Article 17p. 17

SPECIAL RULES OF PROCEDURE SUPPLEMENT TO THE RULES OF COURT

RULE 5 CREDITOR-INITIATED

REHABILITATION

Section 1. Who May Petition. - Any creditor or creditors

holding at least twenty percent (20%) of the debtor's

total liabilities may file a petition with the proper

regional trial court for rehabilitation of a debtor that

cannot meet its debts as they respectively fall due.

Section

2.

Requirements

for

Creditor-Initiated

Petitions. - Where the petition is filed by a creditor or

creditors under this Rule, it is sufficient that the petition

is accompanied by a rehabilitation plan and a list of at

least three (3) nominees to the position of rehabilitation

receiver and verified by a sworn statement that the

affiant has read the petition and that its contents are

true and correct of his personal knowledge or based on

authentic records and that the petition is being filed to

protect the interests of the debtor, the stockholders, the

investors and the creditors of the debtor.

Section

3.

Applicability

of

Provisions

Relating

to

Debtor-Initiated

Rehabilitation.

-

The

provisions of

Sections 5 to 12 of Rule 4 shall apply to rehabilitation

under this Rule.

RULE 6 PRE-NEGOTIATED REHABILITATION

Section

1.

Pre-negotiated Rehabilitation Plan. - A

debtor that foresees the impossibility of meeting its

debts as they fall due may, by itself or jointly with any of

its creditors, file a verified petition for the approval of a

pre-negotiated rehabilitation plan. The petition shall

comply with Section 2 of Rule 4 and be supported by an

affidavit showing the written approval or endorsement

of creditors holding at least two-thirds (2/3) of the total

liabilities of the debtor, including secured creditors

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

secured claims of the debtor and unsecured creditors

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

unsecured claims of the debtor.

Section 2. Issuance of Order. - If the court finds the

petition sufficient in form and substance, it shall, not

later than five (5) working days from the filing of the

petition, issue an order which shall:

(a)

Identify

the

debtor,

its

principal

business

or

activity/ies and its principal place of business;

(b) Direct the publication of the order in a newspaper of

general circulation once a week for at least two (2)

consecutive weeks, with the first publication to be

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

issuance;

(c) Direct the service by personal delivery of a copy of

the petition on each creditor who is not a petitioner

holding at least five percent (5%) of the total liabilities of

the debtor, as determined in the schedule attached to

the petition, within three (3) days;

(d) Direct the petitioner to furnish a copy of the petition

and its annexes, as well as the stay order, to the relevant

regulatory agency;

(e)

State

that

copies

of

the

petition

and

the

rehabilitation plan are available for examination and

copying by any interested party;

(f)

Direct

creditors

and

other

parties

interested

(including the Securities and Exchange Commission

and the relevant regulatory agencies such as, but not

limited

to,

the

Bangko

Sentral

ng

Pilipinas,

the

Insurance

Commission,

the

National

Telecommunications Commission, the Housing and

Land Use Regulatory Board and the Energy Regulatory

Commission) in opposing the petition or rehabilitation

plan

to

file

their

verified

objections

thereto

or

comments thereon within a period of not later than

twenty (20) days from the second publication of the

order, with a warning that failure to do so will bar them

from participating in the proceedings;

(g) Appoint the rehabilitation receiver named in the

plan, unless the court finds that he is not qualified

under these Rules in which case it may appoint a

qualified rehabilitation receiver of its choice;

(h) Stay enforcement of all claims, whether for money

or otherwise and whether such enforcement is by court

action or otherwise, against the debtor, its guarantors

and

persons

not

solidarily

liable

with the debtor;

provided, that the stay order shall not cover claims

against

letters

of

credit

and

similar

security

arrangements issued by a third party to secure the

payment of the debtor's obligations; provided further,

that the stay order shall not cover foreclosure by a

creditor of property not belonging to a debtor under

corporate rehabilitation; provided, however, that where

the owner of such property sought to be foreclosed is

also a guarantor or one who is not solidarily liable, said

owner shall be entitled to be benefit of excussion as

such guarantor;

(i)

Prohibit

the

debtor

from selling, encumbering,

transferring, or disposing in any manner any of its

properties except in the ordinary course of business;

(j) Prohibit the debtor from making any payment of its

liabilities outstanding as of the date of filing of the

petition;

(k) Prohibit the debtor's suppliers of goods or services

from withholding supply of goods and services in the

ordinary course of business for as long as the debtor

makes payments for the services and goods supplied

after the issuance of the stay order;

(l) Direct the payment in full of all administrative

expenses incurred after the issuance of the stay order;

and

(m) Direct the payment of new loans or other forms of

credit accommodations obtained for the rehabilitation

of the debtor with prior court approval.

Section 3. Approval of Plan. - Within ten (10) days from

the date of the second publication of the order referred

to in Section 2 of this Rule, the court shall approve the

rehabilitation plan unless a creditor or other interested

party submits a verified objection to it in accordance

with the next succeeding section.

Section 4. Objection to Petition or Rehabilitation Plan.

- Any creditor or other interested party may submit to

the court a verified objection to the petition or the

rehabilitation plan. The objection shall be limited to the

following:

(a) The petition or the rehabilitation plan or their

attachments

contain

material

omissions

or

are

materially false or misleading;

(b) The terms of rehabilitation are unattainable; or

(c) The approval or endorsement of creditors required

under Section 1 of this Rule has not been obtained

Copies

of

any

objection

to

the

petition

or

the

rehabilitation plan shall be served on the petitioning

debtor and/or creditors.

Section 5. Hearing on Objections. - The court shall set

the case for hearing not earlier than ten (10) days and

no longer than twenty (20) days from the date of the

second publication of the order mentioned in Section 2

of this Rule on the objections is in accordance with the

immediately

preceding

section,

it

shall

direct

the

petitioner to cure the defect within a period fifteen (15)

days from receipt of the order.

Section 6. Period for Approval of Rehabilitation Plan. -

The court shall decide the petition not later than one

hundred twenty (120) days from the date of the filing of

the petition. If the court fails to do so within said period,

the rehabilitation plan shall be deemed approved.

Section 7. Effects of Approval of Rehabilitation Plan. -

Approval of the rehabilitation plan under this Rule shall

have

the

same

legal

effect

as

approval

of

a

rehabilitation plan under Section 20 of Rule 3.

© Compiled By RGL

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