Article 55Supplement v1, p. 55

COMMERCIAL LAWS SUPPLEMENT

challenge to claim/s to the court, serving a certified copy

on the rehabilitation receiver and the creditor holding the

challenged claim/s. Upon the expiration of the thirty

(30)-day period, the rehabilitation receiver shall submit to

the court the registry of claims which shall include

undisputed

claims

that

have

not

been

subject

to

challenge.

SECTION 46. Appeal. — Any decision of the rehabilitation

receiver regarding a claim may be appealed to the court.

(E) Governance.

SECTION 47. Management. — Unless otherwise provided

herein, the management of the juridical debtor shall

remain with the existing management subject to the

applicable law/s and agreement/s, if any, on the election

or appointment of directors, managers or managing

partner. However, all disbursements, payments or sale,

disposal,

assignment,

transfer

or

encumbrance

of

property, or any other act affecting title or interest in

property,

shall

be

subject

to

the

approval

of

the

rehabilitation receiver and/or the court, as provided in the

following subchapter.

(F) Use, Preservation and Disposal of Assets and

Treatment

of

Assets

and

Claims

after

Commencement Date.

SECTION 48. Use or Disposition of Assets. — Except as

otherwise provided herein, no funds or property of the

debtor shall be used or disposed of except in the ordinary

course of business of the debtor, or unless necessary to

finance the administrative expenses of the rehabilitation

proceedings.

SECTION 49. Sale of Assets. — The court, upon application

of the rehabilitation receiver, may authorize the sale of

unencumbered

property

of

the

debtor

outside

the

ordinary course of business upon a showing that the

property, by its nature or because of other circumstance,

is

perishable,

costly

to

maintain,

susceptible

to

devaluation or otherwise in jeopardy.

SECTION 50. Sale or Disposal of Encumbered Property of

the Debtor and Assets of Third Parties Held by Debtor. —

The court may authorize the sale, transfer, conveyance or

disposal

of

encumbered

property

of

the debtor, or

property of others held by the debtor where there is a

security

interest pertaining to third parties under a

financial, credit or other similar transactions if, upon

application of the rehabilitation receiver and with the

consent of the affected owners of the property, or secured

creditor/s in the case of encumbered property of the

debtor

and,

after

notice

and

hearing,

the

court

determines that:

(a) such sale, transfer, conveyance or disposal is necessary

for the continued operation of the debtor's business; and

(b) the debtor has made arrangements to provide a

substitute lien or ownership right that provides an equal

level of security for the counter-party's claim or right.

Provided, That properties held by the debtor where the

debtor has authority to sell such as trust receipt or

consignment arrangements may be sold or disposed of

by the debtor, if such sale or disposal is necessary for the

operation of the debtor's business, and the debtor has

made

arrangements

to

provide a substitute lien or

ownership right that provides an equal level of security for

the counter-party's claim or right.

Sale or disposal of property under this section shall not

give rise to any criminal liability under applicable laws.

SECTION 51. Assets of Debtor Held by Third Parties. — In

the case of possessory pledges, mechanic's liens or

similar claims, third parties who have in their possession

or control property of the debtor shall not transfer, convey

or otherwise dispose of the same to persons other than

the

debtor,

unless

upon

prior

approval

of

the

rehabilitation receiver. The rehabilitation receiver may

also:

(a)

demand

the

surrender

or

the

transfer

of

the

possession

or

control

of

such

property

to

the

rehabilitation receiver or any other person, subject to

payment of the claims secured by any possessory lien/s

thereon;

(b) allow said third parties to retain possession or control,

if such an arrangement would more likely preserve or

increase the value of the property in question or the total

value of the assets of the debtor; or

(c) undertake any other disposition of the said property as

may be beneficial for the rehabilitation of the debtor,

after notice and hearing, and approval of the court.

SECTION

52. Rescission or Nullity of Sale, Payment,

Transfer or Conveyance of Assets. — The court may

rescind or declare as null and void any sale, payment,

transfer or conveyance of the debtor's unencumbered

property or any encumbering thereof by the debtor or its

agents or representatives after the commencement date

which are not in the ordinary course of the business of

the debtor: Provided, however, That the unencumbered

property may be sold, encumbered or otherwise disposed

of upon order of the court after notice and hearing:

(a) if such are in the interest of administering the debtor

and facilitating the preparation and implementation of a

Rehabilitation Plan;

(b) in order to provide a substitute lien, mortgage or

pledge of property under this Act;

(c) for payments made to meet administrative expenses

as they arise;

(d) for payments to victims of quasi delicts upon a

showing that the claim is valid and the debtor has

insurance to reimburse the debtor for the payments

made;

(e) for payments made to repurchase property of the

debtor that is auctioned off in a judicial or extrajudicial

sale under this Act; or

(f) for payments made to reclaim property of the debtor

held pursuant to a possessory lien.

SECTION

53.

Assets

Subject to Rapid Obsolescence,

Depreciation and Diminution of Value. — Upon the

application of a secured creditor holding a lien against or

holder of an ownership interest in property held by the

debtor that is subject to potentially rapid obsolescence,

depreciation or diminution in value, the court shall, after

notice and hearing, order the debtor or rehabilitation

receiver to take reasonable steps necessary to prevent the

depreciation. If depreciation cannot be avoided and such

depreciation

is jeopardizing the security or property

interest of the secured creditor or owner, the court shall:

(a) allow the encumbered property to be foreclosed upon

by

the

secured

creditor

according

to

the

relevant

agreement between the debtor and the secured creditor,

applicable rules of procedure and relevant legislation:

Provided, That the proceeds of the sale will be distributed

in accordance with the order prescribed under the rules

of concurrence and preference of credits; or

(b) upon motion of, or with the consent of the affected

secured creditor or interest owner, order the conveyance

of a lien against or ownership interest in substitute

property

of

the

debtor

to

the

secured

creditor:

Provided, That

other

creditors

holding

liens

on such

property, if any, do not object 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 on the residual funds

from

the

sale

of

encumbered

property

during

the

proceedings; or

(d) allow the sale or disposition of the property: Provided,

That the sale or disposition will maximize the value of the

property for the benefit of the secured creditor and the

debtor, and the proceeds of the sale will be distributed in

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