Article 64Supplement v1, p. 64

COMMERCIAL LAWS SUPPLEMENT

Provided, further, That nothing in this section shall be

construed to prevent a rehabilitation receiver, who was

administering the debtor prior to the commencement of

the liquidation, from being appointed as a liquidator.

SECTION 117. Oath and Bond of the Liquidator. — Prior to

entering upon his powers, duties and responsibilities, the

liquidator shall take an oath and file a bond, in such

amount to be fixed by the court, conditioned upon the

proper and faithful discharge of his powers, duties and

responsibilities.

SECTION 118. Qualifications of the Liquidator. — The

liquidator shall have the qualifications enumerated in

Section 29 hereof. He may be removed at any time by the

court for cause, either motu proprio or upon motion of

any creditor entitled to vote for the election of the

liquidator.

SECTION 119. Powers, Duties and Responsibilities of the

Liquidator. — The liquidator shall be deemed an officer of

the court with the principal duty of preserving and

maximizing the value and recovering the assets of the

debtor, with the end of liquidating them and discharging

to the extent possible all the claims against the debtor.

The powers, duties and responsibilities of the liquidator

shall include, but not be limited to:

(a) to sue and recover all the assets, debts and claims,

belonging or due to the debtor;

(b) to take possession of all the property of the debtor

except property exempt by law from execution;

(c) to sell, with the approval of the court, any property of

the debtor which has come into his possession or control;

(d) to redeem all mortgages and pledges, and to satisfy

any judgment which may be an encumbrance on any

property sold by him;

(e) to settle all accounts between the debtor and his

creditors, subject to the approval of the court;

(f) to recover any property or its value, fraudulently

conveyed by the debtor;

(g) to recommend to the court the creation of a creditors'

committee which will assist him in the discharge of his

functions and which shall have powers as the court

deems just, reasonable and necessary; and

(h)

upon

approval

of

the

court,

to

engage

such

professionals as may be necessary and reasonable to

assist him in the discharge of his duties.

In addition to the rights and duties of a rehabilitation

receiver, the liquidator shall have the right and duty to

take all reasonable steps to manage and dispose of the

debtor's assets with a view towards maximizing the

proceedings therefrom, to pay creditors and stockholders,

and to terminate the debtor's legal existence. Other

duties of the liquidator in accordance with this section

may be established by procedural rules.

A liquidator shall be subject to removal pursuant to

procedures for removing a rehabilitation receiver.

SECTION 120. Compensation of the Liquidator. — The

liquidator and the persons and entities engaged or

employed by him to assist in the discharge of his powers

and

duties

shall

be

entitled

to

such

reasonable

compensation as may be determined by the liquidation

court, which shall not exceed the maximum amount as

may be prescribed by the Supreme Court.

SECTION 121. Reporting Requirements. — The liquidator

shall make and keep a record of all moneys received and

all disbursements made by him or under his authority as

liquidator. He shall render a quarterly report thereof to

the court, which report shall be made available to all

interested parties. The liquidator shall also submit such

reports as may be required by the court from time to

time as well as a final report at the end of the liquidation

proceedings.

SECTION 122. Discharge of Liquidator. — In preparation

for the final settlement of all the claims against the

debtor, the liquidator will notify all the creditors, either by

publication in a newspaper of general circulation or such

other mode as the court may direct or allow, that he will

apply with the court for the settlement of his account and

his discharge from liability as liquidator. The liquidator

will file a final accounting with the court, with proof of

notice to all creditors. The accounting will be set for

hearing. If the court finds the same in order, the court will

discharge the liquidator.

(C) Determination of Claims.

SECTION 123. Registry of Claims. — Within twenty (20)

days from his assumption into office, the liquidator shall

prepare a preliminary registry of claims of secured and

unsecured creditors. Secured creditors who have waived

their security or lien, or have fixed the value of the

property subject of their security or lien by agreement

with the liquidator and is admitted as a creditor for the

balance, shall be considered as unsecured creditors. The

liquidator shall make the registry available for public

inspection and provide publication notice to creditors,

individual

debtors,

owner/s

of

the

sole

proprietorship-debtor,

the

partners

of

the

partnership-debtor and shareholders or members of the

corporation-debtor, on where and when they may inspect

it. All claims must be duly proven before being paid.

SECTION 124. Right of Set-off. — If the debtor and a

creditor are mutually debtor and creditor of each other,

one debt shall be set off against the other, and only the

balance,

if

any,

shall

be

allowed

in

the liquidation

proceedings.

SECTION 125. Opposition or Challenge to Claims. —

Within thirty (30) days from the expiration of the period

for

filing

of

applications

for

recognition

of

claims,

creditors,

individual

debtors,

owner/s

of

the

sole

proprietorship-debtor, partners of the partnership-debtor

and shareholders or members of the corporation-debtor

and other interested parties may submit a challenge to a

claim or claims to the court, serving a certified copy on

the liquidator and the creditor holding the challenged

claim. Upon the expiration of the thirty (30)-day period,

the rehabilitation receiver shall submit to the court the

registry of claims containing the undisputed claims that

have not been subject to challenge. Such claims shall

become final upon the filing of the register and may be

subsequently

set

aside

only

on

grounds

of

fraud,

accident, mistake or inexcusable neglect.

SECTION 126. Submission of Disputed Claims to Court. —

The liquidator shall resolve disputed claims and submit

his findings thereon to the court for final approval. The

liquidator may disallow claims.

(D) Avoidance Proceedings.

SECTION 127. Rescission or Nullity of Certain Transactions.

— Any transaction occurring prior to the issuance of the

Liquidation Order or, in case of the conversion of the

rehabilitation

proceedings

to

liquidation proceedings

prior to the commencement date, entered into by the

debtor

or involving its assets, may be rescinded or

declared null and void on the ground that the same was

executed with intent to defraud a creditor or creditors or

which

constitute undue preference of creditors. The

presumptions set forth in Section 58 hereof shall apply.

SECTION 128. Actions for Rescission or Nullity. — (a) The

liquidator or, with his conformity, a creditor may initiate

and prosecute any action to rescind, or declare null and

void

any

transaction

described

in

the

immediately

preceding paragraph. If the liquidator does not consent

to the filing or prosecution of such action, any creditor

may seek leave of the court to commence said action.

(b) If leave of court is granted under subsection (a) hereof,

the liquidator shall assign and transfer to the creditor all

rights, title and interest in the chose in action or subject

matter of the proceeding, including any document in

support thereof.

© Compiled by RGL

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