Article 60Supplement v1, p. 60

COMMERCIAL LAWS SUPPLEMENT

contemplated herein shall be effective and enforceable

not only against the contracting parties but also against

the other creditors: Provided, That (a) such agreement is

approved

by

creditors

representing

more

than

fifty

percent (50%) of the total liabilities of the debtor; (b)

notice thereof is published in a newspaper of general

circulation in the Philippines once a week for two (2)

consecutive weeks; and (c) the standstill period does not

exceed one hundred twenty (120) days from the date of

effectivity. The notice must invite creditors to participate

in

the

negotiation

for

out-of-court

rehabilitation

or

restructuring

agreement

and

notify

them

that

said

agreement will be binding on all creditors if the required

majority votes prescribed in Section 84 of this Act are

met.

SECTION

86.

Cram

Down

Effect.

—

A

restructuring/workout agreement or Rehabilitation Plan

that

is

approved

pursuant

to

an

informal

workout

framework referred to in this chapter shall have the same

legal effect as confirmation of a Plan under Section 69

hereof.

The

notice

of

the

Rehabilitation

Plan

or

restructuring agreement or Plan shall be published once

a week for at least three (3) consecutive weeks in a

newspaper of general circulation in the Philippines. The

Rehabilitation Plan or restructuring agreement shall take

effect upon the lapse of fifteen (15) days from the date of

the last publication of the notice thereof.

SECTION

87.

Amendment

or

Modification.

—

Any

amendment

of an out-of-court restructuring/workout

agreement or Rehabilitation Plan must be made in

accordance with the terms of the agreement and with

due notice on all creditors.

SECTION 88. Effect of Court Action or Other Proceedings.

— Any court action or other proceedings arising from, or

relating

to,

the

out-of-court

or

informal

restructuring/workout agreement or Rehabilitation Plan

shall not stay its implementation, unless the relevant

party is able to secure a temporary restraining order or

injunctive relief from the Court of Appeals.

SECTION 89. Court Assistance. — The insolvent debtor

and/or

creditor

may

seek

court

assistance

for

the

execution or implementation of a Rehabilitation Plan

under this chapter, under such rules of procedure as may

be promulgated by the Supreme Court.

CHAPTER V Liquidation of Insolvent Juridical

Debtors

SECTION

90.

Voluntary

Liquidation.

—

An

insolvent

debtor may apply for liquidation by filing a petition for

liquidation with the court. The petition shall be verified,

shall establish the insolvency of the debtor and shall

contain, whether as an attachment or as part of the body

of the petition:

(a)

a

schedule

of

the

debtor's

debts

and liabilities

including a list of creditors with their addresses, amounts

of claims and collaterals, or securities, if any;

(b) an inventory of all its assets including receivables and

claims against third parties; and

(c) the names of at least three (3) nominees to the

position of liquidator.

At any time during the pendency of court-supervised or

pre-negotiated

rehabilitation proceedings, the debtor

may also initiate liquidation proceedings by filing a

motion

in

the

same

court where the rehabilitation

proceedings are pending to convert the rehabilitation

proceedings into liquidation proceedings. The motion

shall be verified, shall contain or set forth the same

matters required in the preceding paragraph, and state

that the debtor is seeking immediate dissolution and

termination of its corporate existence.

If the petition or the motion, as the case may be, is

sufficient in form and substance, the court shall issue a

Liquidation Order mentioned in Section 112 hereof.

SECTION 91. Involuntary Liquidation. — Three (3) or more

creditors the aggregate of whose claims is at least either

One

million

pesos

(Php1,000,000.00)

or

at

least

twenty-five percent (25%) of the subscribed capital stock

or partner's contributions of the debtor, whichever is

higher, may apply for and seek the liquidation of an

insolvent debtor by filing a petition for liquidation of the

debtor with the court. The petition shall show that:

(a) there is no genuine issue of fact or law on the claim/s

of the petitioner/s, and that the due and demandable

payments thereon have not been made for at least one

hundred eighty (180) days or that the debtor has failed

generally to meet its liabilities as they fall due; and

(b) there is no substantial likelihood that the debtor may

be rehabilitated.

At

any

time

during

the

pendency

of

or

after

a

rehabilitation

court-supervised

or

pre-negotiated

rehabilitation proceedings, three (3) or more creditors

whose

claims

is

at

least

either

One

million

pesos

(Php1,000,000.00) or at least twenty-five percent (25%) of

the subscribed capital or partner's contributions of the

debtor, whichever is higher, may also initiate liquidation

proceedings by filing a motion in the same court where

the rehabilitation proceedings are pending to convert the

rehabilitation proceedings into liquidation proceedings.

The motion shall be verified, shall contain or set forth the

same matters required in the preceding paragraph, and

state

that

the

movants

are seeking the immediate

liquidation of the debtor.

If

the

petition

or

motion

is sufficient in form and

substance, the court shall issue an Order:

(1) directing the publication of the petition or motion in a

newspaper of general circulation once a week for two (2)

consecutive weeks; and

(2) directing the debtor and all creditors who are not the

petitioners to file their comment on the petition or

motion within fifteen (15) days from the date of last

publication.

If,

after

considering

the

comments

filed,

the

court

determines that the petition or motion is meritorious, it

shall issue the Liquidation Order mentioned in Section 112

hereof.

SECTION 92. Conversion by the Court into Liquidation

Proceedings. — During the pendency of court-supervised

or pre-negotiated rehabilitation proceedings, the court

may order the conversion of rehabilitation proceedings to

liquidation proceedings pursuant to: (a) Section 25 (c) of

this Act; or (b) Section 72 of this Act; or (c) Section 75 of

this Act; or (d) Section 90 of this Act; or at any other time

upon the recommendation of the rehabilitation receiver

that the rehabilitation of the debtor is not feasible.

Thereupon, the court shall issue the Liquidation Order

mentioned in Section 112 hereof.

SECTION 93. Powers of the Securities and Exchange

Commission (SEC). — The provisions of this chapter shall

not affect the regulatory powers of the SEC under Section

6 of Presidential Decree No. 902-A , as amended, with

respect to any dissolution and liquidation proceeding

initiated and heard before it.

CHAPTER VI Insolvency of Individual Debtors

(A) Suspension of Payments.

SECTION

94.

Petition.

—

An individual debtor who,

possessing sufficient property to cover all his debts but

foreseeing the impossibility of meeting them when they

respectively fall due, may file a verified petition that he be

declared in the state of suspension of payments by the

court of the province or city in which he has resided for six

(6) months prior to the filing of his petition. He shall

attach to his petition, as a minimum: (a) a schedule of

debts and liabilities; (b) an inventory of assets; and (c) a

proposed agreement with his creditors.

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