Podcast
Questions and Answers
Which of the following is NOT included as a debtor under the Financial Rehabilitation and Insolvency Act?
Which of the following is NOT included as a debtor under the Financial Rehabilitation and Insolvency Act?
- Corporation
- Partnership
- Banks (correct)
- Sole Proprietorship
What majority vote is needed to approve a proposed agreement for the suspension of payment for an individual debtor?
What majority vote is needed to approve a proposed agreement for the suspension of payment for an individual debtor?
- Three-fourths vote
- Unanimous vote
- Two-thirds vote
- Majority vote (correct)
What is the minimum liability amount that necessitates liquidation for an individual debtor?
What is the minimum liability amount that necessitates liquidation for an individual debtor?
- ₱1,000,000
- ₱250,000
- ₱500,000 (correct)
- ₱100,000
Which order is part of individual liquidation proceedings?
Which order is part of individual liquidation proceedings?
Which type of rehabilitation begins extrajudicially before becoming judicial?
Which type of rehabilitation begins extrajudicially before becoming judicial?
What is an essential requirement for a creditor to initiate an involuntary court-supervised rehabilitation?
What is an essential requirement for a creditor to initiate an involuntary court-supervised rehabilitation?
What follows a petition in the procedure for court-supervised rehabilitation?
What follows a petition in the procedure for court-supervised rehabilitation?
Which item is NOT excluded by a Suspension Order for an individual debtor?
Which item is NOT excluded by a Suspension Order for an individual debtor?
What percentage of liabilities must creditors representing approve to submit a rehabilitation plan in pre-negotiated rehabilitation?
What percentage of liabilities must creditors representing approve to submit a rehabilitation plan in pre-negotiated rehabilitation?
Which type of debtor includes both Sole Proprietorships and Corporations?
Which type of debtor includes both Sole Proprietorships and Corporations?
Study Notes
Financial Rehabilitation and Insolvency Act (RA 10142)
- Provides for the rehabilitation or liquidation of financially distressed enterprises and individuals
Rehabilitation
- Suspends payment to creditors to allow debtor to restructure debts
- Involves negotiation with creditors to agree on a rehabilitation plan
- Has a "cram down effect" where a plan is imposed on dissenting creditors if approved by the required majority
Debtor
- Includes sole proprietorships, partnerships, corporations, and individuals
- Excludes banks, insurance and pre-need companies, and national and local government agencies
Individual Debtor
- Can file for suspension of payment to obtain debt moratorium without reducing debt
- Must file petition with schedule of debts and liabilities, inventory of assets, and proposed agreement
- Suspension order excludes compensation, illness and funeral expenses, and secured creditors
- Requires approval of proposed agreement by majority vote
- Can file for voluntary liquidation (petition to be declared insolvent)
- Can be petitioned for involuntary liquidation by creditors
- Requires liabilities exceeding P500,000 for liquidation
Individual Liquidation Proceeding
- Involves filing a petition and show cause order
- Leads to a liquidation order, custody order, and execution order
Juridical Debtor (Corporation/Partnership)
- Can undergo court-supervised rehabilitation, pre-negotiated rehabilitation, or liquidation
Court-Supervised Rehabilitation
- Initiated by debtor (voluntary) or creditor (involuntary) petition
- Requires establishing insolvency and viability of rehabilitation
- Involves a procedure of petition, commencement order, publisher's affidavit, registry of claims, initial hearing, report of rehab receiver, and dismissal or proceeding to liquidation
Pre-Negotiated Rehabilitation
- Involves an extrajudicial agreement between debtor and creditors, then judicial approval
- Requires a rehabilitation plan approved by creditors representing 2/3 of liabilities (at least 50% both of secured and unsecured)
- Involves a procedure of petition, commencement order, objections, hearing, and approval
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Description
This quiz covers Module 4 of Business Laws, focusing on the Financial Rehabilitation and Insolvency Act (RA 10142) and its provisions on rehabilitation, insolvency, and proceedings. It's perfect for Atty Precious Swelan Santiago's midterm exam.
