Article 58Supplement v1, p. 58

COMMERCIAL LAWS SUPPLEMENT

Plan within twenty (20) days from receipt of notice from

the

court

that

the

Rehabilitation

Plan

has

been

submitted

for

confirmation.

Objections

to

a

Rehabilitation Plan shall be limited to the following:

(a) The creditors' support was induced by fraud;

(b)

The

documents

or

data

relied

upon

in

the

Rehabilitation Plan are materially false or misleading; or

(c) The Rehabilitation Plan is in fact not supported by the

voting creditors.

SECTION 67. Hearing on the Objections. — If objections

have been submitted during the relevant period, the

court shall issue an order setting the time and date for

the hearing or hearings on the objections.

If the court finds merit in the objection, it shall order the

rehabilitation receiver or other party to cure the defect,

whenever

feasible. If the court determines that the

debtor acted in bad faith, or that it is not feasible to cure

the defect, the court shall convert the proceedings into

one for the liquidation of the debtor under Chapter V of

this Act.

SECTION 68. Confirmation of the Rehabilitation Plan. — If

no objections are filed within the relevant period or, if

objections are filed, the court finds them lacking in merit,

or determines that the basis for the objection has been

cured, or determines that the debtor has complied with

an order to cure the objection, the court shall issue an

order confirming the Rehabilitation Plan.

The

court

may

confirm

the

Rehabilitation

Plan

notwithstanding unresolved disputes over claims if the

Rehabilitation Plan has made adequate provisions for

paying such claims.

For the avoidance of doubt, the provisions of other laws to

the contrary notwithstanding, the court shall have the

power to approve or implement the Rehabilitation Plan

despite the lack of approval, or objection from the

owners, partners or stockholders of the insolvent debtor:

Provided, That the terms thereof are necessary to restore

the financial well-being and viability of the insolvent

debtor.

SECTION 69. Effect of Confirmation of the Rehabilitation

Plan. — The confirmation of the Rehabilitation Plan by

the court shall result in the following:

(a) The Rehabilitation Plan and its provisions shall be

binding upon the debtor and all persons who may be

affected by it, including the creditors, whether or not such

persons have participated in the proceedings or opposed

the Rehabilitation Plan or whether or not their claims

have been scheduled;

(b) The debtor shall comply with the provisions of the

Rehabilitation Plan and shall take all actions necessary to

carry out the Plan;

(c) Payments shall be made to the creditors in accordance

with the provisions of the Rehabilitation Plan;

(d)

Contracts

and

other arrangements between the

debtor and its creditors shall be interpreted as continuing

to apply to the extent that they do not conflict with the

provisions of the Rehabilitation Plan;

(e) Any compromises on amounts or rescheduling of

timing of payments by the debtor shall be binding on

creditors

regardless

of

whether

or

not

the

Plan is

successfully implemented; and

(f) Claims arising after approval of the Plan that are

otherwise not treated by the Plan are not subject to any

Suspension Order.

The Order confirming the Plan shall comply with Rule 36

of the Rules of Court : Provided, however, That the court

may maintain jurisdiction over the case in order to resolve

claims against the debtor that remain contested and

allegations that the debtor has breached the Plan.

SECTION 70. Liability of General Partners of a Partnership

for Unpaid Balances Under an Approved Plan. — The

approval of the Plan shall not affect the rights of creditors

to pursue actions against the general partners of a

partnership to the extent they are liable under relevant

legislation for the debts thereof.

SECTION 71. Treatment of Amounts of Indebtedness or

Obligations Forgiven or Reduced. — Amounts of any

indebtedness

or

obligations

reduced

or

forgiven

in

connection with a Plan's approval shall not be subject to

any tax, in furtherance of the purposes of this Act.

SECTION

72.

Period

for

Confirmation

of

the

Rehabilitation Plan. — The court shall have a maximum

period of one (1) year from the date of the filing of the

petition to confirm a Rehabilitation Plan.

If no Rehabilitation Plan is confirmed within the said

period, the proceedings may, upon motion or motu

proprio, be converted into one for the liquidation of the

debtor.

SECTION

73. Accounting Discharge of Rehabilitation

Receiver. — Upon the confirmation of the Rehabilitation

Plan, the rehabilitation receiver shall provide a final report

and accounting to the court. Unless the Rehabilitation

Plan specifically requires and describes the role of the

rehabilitation

receiver

after

the

approval

of

the

Rehabilitation

Plan,

the

court

shall

discharge

the

rehabilitation receiver of his duties.

(J) Termination of Proceedings.

SECTION

74.

Termination

of

Proceedings.

—

The

rehabilitation proceedings under Chapter II shall, upon

motion by any stakeholder or the rehabilitation receiver,

be terminated by order of the court either declaring a

successful implementation of the Rehabilitation Plan or a

failure of rehabilitation.

There is failure of rehabilitation in the following cases:

(a) Dismissal of the petition by the court;

(b) The debtor fails to submit a Rehabilitation Plan;

(c)

Under

the Rehabilitation Plan submitted by the

debtor, there is no substantial likelihood that the debtor

can be rehabilitated within a reasonable period;

(d) The Rehabilitation Plan or its amendment is approved

by the court but in the implementation thereof, the

debtor fails to perform its obligations thereunder, or there

is a failure to realize the objectives, targets or goals set

forth therein, including the timelines and conditions for

the settlement of the obligations due to the creditors and

other claimants;

(e) The commission of fraud in securing the approval of

the Rehabilitation Plan or its amendment; and

(f) Other analogous circumstances as may be defined by

the rules of procedure.

Upon a breach of, or upon a failure of the Rehabilitation

Plan, the court, upon motion by an affected party, may:

(1) issue an order directing that the breach be cured

within a specified period of time, failing which the

proceedings may be converted to a liquidation;

(2)

issue

an order converting the proceedings to a

liquidation;

(3) allow the debtor or rehabilitation receiver to submit

amendments to the Rehabilitation Plan, the approval of

which shall be governed by the same requirements for

the

approval

of

a

Rehabilitation

Plan

under

this

subchapter;

(4) issue any other order to remedy the breach consistent

with the present regulation, other applicable law and the

best interests of the creditors; or

(5) enforce the applicable provisions of the Rehabilitation

Plan through a writ of execution.

SECTION 75. Effects of Termination. — Termination of the

proceedings shall result in the following:

(a) The discharge of the rehabilitation receiver, subject to

his submission of a final accounting; and

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