A.M.
NO. 00-8-10-SC[November
21, 2000]
RE :
INTERIM
RULES OF PROCEDURE ON CORPORATE REHABILITATION
EN
BANCR E
S O L
U T I O N
Acting on the Memorandum
of the Committee on SEC Cases submitting for this Court's consideration
and approval the Interim Rules of Procedure on Corporate
Rehabilitation,
the Court Resolved to approve the same.
The Interim Rules
shall take effect on December 15, 2000 following its publication in two
(2) newspapers of general circulation not later than November 26, 2000.
November 21, 2000,
Manila.
Davide, Jr., C.J.,
Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban,
Quisumbing,
Pardo, Buena, Gonzaga-Reyes, Ynares-Santiago and De Leon, Jr., JJ.,
concur.
INTERIM
RULES OF PROCEDURE ON CORPORATE REHABILITATION(2000)Rule
1COVERAGE
Section 1. Scope.
- These Rules shall apply to petitions for rehabilitation filed by
corporations,
partnerships, and associations pursuant to Presidential
Decree No. 902-A, as amended.
Sec. 2. Applicability
to Rehabilitation Cases Transferred from the Securities and Exchange
Commission.
- Cases for rehabilitation transferred from the Securities and
Exchange
Commission to the Regional Trial Courts pursuant to Republic
Act No. 8799, otherwise known as The Securities Regulation Code,
shall
likewise be governed by these Rules.
Rule
2 DEFINITION
OF TERMS AND CONSTRUCTION
Section 1. Definition
of Terms. - For purposes of these Rules:chanroblesvirtuallawlibrary
"Administrative
expenses" shall refer to those expenses incurred in the ordinary
course
of business of the debtor after the issuance of the stay order,
excluding
interest payable to creditors.
"Affidavit
of
General Financial Condition" shall refer to a verified statement on
the general financial condition of the debtor required in Section 2,
Rule
4 of these Rules.
"Board
of Directors"
shall include the executive committee or the management of a
partnership
or association.
"Claim"
shall
include all claims or demands of whatever nature or character against a
debtor or its property, whether for money or otherwise.
"Creditor"
shall mean any holder of a Claim.
"Court"
shall
refer to the proper Regional Trial Court designated to hear and decide
the cases contemplated under these Rules.
"Debtor"
shall
mean any corporation, partnership, or association, whether supervised
or
regulated by the Securities and Exchange Commission or other government
agencies, on whose behalf a petition for rehabilitation has been filed
under these Rules.
"Stockholder"
shall include a member of a non-stock corporation or association, in a
partnership.
Sec. 2. Construction.
- These Rules shall be liberally construed to carry out the objectives
of Sections 5(d), 6(c) and 6(d) of Presidential
Decree No. 902-A, as amended, and to assist the parties in
obtaining
a just, expeditious, and inexpensive determination of cases. Where
applicable,
the Rules of Court
shall apply suppetorily to proceedings under these Rules.
Rule
3
GENERAL
PROVISIONS
Section 1. Nature
of Proceedings. - Any proceeding initiated under these Rules shall
be considered in rem. Jurisdiction over all those affected by the
proceedings
shall be considered as acquired upon publication of the notice of the
commencement
of the proceedings in any newspaper of general circulation in the
Philippines
in the manner prescribed by these Rules.
The proceedings shall
also be summary and non-adversarial in nature. The following pleadings
are prohibited:chanroblesvirtuallawlibrary
a. Motion to
dismiss;
b. Motion
for a
bill of particulars;
c. Motion
for new
trial or for reconsideration;
d. Petition
for
relief;
e. Motion
for extension;
f.
Memorandum;
g. Motion
for postponement;
h. Reply or
Rejoinder;
i. Third
party complaint;
and
j.
Intervention.
Any pleading, motion,
opposition, defense, or claim filed by any interested party shall be
supported
by verified statements that the affiant has read the same and that the
factual allegations therein are true and correct of his personal
knowledge
or based on authentic records and shall contain as annexes such
documents
as may be deemed by the party submitting the same as supportive of the
allegations in the affidavits. The court may decide matters on the
basis
of affidavits and other documentary evidence. Where necessary, the
Court
shall conduct clarificatory hearings before resolving any matter
submitted
to it for resolution.
Sec. 2. Venue.
- Petitions for rehabilitation pursuant to these Rules shall be filed
in
the Regional Trial Court having jurisdiction over the territory where
the
debtor's principal office is located.
Sec. 3. Service
of Pleadings and Documents. - When so authorized by the Court, any
pleading and/or document required by these Rules may be filed with the
Court and/or served upon the other parties by facsimile transmission
(fax)
or electronic mail (e-mail). In such cases, the date of transmission
shall
be deemed to be the date of service. In case of a voluminous pleading
or
document, the Court may motu proprio or upon motion, waive the
requirement
of service, provided, a copy thereof together with all its attachments
is duly filed with the court and is made available for examination and
reproduction by any party, and provided, further, that a notice of such
filing and availability is duly served on the parties.
Sec. 4. Trade
Secrets and Other Confidential Information. - On motion or on its
own
initiative, the court may issue an order to protect trade secrets or
other
confidential research, development, or commercial information
belongings
to the debtor.
Sec. 5. Executory
Nature of Orders. - Any order issued by the court under these Rules
is immediately executory. A petition for review or an appeal therefrom
shall not stay the execution of the order unless restrained or enjoined
by the appellate court. The review of any order or decision of the
court
or an appeal therefrom shall be in accordance with the Rules
of Court: Provided, however, that the reliefs ordered by
the
trial or appellate courts shall take into account the need for
resolution
of proceedings in a just, equitable, and speedy manner.
Rule
4 REHABILITATION
Section 1. Who
May Petition. - Any debtor who foresees the impossibility of
meeting
its debts when they respectively fall due, or any creditor or creditors
holding at least twenty-five percent (25%) of the debtor's total
liabilities,
may petition the proper Regional Trial Court to have the debtor placed
under rehabilitation.
Sec. 2. Contents
of the Petition. - The petition filed by the debtor must be
verified
and must set forth with sufficient particularly all the following
material
facts: (a) the name and business of the debtor; (b) the nature of the
business
of the debtor; (c) the history of the debtor; (d) the cause of its
inability
to pay its debts; (e) all the pending actions or proceedings known to
the
debtor and the courts or tribunals where they are pending; (f) threats
or demands to enforce claims or liens against the debtor; and (g) the
manner
by which the debtor may be rehabilitated and how such rehabilitation
may
benefit the general body of creditors, employees, and stockholders.
The petition shall
be accompanied by the following documents:chanroblesvirtuallawlibrary
a. An
audited financial
statement of the debtor at the end of its last fiscal year;
b. Interim
financial
statements as of the end of the month prior to the filing of the
petition;
c. Schedule
of Debts
and Liabilities which lists all the creditors of the debtor indicating
the name and address of each creditor, the amount of each claim as to
principal,
interest, or penalties due as of the date of filing, the nature of the
claim, and any pledge, lien, mortgage judgment, or other security given
for the payment thereof;
d. Any
Inventory
of Assets which must list with reasonable specificity all the assets of
the debtor, stating the nature of each asset, the location and
condition
thereof, the book value or market value of the assets, and attaching
the
corresponding certificate of title therefor in case of real property,
or
the evidence of title or ownership in case of movable property, the
encumbrances,
liens or claims thereon, if any, and the identifies and addresses of
the
lienholders and claimants. The Inventory shall include a Schedule of
Accounts
Receivable which must indicate the amount of each, the persons from
whom
due, the date of maturity, and the degree of collectibility
categorizing
them as highly collectible to remotely collectible;
e. A
rehabilitation
plan which conforms to the minimal requirements set out in the Section
5, Rule 4 of these Rules;
f. A
Schedule of
Payments and disposition of assets which the debtor may have effected
within
three (3) months immediately preceding the filing of the petition;
g. A
Schedule of
the Cash Flow of the debtor for three (3) months immediately preceding
the filing of the petition, and a detailed schedule of the projected
cash
flow for the succeeding three (3) months;
h. A
Statement of
Possible Claims by or against the debtor which must contain a brief
statement
of the facts which might give rise to the claim and an estimate of the
probable amount thereof;
i. An
Affidavit
of General Financial Condition which shall contain answers to the
questions
or matters prescribed in
Annex "A"
hereof;
j. At least
three
(3) nominees for the position of Rehabilitation Receiver as well as
their
qualifications and addresses, including, but not limited to their
telephone
numbers, fax number and e-mail address; and
k. A
Certificate
attesting, under oath, that the (a) filing of the petition has been
duly
authorized; and (b) the directors and stockholders have irrevocably
approved
and/or consented to, in accordance with existing laws, all actions or
matters
necessary and desirable to rehabilitate the debtor including, but not
limited
to, amendments to the articles of incorporation and by-laws or articles
of partnership; increase or decrease in the authorized capital stock;
issuance
of bonded indebtedness; alienation, transfer, or encumbrance of assets
of the debtor; and modification of shareholders' rights.
Five (5) copies of its
petition shall be filed with the court.
Sec. 3. Verification
by Debtor. - The petition filed by the debtor must be verified by
an
affidavit of a responsible officer of the debtor and shall be in a form
substantially as follows:chanroblesvirtuallawlibrary
I,
___________________________,
(position) of (name of petitioner), do solemnly swear that the
petitioner
has been duly authorized to file the petition and that the stockholders
and board of directors (or governing body) have approved and/or
consented
to, in accordance with law, all actions or matters necessary or
desirable
to rehabilitate the debtor. There is no petition for insolvency filed
with
any other body, court, or tribunal affecting the petitioner. The
Inventory
of Assets and the Schedule of Debts and Liabilities contains a full,
correct,
and true description of all debts and liabilities and of all goods,
effects,
estate, and property of whatever kind or class belonging to petitioner.
The Inventory also contains a full, correct, and true statement of all
debts owing or due to petitioner, or to any person or persons in trust
for petitioner and of all securities and contracts whereby any money
may
hereafter become due or payable to petitioner or by or through which
any
benefit or advantage may accrue to petitioner. The petition contains a
concise statement of the facts giving rise, or which might give rise,
to
any cause of action in favor of petitioner. Petitioner has no land,
money,
stock, expectancy, or property of any kind, except those set forth in
the
Inventory of Assets. Petitioner has, in no instance, created or
acknowledged
a debt for a greater sum than the true and correct amount. Petitioner,
its officers, directors, and stockholders have not, directly or
indirectly,
concealed, fraudulently sold or otherwise fraudulently disposed of, any
part of petitioner's real or personal property, estate, effects, or
rights
of action, and petitioner, its officers, directors, and stockholders
have
not in any way compounded with any of its creditors in order to give
preference
to such creditors, or to receive or to accept any profit or advantage
therefrom,
or to defraud or deceive in any manner any creditor to whom petitioner
is indebted. Petitioner, its officers, directors, and stockholders have
been acting in good faith and with due diligence.
Sec. 4. Creditor-initiated
Petitions. - Where the petition is filed by a creditor or
creditors,
it is sufficient that the petition is accompanied by a rehabilitation
plan
and a list of nominees to the position of Rehabilitation Receiver and
verified
by a sworn statement that the affiant has read the petition and that
its
contents are true and correct of his personal knowledge or based on
authentic
records obtained from the debtor.
Sec. 5. Rehabilitation
Plan. - The rehabilitation plan shall include (a) the desired
business
targets or goals and the duration and coverage of the rehabilitation;
(b)
the terms and conditions of such rehabilitation which shall include the
manner of its implementation, giving due regard to the interests of
secured
creditors; (c) the material financial commitments to support the
rehabilitation
plan; (d) the means for the execution of the rehabilitation plan, which
may include conversion of the debts or any portion thereof to equity,
restructuring
of the debts, dacion en pago, or sale of assets or of the
controlling
interest; (e) a liquidation analysis that estimates the proportion of
the
claims that the creditors and shareholders would receive if the
debtor's
properties were liquidated; and (f) such other relevant information to
enable a reasonable investor to make an informed decision on the
feasibility
of the rehabilitation plan.
Sec. 6. Stay Order.
- If the court finds the petition to be sufficient in form and
substance,
it shall, not later than five (5) days from the filing of the petition,
issue an Order (a) appointing a Rehabilitation Receiver and fixing his
bond; (b) staying enforcement of all claims, whether for money or
otherwise
and whether such enforcement is by court action or otherwise, against
the
debtor, its guarantors and sureties not solidarily liable with the
debtor;
(c) prohibiting the debtor from selling, encumbering, transferring, or
disposing in any manner any of its properties except in the ordinary
course
of business; (d) prohibiting the debtor from making any payment of its
liabilities outstanding as at the date of filing of the petition; (e)
prohibiting
the debtor's suppliers of goods or services from withholding supply of
goods and services in the ordinary course of business for as long as
the
debtor makes payments for the services and goods supplied after the
issuance
of the stay order; (f) directing the payment in full of all
administrative
expenses incurred after the issuance of the stay order; (g) fixing the
initial hearing on the petition not earlier than forty five (45) days
but
not later than sixty (60) days from the filing thereof; (h) directing
the
petitioner to publish the Order in a newspaper of general of general
circulation
in the Philippines once a week for two (2) consecutive weeks; (i)
directing
all creditors and all interested parties (including the Securities and
Exchange Commission) to file and serve on the debtor a verified comment
on or opposition to the petition, with supporting affidavits and
documents,
not later than ten (10) days before the date of the initial hearing and
putting them on notice that their failure to do so will bar them from
participating
in the proceedings; and (j) directing the creditors and interested
parties
to secure from the court copies of the petition and its annexes within
such time as to enable themselves to file their comment on or
opposition
to the petition and to prepare for the initial hearing of the petition.
Sec. 7. Service
of Stay Order on Rehabilitation Receiver. - The petitioner shall
immediately
serve a copy of the stay order on the Rehabilitation Receiver appointed
by the court, who shall manifest his acceptance or non-acceptance of
his
appointment not later than ten (10) days from receipt of the order.
Sec. 8. Voidability
of Illegal Transfers and Preferences. - Upon motion or motu
proprio,
the court may declare void any transfer of property or any other
conveyance,
sale, payment, or agreement made in violation of its stay order or in
violation
of these Rules.
Sec. 9. Initial
Hearing. - On or before the initial hearing, the petitioner shall
file
the publisher's affidavit showing that the publication requirements
specified
above had been complied with. If the court is satisfied that said
jurisdictional
requirement had been complied with, it shall summarily hear the parties
on any matter relating to the petition as well as any comment and/or
opposition
filed in connection therewith. The court may hold additional
clarificatory
hearings where there is need to further clarify matters but in no event
shall such additional hearings be held beyond one hundred eighty (180)
days from the date of the initial hearing.
If, after the
initial
hearing, the court is satisfied that there is merit in the petition, it
shall give due course to the petition and immediately refer the
petition
and its annexes to the Rehabilitation Receiver who shall evaluate the
rehabilitation
plan and submit his recommendations to the court not later than one
hundred
twenty (120) days from the date of the initial hearing.
Sec. 10. Opposition
to or Comment on the Petition. - Every creditor of the debtor or
any
interested party shall file his verified opposition to or comment on
the
petition not later than ten (10) days before the date of the initial
hearing.
After such time, no creditor or interested party shall be allowed to
file
any comment or opposition thereto without leave of court.
If the
Schedule
of Debts and Liabilities omits a claim or liability, the creditor
concerned
shall attach a verified statement of the obligations allegedly due it
to
its comment or opposition.
The court
shall
likewise require the Securities and Exchange Commission to comment on
the
petition. The Commission shall coordinate with the government agency
concerned
in appropriate cases for purposes of filing its comment.
Sec. 11. Period
of the Stay Order. - The stay order shall be effective from the
date
of its issuance until the dismissal of the petition or the termination
of the rehabilitation proceedings.
The petition
shall
be dismissal if no rehabilitation plan is approved by the court upon
the
lapse of one hundred eighty (180) days from the date of the initial
hearing.
The court may grant an extension beyond this period only if it appears
by convincing and compelling evidence that the debtor may successfully
be rehabilitated. In no instance, however, shall the period for
approving
or disapproving a rehabilitation plan exceed eighteen (18) months from
the date of filing of the petition.
Sec. 12. Relief
from, Modification, or Termination of Stay Order. - The court may,
on motion or motu proprio, terminate, modify, or set conditions
for the continuance of the stay order, or relieve a claim from the
coverage
thereof upon showing that (a) any of the allegations in the petition,
or
any of the contents of any attachment, or the verification thereof has
ceased to be true; (b) a creditor does not have adequate protection
over
property securing its claim; or (c) the debtor's secured obligation is
more than the fair market value of the property subject of the stay and
such property is not necessary for the rehabilitation of the debtor.
For purposes of this
section, the creditor shall lack adequate protection if it can be shown
that:chanroblesvirtuallawlibrary
a. the
debtor fails
or refuses to honor a pre-existing agreement with the creditor to keep
the property insured;
b. the
debtor fails
or refuses to take commercially reasonable steps to maintain the
property;
or
c. the
property
has depreciated to an extent that the creditor is undersecured.
Upon showing of a lack
of adequate protection, the court shall order the rehabilitation
receiver
to (a) make arrangements to provide for the insurance or maintenance of
the property, or (b) to make payments or otherwise provide additional
or
replacement security that the obligation is fully secured. If such
arrangements
are not feasible, the court shall modify the stay order to allow the
secured
creditor lacking adequate protection to enforce its claim against the
debtor;
Provided, however, that the court may deny the creditor the remedies in
this paragraph if such remedies would prevent the continuation of the
debtor
as a going concern or otherwise prevent the approval and implementation
of a rehabilitation plan.
Sec. 13. Qualifications
of the Rehabilitation Receiver. — In the appointment of the
Rehabilitation
Receiver, the following qualifications shall be taken into
consideration
by the court:chanroblesvirtuallawlibrary
a. Expertise
and
acumen to manage and operate a business similar in size and complexity
to that of the debtor;
b. Knowledge
in
management, finance, and rehabilitation of distressed companies;
c. General
familiarity
with the rights of creditors in suspension of payments or
rehabilitation
and general understanding of the duties and obligations of a
Rehabilitation
Receiver;
d. Good
moral character,
independence, and integrity;
e. Lack of a
conflict
of interest as defined in these Rule; and
f.
Willingness and
ability to file a bond in such amount as may be determined by the court.
Without limiting the
generality of the following, a Rehabilitation Receiver may be deemed to
have a conflict of interest if:chanroblesvirtuallawlibrary
a. He is a
creditor
or stockholder of the debtor;
b. He is
engaged
in a line of business which competes with the debtor;
c. He is, or
was
within two (2) years from the filing of the petition, a director,
officer,
or employee of the debtor or any of its present creditors, or the
auditor
or accountant of the debtor;
d. He is, or
was
within two (2) years from the filing of the petition, an underwriter of
the outstanding securities of the debtor;
e. He is
related
by consanguinity or affinity within the fourth civil degree to any
creditor,
stockholder, director, officer, employee, or underwriter of the debtor;
or
f. He has
any other
direct or indirect material interest in the debtor or any creditor.
Sec. 14. Powers and
Functions of the Rehabilitation Receiver. - The Rehabilitation
Receiver
shall not take over the management and control of the debtor but shall
closely oversee and monitor the operations of the debtor during the
pendency
of the proceedings, and for this purpose shall have the powers, duties
and functions of a receiver under Presidential
Decree No. 902-A, as amended, and the Rules
of Court.
The Rehabilitation
Receiver shall be considered as an officer of the court. He shall be
primarily
tasked to study the best way to rehabilitate the debtor and to ensure
that
the value of the debtor's property is reasonably maintained pending the
determination of whether or not the debtor should be rehabilitated, as
well as implement the rehabilitation plan after its approval.
Accordingly,
he shall have the following powers and functions:chanroblesvirtuallawlibrary
(a) To
verify the
accuracy of the petition, including its annexes such as the Schedule of
Debts and Liabilities and the Inventory of Assets submitted in support
of the petition;
(b) To
accept and
incorporate, when justified, amendments to the Schedule of Debts and
Liabilities;
(c) To
recommend
to the court the disallowance of claims and rejection of amendments to
the Schedule of Debts and Liabilities that lack sufficient proof and
justification;
(d) To
submit to
the court and make available for review by the creditors, a revised
Schedule
of Debts and Liabilities;
(e) To
investigate
the acts, conduct, properties, liabilities, and financial condition of
the debtor, the operation of its business and the desirability of the
continuance
thereof; and, any other matter relevant to the proceeding or to the
formulation
of a rehabilitation plan;
(f) To
examine under
oath the directors and officers of the debtor and any other witnesses
that
he may deem appropriate;
(g) To make
available
to the creditors documents and notices necessary for them to follow and
participate in the proceedings;
(h) To
report to
the court any fact ascertained by him pertaining to the causes of the
debtors'
problems, fraud, preferences, dispositions, encumbrances, misconduct,
mismanagement,
and irregularities, committed by the stockholders, directors,
management,
or any other person against the debtor;
(i) To
employ such
person or persons against such as lawyers, accountants, appraisers, an
staff as are necessary in performing his functions and duties as
Rehabilitation
Receiver;
(j) To
monitor the
operations of the debtor and to immediately report to the court any
material
adverse change in the debtor's business;
(k) To
evaluate
the existing assets and liabilities, earnings and operations of the
debtor;
(l) To
determine
and recommend to the court the best way to salvage and protect the
interests
of the creditors, stockholders, and the general public;
(m) To study
the
rehabilitation plan proposed by the debtor or any rehabilitation plan
submitted
during the proceedings, together with any comments made thereon;
(n) To
prohibit
and report to the court any encumbrance, transfer, or disposition of
the
debtor's property outside of the ordinary course of business or what is
allowed by the court;
(o) To
prohibit
and report to the court any payments outside of the ordinary course of
business;
(p) To have
unlimited
access to the debtor's employees, premises, books, records, and
financial
documents during business hours;
(q) To
inspect,
copy, photocopy, or photograph any document, paper, book, account, or
letter,
whether in the possession of the debtor or other persons;
(r) To gain
entry
into any property for the purpose of inspecting, measuring, surveying,
or photographing it or any designated relevant object or operation
thereon;
(s) To take
possession,
control, and custody of the debtor's assets;
(t) To
notify counterparties
and the court as to contracts that the debtor has decided to continue
to
perform or breach;
(u) To be
notified
of, and to attend all meetings of the board of directors and
stockholders
of the debtor;
(v) To
recommend
any modification of an approved rehabilitation plan as he may deem
appropriate;
(w) To bring
to
the attention of the court any material change affecting the debtor's
ability
to meet the obligations under the rehabilitation plan;
(x) To
recommend
the appointment of a management committee in the cases provided for
under
Presidential
Decree No. 902-A, as amended;
(y) To
recommend
the termination of the proceedings and the dissolution of the debtor if
he determines that the continuance in business of such entity is no
longer
feasible or profitable or no longer works to the best interest of the
stockholders,
parties-litigants, creditors, or the general public;
(z) To apply
to
the court for any order or directive that he may deem necessary or
desirable
to aid him in the exercise of his powers and performance of his duties
and functions; and
(aa) To
exercise
such other powers as may from time to time be conferred upon him by the
court.
Sec. 15. Oath and
Bond. - Before entering upon his powers duties, and functions, the
Rehabilitation Receiver must be sworn to perform them faithfully, and
must
post a bond executed in favor of the debtor in such sum as the court
may
direct, to guarantee that he will faithfully discharge his duties and
obey
the orders of the court. If necessary, he shall also declare under oath
that he will perform the duties of a trustee of the assets of the
debtor,
will act honestly and in good faith, and deal with the assets of the
debtor
in a commercially reasonable manner.
Sec. 16. Fees
and Expenses. - The Rehabilitation Receiver and the persons hired
by
him shall be entitled to reasonable professional fees and reimbursement
of expenses which shall be considered as administrative expenses.
Sec. 17. Immunity
from Suit. - The Rehabilitation Receiver shall not be subject to
any
action, claim, or demand in connection with any act done or omitted by
him in good faith in the exercise of his functions and powers herein
conferred.
Sec. 18. Reports.
- The Rehabilitation Receiver shall report every three months to the
court
or as often as the court may require on the general condition of the
debtor.
Sec. 19. Dismissal
of Rehabilitation Receiver. - A Rehabilitation Receiver may be
dismissed
by the court, upon motion or motu proprio, on account of
conflict
of interest, or on any of the grounds for removing a trustee under the
general principles of trusts.
Sec. 20. Comments
on or Opposition to the Rehabilitation Plan. - Any creditor or
interested
party or record may file comments on or opposition to the proposed
rehabilitation
plan, with a copy given to the Rehabilitation Receiver, not later than
one hundred twenty (120) days from the date of the initial hearing. The
court shall conduct summary and non-adversarial proceedings to receive
evidence, if necessary, in hearing the comments and opposition to the
plan.
Sec. 21. Creditors'
Meetings. - At any time before he submits his evaluation on the
rehabilitation
plan to the court as prescribed in section 9, Rule 4 of this Rule, the
Rehabilitation Receiver may, either alone or with the debtor, meet with
the creditors or any interested party to discuss the plan with a view
to
clarifying or resolving any matter connected therewith.
Sec. 22. Modification
of the Proposed Rehabilitation Plan. - The debtor may modify its
rehabilitation
plan in the light of the comments of the Rehabilitation Receiver and
creditors
or any interested party and submit a revised or substitute
rehabilitation
plan for the final approval of the court. Such rehabilitation plan must
be submitted to the court not later than one (1) year from the date of
the initial hearing.
Sec. 23. Approval
of the Rehabilitation Plan. - The court may approve a
rehabilitation
plan even over the opposition of creditors holding a majority of the
total
liabilities of the debtor if, in its judgment, the rehabilitation of
the
debtor is feasible and the opposition of the creditors is manifestly
unreasonable.
In determining
whether
or not the opposition of the creditors is manifestly unreasonable, the
court shall consider the following:chanroblesvirtuallawlibrary
a. That the
plan
would likely provide the objecting class of creditors with compensation
greater than that which they would have received if the assets of the
debtor
were sold by a liquidator within a three-month period;
b. That the
shareholders
or owners of the debtor lose at least their controlling interest as a
result
of the plan; and
c. The
Rehabilitation
Receiver has recommended approval of the plan.
In approving the rehabilitation
plan, the court shall issue the necessary orders or processes for its
immediate
and successful implementation. It may impose such terms, conditions, or
restrictions as the effective implementation and monitoring thereof may
reasonably require, or for the protection and preservation of the
interests
of the creditors should the plan fail.
Sec. 24. Effects
of the Rehabilitation Plan. - The approval of the rehabilitation
plan
by the court shall result in the following:chanroblesvirtuallawlibrary
a. The plan
and
its provisions shall be binding upon the debtor and all persons who may
be affected by it, including the creditors, whether or not such persons
have participated in the proceedings or opposed the plan or whether or
not their claims have been scheduled;
b. The
debtor shall
comply with the provisions of the plan and shall take all actions
necessary
to carry out the plan;
c. Payments
shall
be made to the creditors in accordance with the provisions of the plan;
d. Contracts
and
other arrangements between the debtor and its creditors shall be
interpreted
as continuing to apply to the extent that they do not conflict with the
provisions of the plan; and
e. Any
compromises
on amounts or rescheduling of timing of payments by the debtor shall be
binding on creditors regard less of whether or not the plan is
successfully
implemented.
Sec. 25. Revocation
of the Rehabilitation Plan on Grounds of Fraud. - On motion or motu
proprio, within ninety (90) days from the approval of the
rehabilitation
plan, and after notice and hearing, the court may revoke the approval
thereof
on the ground that the same was secured through fraud.
Sec. 26. Alteration
or Modification of the Rehabilitation Plan. - An approved
rehabilitation
plan may, on motion, be altered or modified if, in the judgment of the
court, such alteration or modification is necessary to achieve the
desired
targets or goals set forth therein.
Sec. 27. Termination
of Proceedings. - In case of the failure of the debtor to submit
the
rehabilitation plan, or the disapproval thereof by the court, or the
failure
of the rehabilitation of the debtor because of failure to achieve the
desired
targets or goals as set forth therein, or the failure of the said
debtor
to perform its obligations under the said plan, or a determination that
the rehabilitation plan may no longer be implemented in accordance with
its terms, conditions, restrictions, or assumptions, the court shall
upon
motion, motu proprio, or upon the recommendation of the
Rehabilitation
Receiver, terminate the proceedings. The proceedings shall also
terminate
upon the successful implementation of the rehabilitation plan.
Sec. 28. Discharge
of the Rehabilitation Receiver. - Upon termination of the
rehabilitation
proceedings, the Rehabilitation Receiver shall submit his final report
and accounting within such period of time as the court will allow him.
Upon approval of his report and accounting, the court shall order his
discharge.
Rule
5 FINAL
PROVISIONS
Section 1. Severability.
- If any provision or section of these Rules is held invalid, the other
provisions or sections shall not be affected thereby.
Sec. 2. Effectivity.
- These Rules shall take effect on December 15, 2000 following its
publication
in two (2) newspapers of general circulation in the Philippines.
ANNEX
"A"
AFFIDAVIT
OF GENERAL FINANCIAL CONDITION
(1) Are you
an
officer of the debtor referred to in these proceedings?
(2) What is
your
full name and what position do you hold in the debtor?
(3) What is
the
full name of the debtor and what is the address of its head office?
(4) When was
it
formed or incorporated?
(5) When did
the
debtor commence business?
(6) What is
the
nature of its business? What is the market share of the debtor in the
industry
in which it is engaged?
(7) Who are
the
parties, members, or stockholders? How many employees?
(8) What is
the
capital of the debtor?
(9) What is
the
capital contribution and what is the amount of the capital, paid and
unpaid,
of each of the partners or shareholders?
(10) Do any
of
these people hold the shares in trust for others?
(11) Who are
the
directors and officers of the debtors?
(12) Has the
debtor
any subsidiary corporation? If so, give particulars?
(13) Has the
debtor
properly maintained its books and are they updated?
(14) Were
the
books audited annually?
(15) If so,
what
is the name of the auditor and when was the last audited statement
drawn
up?
(16) Have
all
proper returns been made to the various government agencies requiring
same?
(17) When
did
the debtor first become aware of its problems?
(18) Has the
debtor
within the twelve months preceding the filing of the petition:
(a) made
any payments,
returned any goods or delivered any property to any of its creditors,
except
in the normal course of business?
(b)
executed any
mortgage, pledge, or security over any of its properties in favor of
any
creditor?
(c)
transferred
or disposed of any of its properties in payment of any debt?
(d) sold,
disposed
of, or removed any of its property except in the ordinary course of
business?
(e) sold
any merchandise
at less than fair market value or purchased merchandise or services at
more than fair market value?
(f) made
or been
a party to any settlement of property in favor of any person?
If, so,
give particulars.
(19) Has the
debtor
recorded all sales or dispositions of assets?
(20) What
were
the sales for the last three years and what percentage of the sales
represented
the profit or mark-up?
(21) What
were
the profits or losses for the debtor for the last three years?
(22) What
are
the causes of the problems of the debtor? Please provide particulars?
(23) When
did
you first notice these problems and what actions did the debtor take to
rectify them?
(24) How
much
do you estimate is needed to rehabilitate the debtor?
(25) Has any
person
expressed interest in investing new money into the debtor?
(26) Are
there
any pending and threatened legal actions against the debtor? If so,
please
provide particulars.
(27) Has the
debtor
discussed any restructuring or repayment plan with any of the
creditors?
Please provide status and details.
(28) Has any
creditor
expressed interest in restructuring the debts of the debtor? If so,
please
give particulars.
(29) Have
employees'
wages and salaries been kept current? If not, how much are in arrears
and
what time period do the arrears represent?
(30) Have
obligation
to the government and its agencies been kept current? If not, how much
are in arrears and what time period do the arrears represent?
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