Article 57Supplement v1, p. 57

COMMERCIAL LAWS SUPPLEMENT

(c) the property has depreciated to an extent that the

creditor is under secured.

Upon showing of a lack of protection, the court shall

order the debtor or the rehabilitation receiver to make

arrangements

to

provide

for

the

insurance

or

maintenance of the property; or to make payments or

otherwise provide additional or replacement security

such

that

the

obligation

is

fully

secured.

If

such

arrangements are not feasible, the court may modify the

Stay Order to allow the secured creditor lacking adequate

protection to enforce its security claim against the debtor:

Provided, however, That the court may deny the creditor

the remedies in this paragraph if the property subject of

the enforcement is required for the rehabilitation of the

debtor.

(I) Administration of Proceedings.

SECTION 62. Contents of a Rehabilitation Plan. — The

Rehabilitation Plan shall, as a minimum:

(a) specify the underlying assumptions, the financial

goals and the procedures proposed to accomplish such

goals;

(b) compare the amounts expected to be received by the

creditors under the Rehabilitation Plan with those that

they will receive if liquidation ensues within the next one

hundred twenty (120) days;

(c) contain information sufficient to give the various

classes of creditors a reasonable basis for determining

whether supporting the Plan is in their financial interest

when compared to the immediate liquidation of the

debtor, including any reduction of principal interest and

penalties payable to the creditors;

(d) establish classes of voting creditors;

(e)

establish

subclasses

of

voting

creditors

if

prior

approval has been granted by the court;

(f) indicate how the insolvent debtor will be rehabilitated

including, but not limited to, debt forgiveness, debt

rescheduling,

reorganization

or

quasi-reorganization,

dacion en pago, debt-equity conversion and sale of the

business (or parts of it) as a going concern, or setting-up

of a new business entity or other similar arrangements as

may be necessary to restore the financial well-being and

viability of the insolvent debtor;

(g)

specify

the treatment of each class or subclass

described in subsections (d) and (e);

(h) provide for equal treatment of all claims within the

same

class

or

subclass,

unless

a

particular creditor

voluntarily agrees to less favorable treatment;

(i) ensure that the payments made under the plan follow

the priority established under the provisions of the Civil

Code on concurrence and preference of credits and other

applicable laws;

(j) maintain the security interest of secured creditors and

preserve the liquidation value of the security unless such

has been waived or modified voluntarily;

(k)

disclose

all

payments

to

creditors

for

pre-commencement debts made during the proceedings

and the justifications thereof;

(l) describe the disputed claims and the provisioning of

funds to account for appropriate payments should the

claim be ruled valid or its amount adjusted;

(m) identify the debtor's role in the implementation of the

Plan;

(n) state any rehabilitation covenants of the debtor, the

breach of which shall be considered a material breach of

the Plan;

(o) identify those responsible for the future management

of the debtor and the supervision and implementation of

the Plan, their affiliation with the debtor and their

remuneration;

(p) address the treatment of claims arising after the

confirmation of the Rehabilitation Plan;

(q) require the debtor and its counter-parties to adhere to

the terms of all contracts that the debtor has chosen to

confirm;

(r)

arrange

for

the

payment

of

all

outstanding

administrative expenses as a condition to the Plan's

approval

unless such condition has been waived in

writing by the creditors concerned;

(s) arrange for the payment of all outstanding taxes and

assessments,

or

an adjusted amount pursuant to a

compromise settlement with the BIR or other applicable

tax authorities;

(t) include a certified copy of a certificate of tax clearance

or evidence of a compromise settlement with the BIR;

(u) include a valid and binding resolution of a meeting of

the debtor's stockholders to increase the shares by the

required amount in cases where the Plan contemplates

an additional issuance of shares by the debtor;

(v) state the compensation and status, if any, of the

rehabilitation receiver after the approval of the Plan; and

(w) contain provisions for conciliation and/or mediation as

a prerequisite to court assistance or intervention in the

event

of

any

disagreement

in the interpretation or

implementation of the Rehabilitation Plan.

SECTION 63. Consultation with Debtor and Creditors. — If

the

court

gives

due

course

to

the

petition,

the

rehabilitation receiver shall confer with the debtor and all

the classes of creditors, and may consider their views and

proposals in the review, revision or preparation of a new

Rehabilitation Plan.

SECTION 64. Creditor Approval of Rehabilitation Plan. —

The rehabilitation receiver shall notify the creditors and

stakeholders that the Plan is ready for their examination.

Within twenty (20) days from the said notification, the

rehabilitation receiver shall convene the creditors, either

as a whole or per class, for purposes of voting on the

approval of the Plan. The Plan shall be deemed rejected

unless approved by all classes of creditors whose rights

are adversely modified or affected by the Plan. For

purposes of this section, the Plan is deemed to have been

approved by a class of creditors if members of the said

class holding more than fifty percent (50%) of the total

claims of the said class vote in favor of the Plan. The votes

of the creditors shall be based solely on the amount of

their respective claims based on the registry of claims

submitted by the rehabilitation receiver pursuant to

Section 44 hereof.

Notwithstanding the rejection of the Rehabilitation Plan,

the court may confirm the Rehabilitation Plan if all of the

following circumstances are present:

(a)

The

Rehabilitation

Plan

complies

with

the

requirements specified in this Act;

(b)

The

rehabilitation

receiver

recommends

the

confirmation of the Rehabilitation Plan;

(c) The shareholders, owners or partners of the juridical

debtor lose at least their controlling interest as a result of

the Rehabilitation Plan; and

(d) The Rehabilitation Plan would likely provide the

objecting class of creditors with compensation which has

a net present value greater than that which they would

have received if the debtor were under liquidation.

SECTION 65. Submission of Rehabilitation Plan to the

Court. — If the Rehabilitation Plan is approved, the

rehabilitation receiver shall submit the same to the court

for confirmation. Within five (5) days from receipt of the

Rehabilitation Plan, the court shall notify the creditors

that the Rehabilitation Plan has been submitted for

confirmation, that any creditor may obtain copies of the

Rehabilitation Plan and that any creditor may file an

objection thereto.

SECTION 66. Filing of Objections to Rehabilitation Plan.

— A creditor may file an objection to the Rehabilitation

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