6 Questions
What percentage of creditors must approve the Out-of-Court Rehabilitation Agreement (OCRA) for it to be valid?
85%
What is the first step in the procedure for Out-of-Court Rehabilitation?
Petition for Court Assistance to Execute OCRA/Implement Standstill Agreement
Which of the following is NOT a qualification for a Rehabilitation Receiver?
Must be related within the 5th degree
Which action is taken if there is no likelihood of rehabilitation for an insolvent juridical debtor during rehabilitation proceedings?
Petition with schedule, inventory and nominee
Who recommends the Management Committee for a debtor?
The Rehabilitation Receiver
For how many days does the standstill period last in Out-of-Court Rehabilitation?
120 days
Study Notes
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
A quiz on out-of-court rehabilitation, also known as informal restructuring agreement, including its requirements and implementation. Approved by creditors representing 85% of total liabilities.
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