and

the "uspension or "tay 5rder, and any other provision of this Act, shall not be

dee$ed in any way to di$inish or i$pair the security or lien of a secured creditor, or the value of his lienor security, e&cept that his right to enforce said security or lien $ay be suspended during the ter$ of the"tay 5rder.

The court, upon $otion or reco$$endation of the rehabilitation receiver, $ay allow a secured creditor toenforce his security or lien, or foreclose upon property of the debtor

securing his6its clai$, if the said property is not necessary for the rehabilitation of the debtor. The securedcreditor and6or the other lien holders shall be ad$itted to the rehabilitation proceedings only for thebalance of his clai$, if any.

Se(tion +.*ac, of !de%uate Protection. - The court, on $otion or motu proprio# $ay ter$inate, $odify orset conditions for the continuance of suspension of pay$ent, or relieve a clai$ fro$ the coverage thereof,upon showing that+ a a creditor does not have ade%uate protection over property securing its clai$/ or

b the value of a clai$ secured by a lien on property which is not necessary for rehabilitation of thedebtor e&ceeds the fair $aret value of the said property.

=or purposes of this section, a creditor shall be dee$ed to lac ade%uate protection if it can be shownthat+

a the debtor fails or refuses to honor a pre-e&isting agree$ent with the creditor to eep theproperty insured/

b the debtor fails or refuses to tae co$$ercially reasonable steps to $aintain the property/ or

c the property has depreciated to an e&tent that the creditor is under secured.

@pon showing of a lac of protection, the court shall order the debtor or the rehabilitation receiver to $aearrange$ents to provide for the insurance or $aintenance of the property/ or to $ae pay$ents orotherwise provide additional or replace$ent security such that the obligation is fully secured. !f sucharrange$ents are not feasible, the court $ay $odify the "tay 5rder to allow the secured creditor lacing

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ade%uate protection to enforce its security clai$ against the debtor+ Provided# ho+ever# That the court$ay deny the creditor the re$edies in this paragraph if the property sub#ect of the enforce$ent is re%uiredfor the rehabilitation of the debtor.

0i1 Ad4inistration o5 Pro(eedings.

Se(tion +#.Contents of a Rehabilitation Plan.F The Rehabilitation Plan shall, as a $ini$u$+

a specify the underlying assu$ptions, the financial goals and the procedures proposed toacco$plish such goals/

b co$pare the a$ounts e&pected to be received by the creditors under the Rehabilitation Planwith those that they will receive if li%uidation ensues within the ne&t one hundred twenty 0:days/

c contain infor$ation sufficient to give the various classes of creditors a reasonable basis fordeter$ining whether supporting the Plan is in their financial interest when co$pared to thei$$ediate li%uidation of the debtor, including any reduction of principal interest and penaltiespayable to the creditors/

d establish classes of voting creditors/

e establish subclasses of voting creditors if prior approval has been granted by the court/

f indicate how the insolvent debtor will be rehabilitated including, but not li$ited to, debtforgiveness, debt rescheduling, reorgani'ation or %uasi-reorgani'ation. dacion en pago# debt-e%uity conversion and sale of the business or parts of it as a going concern, or setting-up of anew business entity or other si$ilar arrange$ents as $ay be necessary to restore the financialwell-being and visibility of the insolvent debtor/

g specify the treat$ent of each class or subclass described in subsections d and e/

h provide for e%ual treat$ent of all clai$s within the sa$e class or subclass, unless a particularcreditor voluntarily agrees to less favorable treat$ent/

i ensure that the pay$ents $ade under the plan follow the priority established under theprovisions of the *ivil *ode on concurrence and preference of credits and other applicable laws/

# $aintain the security interest of secured creditors and preserve the li%uidation value of thesecurity unless such has been waived or $odified voluntarily/

disclose all pay$ents to creditors for pre-co$$ence$ent debts $ade during the proceedingsand the #ustifications thereof/

describe the disputed clai$s and the provisioning of funds to account for appropriatepay$ents should the clai$ be ruled valid or its a$ount ad#usted/

$ identify the debtor)s role in the i$ple$entation of the Plan/

n state any rehabilitation covenants of the debtor, the breach of which shall be considered a$aterial breach of the Plan/

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o identify those responsible for the future $anage$ent of the debtor and the supervision andi$ple$entation of the Plan, their affiliation with the debtor and their re$uneration/

p address the treat$ent of clai$s arising after the confir$ation of the Rehabilitation Plan/

% re%uire the debtor and its counter-parties to adhere to the ter$s of all contracts that the debtor

has chosen to confir$/

r arrange for the pay$ent of all outstanding ad$inistrative e&penses as a condition to the Plan)sapproval unless such condition has been waived in writing by the creditors concerned/

s arrange for the pay$entH of all outstanding ta&es and assess$ents, or an ad#usted a$ountpursuant to a co$pro$ise settle$ent with the BlR 5r other applicable ta& authorities/

t include a certified copy of a certificate of ta& clearance or evidence of a co$pro$isesettle$ent with the B!R/

u include a valid and binding r,solution of a $eeting of the debtor)s stocholders to increase theshares by the re%uired a$ount in cases where the Plan conte$plates an additional issuance ofshares by the debtor/

v state the co$pensation and status, if any, of the rehabilitation receiver after the approval ofthe Plan/ and

w contain provisions for conciliation and6or $ediation as a prere%uisite to court assistance orintervention in the event of any disagree$ent in the interpretation or i$ple$entation of theRehabilitation Plan.

Se(tion +).Consultation +ith Debtor and Creditors.F if the court gives due course to the petition, therehabilitation receiver shall confer with the debtor and all the classes of creditors, and $ay consider theirviews and proposals ill the review, revision or preparation of a new Rehabilitation Plan.

Se(tion +".Creditor !pproval of Rehabilitation Plan.F The rehabilitation receiver shall notify the creditorsand staeholders that the Plan is ready for their e&a$ination. (ithin twenty 0I days fro$ the saidnotification, the rehabilitation receiver shall convene the creditors, either as a whole or per class, forpurposes of voting on the approval of the Plan. The Plan shall be dee$ed re#ected unless approved by allclasses of creditors w hose rights are adversely $odified or affected by the Plan. =or purposes of thissection, the Plan is dee$ed to have been approved by a class of creditors if $e$bers of the said classholding $ore than fifty percent 3:; of the total clai$s of the said class vote in favor of the Plan. Thevotes of the creditors shall be based solely on the a$ount of their respective clai$s based on the registryof clai$s sub$itted by the rehabilitation receiver pursuant to "ection 22 hereof.

>otwithstanding the re#ection of the Rehabilitation Plan, the court $ay confir$ the Rehabilitation Plan if allof the following circu$stances are present+

aThe Rehabilitation Plan co$plies with the re%uire$ents specified in this Act.

b The rehabilitation receiver reco$$ends the confir$ation of the Rehabilitation Plan/

c The shareholders, owners or partners of the #uridical debtor lose at least their controllinginterest as a result of the Rehabilitation Plan/ and

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d The Rehabilitation Plan would liely provide the ob#ecting class of creditors with co$pensationwhich has a net present value greater than that which they would have received if the debtorwere under li%uidation.

Se(tion +*.Submission of Rehabilitation Plan to the Court. - fthe Rehabilitation Plan is approved, therehabilitation receiver shall sub$it the sa$e to the court for confir$ation. (ithin five 3 days fro$ receipt

of the Rehabilitation Plan, the court shall notify the creditors that the Rehabilitation Plan has beensub$itted for confir$ation, that any creditor $ay obtain copies of the Rehabilitation Plan and that anycreditor $ay file an ob#ection thereto.

Se(tion ++.1iling of $b8ections to Rehabilitation Plan.F A creditor $ay file an ob#ection to theRehabilitation Plan within twenty 0: days fro$ receipt of notice fro$ the court that the RehabilitationPlan has been sub$itted for confir$ation. 5b#ections to a Rehabilitation Plan shall be li$ited to thefollowing+

a The creditors) support was induced by fraud/

bThe docu$ents or data relied upon in the Rehabilitation Plan are $aterially false or$isleading/ or

cThe Rehabilitation Plan is in fact not supported by the voting creditors.

Se(tion +,.Hearing on the $b8ections. - !f ob#ections have been sub$itted during the relevant period, thecourt shall issue an order setting the ti$e and date for the hearing or hearings on the ob#ections.

!f the court finds $erit in the ob#ection, it shall order the rehabilitation receiver or other party to cure thedefect, whenever feasible. !f the court deter$ines that the debtor acted in bad faith, or that it is notfeasible to cure the defect, the court shall convert the proceedings into one for the li%uidation of the debtorunder *hapter < of this Act.

Se(tion +-.Confirmation of the Rehabilitation Plan.F !f no ob#ections are filed within the relevant period

or, if ob#ections are filed, the court finds the$ lacing in $erit, or deter$ines that the basis for theob#ection has been cured, or deter$ines that the debtor has co$plied with an order to cure the ob#ection,the court shall issue an order confir$ing the Rehabilitation Plan.

The court $ay confir$ the Rehabilitation Plan notwithstanding unresolved disputes over clai$s if theRehabilitation Plan has $ade ade%uate provisions for paying such clai$s.

=or the avoidance of doubt, the provisions of other laws to the contrary notwithstanding, the court shallhave the power to approve or i$ple$ent the Rehabilitation Plan despite the lac of approval, or ob#ectionfro$ the owners, partners or stocholders of the insolvent debtor+ Provided# That the ter$s thereof arenecessary to restore the financial well-being and viability of the insolvent debtor.

Se(tion +.&ffect of Confirmation of the Rehabilitation Plan# - The confir$ation of the Rehabilitation Plan

by the court shall result in the following+

a The Rehabilitation Plan and its provisions shall be binding upon the debtor and all personswho $ay be affected by . it, including the creditors, whether or not such persons haveparticipated in the proceedings or opposed the Rehabilitation Plan or whether or not their clai$shave been scheduled/

b The debtor shall co$ply with the provisions of the Rehabilitation Plan and shall tae all actionsnecessary to carry out the Plan/

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c Pay$ents shall be $ade to the creditors in accordance with the provisions of theRehabilitation Plan/

d *ontracts and other arrange$ents between the debtor and its creditors shall be interpreted ascontinuing to apply to the e&tent that they do not conflict with the provisions of the RehabilitationPlan/

e Any co$pro$ises on a$ounts or rescheduling of ti$ing of pay$ents by the debtor shall bebinding on creditors regardless of whether or not the Plan is successfully i$ple$ent/ and

f *lai$s arising after approval of the Plan that are otherwise not treated by the Plan are notsub#ect to any "uspension 5rder.

The 5rder confir$ing the Plan shall co$ply with Rules 14 of the Rules of *ourt+ Provided# ho+ever#Thatthe court $ay $aintain #urisdiction over the case in order to resolve clai$s against the debtor that re$aincontested and allegations that the debtor has breached the Plan.

Se(tion ,!.*iability of 'eneral Partners of a Partnership for -npaid Balances -nder an !pproved Plan.-The approval of the Plan shall not affect the rights of creditors to pursue actions against the general

partners of a partnership to the e&tent they are liable under relevant legislation for the debts thereof.

Se(tion ,.Treatment of !mounts of (ndebtedness or $bligations 1orgiven or Reduced. - A$ounts ofany indebtedness or obligations reduced or forgiven in connection with a Plan)s approval shall not besub#ect to any ta& in furtherance of the purposes of this Act.

Se(tion ,#.Period for Confirmation of the Rehabilitation Plan.- The court shall have a $a&i$u$ periodof one year fro$ the date of the filing of the petition to confir$ a Rehabilitation Plan.

!f no Rehabilitation Plan is confir$ed within the said period, the proceedings $ay upon $otion or motupropio, be converted into one for the li%uidation of the debtor .

Se(tion ,).!ccounting Discharge of Rehabilitation Receiver.- @pon the confir$ation of theRehabilitation Plan, the rehabilitation receiver shall provide a final report and accounting to the court.@nless the Rehabilitation Plan specifically re%uires and describes the role of the rehabilitation receiverafter the approval of the Rehabilitation Plan, the court shall discharge the rehabilitation receiver of hisduties.

# Ter$ination of Proceedings

Se(tion ,".Termination of Proceedings.- The rehabilitation proceedings under *hapter !! shall, upon$otion by any staeholder or the rehabilitation receiver be ter$inated by order of the court eitherdeclaring a successful i$ple$entation of the Rehabilitation Plan or a failure of rehabilitation.

There is failure of rehabilitation in the following cases+

a 8is$issal of the petition by the court/

b The debtor fails to sub$it a Rehabilitation Plan/

c @nder the Rehabilitation Plan sub$itted by the debtor, there is no substantial lielihood thatthe debtor can be rehabilitated within a reasonable period/

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d The Rehabilitation Plan or its a$end$ent is approved by the court but in the i$ple$entationthereof, the debtor fails to perfor$ its obligations thereunder or there is a failure to reali'e theob#ectives, targets or goals set forth therein, including the ti$elines and conditions for thesettle$ent of the obligations due to the creditors and other clai$ants/

e The co$$ission of fraud in securing the approval of the Rehabilitation Plan or its a$end$ent/

and

f 5ther analogous circu$stances as $ay be defined by the rules of procedure.

@pon a breach of, or upon a failure of the Rehabilitation Plan the court, upon $otion by an affected party$ay+

!ssue an order directing that the breach be cured within a specified period of ti$e, fallingwhich the proceedings $ay be converted to a li%uidation/

0 !ssue an order converting the proceedings to a li%uidation/

1 Allow the debtor or rehabilitation receiver to sub$it a$end$ents to the Rehabilitation Plan,the approval of which shall be governed by the sa$e re%uire$ents for the approval of aRehabilitation Plan under this subchapter/

2 !ssue any other order to re$edy the breach consistent with the present regulation, otherapplicable law and the best interests of the creditors/ or

3 9nforce the applicable provisions of the Rehabilitation Plan through a writ of e&ecution.

Se(tion ,*.&ffects of Termination.- Ter$ination of the proceedings shall result in the following+

a The discharge of the rehabilitation receiver sub#ect to his sub$ission of a final accounting/ and

b The lifting of the "tay 5rder and any other court order holding in abeyance any action for theenforce$ent of a clai$ against the debtor.

Provided# ho+ever#That if the ter$ination of proceedings is due to failure of rehabilitation or dis$issal ofthe petition for reasons other than technical grounds, the proceedings shall be i$$ediately converted toli%uidation as provided in "ection D0 of this Act.

CHAPTER IIIPRE/NEGOTIATE% REHABILITATION

Se(tion ,+.Petition by Debtor.- An insolvent debtor, by itself or #ointly with any of its creditors, $ay file averified petition with the court for the approval of a pre-negotiated Rehabilitation Plan which has been

endorsed or approved by creditors holding at least two-thirds 061 of the total liabilities of the debtor,including secured creditors holding $ore than fifty percent 3:; of the total secured clai$s of the debtorand unsecured creditors holding $ore than fifty percent 3:; of the total unsecured clai$s of the debtor.The petition shall include as a $ini$u$+

a a schedule of the debtor)s debts and liabilities/

b an inventory of the debtor)s assets/

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c the pre-negotiated Rehabilitation Plan, including the na$es of at least three 1 %ualifiedno$inees for rehabilitation receiver/ and

d a su$$ary of disputed clai$s against the debtor and a report on the provisioning of funds toaccount for appropriate pay$ents should any such clai$s be ruled valid or their a$ountsad#usted.

Se(tion ,,.(ssuance of $rder.- (ithin five 3 woring days, and after deter$ination that the petition issufficient in for$ and substance, the court shall issue an 5rder which shall/

a identify the debtor, its principal business of activity6ies and its principal place of business/

b declare that the debtor is under rehabilitation/

c su$$ari'e the ground.6s for the filling of the petition/

d direct the publication of the 5rder in a newspaper of general circulation in the Philippines oncea wee for at least two 0 consecutive wees, with the first publication to be $ade within seven? days fro$ the ti$e of its issuance/

e direct the service by personal delivery of a copy of the petition on each creditor who is not apetitioner holding at least ten percent :; of the total liabilities of the debtor, as deter$ined inthe schedule attached to the petition, within three 1 days/

f state that copies of the petition and the Rehabilitation Plan are available for e&a$ination andcopying by any interested party/

g state that creditors and other interested parties opposing the petition or Rehabilitation Plan$ay file their ob#ections or co$$ents thereto within a period of not later than twenty 0: daysfro$ the second publication of the 5rder/

h appoint a rehabilitation receiver, if provided for in the Plan/ and

i include a "uspension or "tay 5rder as described in this Act.

Se(tion ,-.!pproval of the Plan.- (ithin ten : days fro$ the date of the second publication of the5rder, the court shall approve the Rehabilitation Plan unless a creditor or other interested party sub$itsan ob#ection to it in accordance with the ne&t succeeding section.

Se(tion ,.$b8ection to the Petition or Rehabilitation Plan. - Any creditor or other interested party $aysub$it to the court a verified ob#ection to the petition or the Rehabilitation Plan not later than eight Cdays fro$ the date of the second publication of the 5rder $entioned in "ection ?? hereof. The ob#ectionsshall be li$ited to the following+

a The allegations in the petition or the Rehabilitation Plan or the attach$ents thereto are$aterially false or $isleading/

b The $a#ority of any class of creditors do not in fact support the Rehabilitation Plan/

c The Rehabilitation Plan fails to accurately account for a clai$ against the debtor and the clai$in not categorically declared as a contested clai$/ or

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d The support of the creditors, or any of the$

Financial Rehabilitation and Insolvency Act

Documents

Transcript of Financial Rehabilitation and Insolvency Act