Business Laws and Regulations: Out-of-Court Rehabilitation

Business Laws and Regulations: Rehabilitation and Liquidation

Rehabilitation Process

• A rehabilitation plan is deemed approved if not acted upon within 120 days from filing
• Out-of-Court Rehabilitation (OCRA) is an informal restructuring agreement approved by creditors representing 85% of total liabilities (67% secured and 75% unsecured)

Out-of-Court Rehabilitation (OCRA)

• No petition is filed in court for approval, but only for implementation
• Stand-still period of 120 days is approved by majority creditors, and the agreement is published to invite creditors

Procedure for OCRA

• Petition for Court Assistance to Execute OCRA/Implement Standstill Agreement
• Summons
• Summary Hearing

Liquidation for Insolvent Juridical Debtor

• Petition with schedule, inventory, and nominee, or Motion during the pendency of rehabilitation proceedings (if there is "no likelihood of being rehabilitated")
• Court orders publication and filing of Comment
• Approval of Liquidation Order
• Appointment of Liquidator
• Registry of Claims
• Liquidation Plan
• Completion and Termination

Rehabilitation Receiver

Qualifications

• Must be a citizen or resident
• Must have good moral character
• Must have knowledge and expertise
• Must have no conflict of interest (not a creditor, not in the same business, not an officer, not an underwriter, not related within 4th degree)

Duties

• Preserving assets
• Determining viability
• Preparing and implementing the plan

Management Committee

• Recommended by the Rehabilitation Receiver
• Responsible for management and control of the debtor