Article 61Supplement v1, p. 61

COMMERCIAL LAWS SUPPLEMENT

SECTION 95. Action on the Petition. — If the court finds

the petition sufficient in form and substance, it shall,

within five (5) working days from the filing of the petition,

issue an Order:

(a) calling a meeting of all the creditors named in the

schedule of debts and liabilities at such time not less than

fifteen (15) days nor more than forty (40) days from the

date of such Order and designating the date, time and

place of the meeting;

(b)

directing

such

creditors to prepare and present

written evidence of their claims before the scheduled

creditors' meeting;

(c)

directing the publication of the said order in a

newspaper

of

general

circulation

published

in

the

province or city in which the petition is filed once a week

for two (2) consecutive weeks, with the first publication to

be made within seven (7) days from the time of the

issuance of the Order;

(d) directing the clerk of court to cause the sending of a

copy of the Order by registered mail, postage prepaid, to

all

creditors

named

in

the

schedule

of

debts

and

liabilities;

(e)

forbidding

the

individual

debtor

from

selling,

transferring, encumbering or disposing in any manner of

his property, except those used in the ordinary operations

of commerce or of industry in which the petitioning

individual debtor is engaged, so long as the proceedings

relative to the suspension of payments are pending;

(f) prohibiting the individual debtor from making any

payment outside of the necessary or legitimate expenses

of his business or industry, so long as the proceedings

relative to the suspension of payments are pending; and

(g)

appointing

a

commissioner

to

preside over the

creditors' meeting.

SECTION 96. Actions Suspended. — Upon motion filed by

the individual debtor, the court may issue an order

suspending any pending execution against the individual

debtor: Provided, that properties held as security by

secured

creditors

shall

not

be

the subject of such

suspension order. The suspension order shall lapse when

three (3) months shall have passed without the proposed

agreement being accepted by the creditors or as soon as

such agreement is denied.

No creditor shall sue or institute proceedings to collect his

claim from the debtor from the time of the filing of the

petition for suspension of payments and for as long as

proceedings remain pending except:

(a)

those creditors having claims for personal labor,

maintenance, expense of last illness and funeral of the

wife or children of the debtor incurred in the sixty (60)

days immediately prior to the filing of the petition; and

(b) secured creditors.

SECTION

97.

Creditors' Meeting. — The presence of

creditors

holding

claims

amounting

to

at

least

three-fifths (3/5) of the liabilities shall be necessary for

holding a meeting. The commissioner appointed by the

court shall preside over the meeting and the clerk of

court shall act as the secretary thereof, subject to the

following rules:

(a) The clerk shall record the creditors present and

amount of their respective claims;

(b) The commissioner shall examine the written evidence

of the claims. If the creditors present hold at least

three-fifths (3/5) of the liabilities of the individual debtor,

the commissioner shall declare the meeting open for

business;

(c) The creditors and individual debtor shall discuss the

propositions in the proposed agreement and put them to

a vote;

(d) To form a majority, it is necessary:

(1) that two-thirds (2/3) of the creditors voting unite upon

the same proposition; and

(2) that the claims represented by said majority vote

amount to at least three-fifths (3/5) of the total liabilities

of the debtor mentioned in the petition; and

(e) After the result of the voting has been announced, all

protests made against the majority vote shall be drawn

up, and the commissioner and the individual debtor

together with all creditors taking part in the voting shall

sign the affirmed propositions.

No creditor who incurred his credit within ninety (90)

days prior to the filing of the petition shall be entitled to

vote.

SECTION 98. Persons Who May Refrain from Voting. —

Creditors who are unaffected by the Suspension Order

may refrain from attending the meeting and from voting

therein.

Such

persons

shall

not

be

bound

by

any

agreement determined upon at such meeting, but if they

should join in the voting they shall be bound in the same

manner as are the other creditors.

SECTION 99. Rejection of the Proposed Agreement. —

The proposed agreement shall be deemed rejected if the

number of creditors required for holding a meeting do

not attend thereat, or if the two (2) majorities mentioned

in Section 97 hereof are not in favor thereof. In such

instances, the proceeding shall be terminated without

recourse and the parties concerned shall be at liberty to

enforce the rights which may correspond to them.

SECTION

100.

Objections.

—

If

the

proposal of the

individual

debtor,

or any amendment thereof made

during the creditors' meeting, is approved by the majority

of creditors in accordance with Section 97 hereof, any

creditor who attended the meeting and who dissented

from and protested against the vote of the majority may

file an objection with the court within ten (10) days from

the date of the last creditors' meeting. The causes for

which objection may be made to the decision made by

the majority during the meeting shall be: (a) defects in

the call for the meeting, in the holding thereof, and in the

deliberations had thereat which prejudice the rights of

the creditors; (b) fraudulent connivance between one or

more creditors and the individual debtor to vote in favor

of the proposed agreement; or (c) fraudulent conveyance

of claims for the purpose of obtaining a majority. The

court shall hear and pass upon such objection as soon as

possible and in a summary manner.

In case the decision of the majority of creditors to approve

the

individual

debtor's proposal or any amendment

thereof made during the creditors' meeting is annulled

by the court, the court shall declare the proceedings

terminated and the creditors shall be at liberty to exercise

the rights which may correspond to them.

SECTION 101. Effects of Approval of Proposed Agreement.

— If the decision of the majority of the creditors to

approve the proposed agreement or any amendment

thereof made during the creditors' meeting is upheld by

the court, or when no opposition or objection to said

decision has been presented, the court shall order that

the agreement be carried out and all parties bound

thereby to comply with its terms.

The

court may also issue all orders which may be

necessary or proper to enforce the agreement on motion

of any affected party. The Order confirming the approval

of the proposed agreement on any amendment thereof

made during the creditors' meeting shall be binding

upon all creditors whose claims are included in the

schedule

of

debts

and

liabilities

submitted

by

the

individual debtor and who were properly summoned, but

not upon: (a) those creditors having claims for personal

labor, maintenance, expenses of last illness and funeral of

the wife or children of the debtor incurred in the sixty (60)

days immediately prior to the filing of the petition, and (b)

secured creditors who failed to attend the meeting on

refrained from voting therein.

SECTION 102. Failure of Individual Debtor to Perform

Agreement. — If the individual debtor fails, wholly or in

part, to perform the agreement decided upon at the

meeting of the creditors, all the rights which the creditors

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