PRE-NEGOTIATED

REHABILITATION
120 days

no earlier than 20 days or later than 30 days

5 days 7 days 8 days

OBJECTION to APPROVAL of
FILING OF ISSUANCE OF NOTICE and HEARING on the
THE PETITION PLAN (Same as
PETITION ORDER PUBLICATION OBJECTION
OR PLAN Section 69)

Debtor and Creditors may

file a verified petition for
approval of a pre- The Court shall issue an
negotiated Rehabilitation order: (a) identify the
Plan with has been debtor, its principal
approved by creditors business; (b) declare the
holding 2/3 of total debtor is under publication in a newspaper
liabilities, including rehabilitation; (c) of general circulation once
secured holding more than summarize the grounds for a week for at least 2
50% of secured claims and the filing of the petition; consecutive weeks, with Objections: (a) allegations
unsecured holding 50% of (d) direct publication; (e) first publication to be materially false or
made within 7 days from misleading; (b) majority of
total unsecured claims. direct personal delivery of
copy of petition to the time of issuance and creditors do not support
The Petition shall include service by personal Petition; (c) Plan fails to
as a minimum: (a) a creditors; (e) state copies
of the petition and Plan are delivery of a copy of the account for a claim; and
schedule of the debtors petition on each creditor (d) support of creditors
debts and liabilities; and available for examination
and copying; (g) flie who is not a petitioner induced by fraud
(b) inventory of the holding at least 10% of the
debtors assets; (c) pre- objection not later than 20
days from second total liabilities of the
negotiated Rehabilitation debtor
Plan, including names of at publication of the order;
3 nominees for Receiver; (h) appoint a
(d) summary of disputed rehabilitation receiver; (i)
claims against debtor and include a Suspension or
report on provisioning of Stay Order
funds to account for
appropriate payments
 SUSPENSION OF PAYMENTS

Not less than 15 days nor more than 40 days from date of Order within 10 days

First publication within 7 days

REJECTION of
PROPOSED
AGREEMENT
(Section 99)
Individual
COURT ISSUES an NOTICE and SUSPENSION CREDITORS
Debtor files Upon motion by OBJECTIONS
ORDER PUBLICATION debtor,ORDER
The presence of creditors
MEETING
PETITION the court may holding claims to at least 3/5
issue an order of the liabilities shall be
suspending any necessary to hold a meeting.
Order shall: (a) call a
pending execution The commissioner appointed APPROVAL OF
meeting of all creditors;
(b) direct creditors to against the individual
by the court shall preside
over the meeting subject to If the proposal of the
PROPOSED
debtor. Provided, that
present written evidence
properties held as
the ff. rules: (a) The clerk debtor is approved by AGREEMENT
of claim; (c) direct the shall record the creditors creditors, any creditor
Individual Debtor publication of order in a security by secured present and amount of their
who attended meeting
(Section 101)
possessing sufficient newspaper of general creditors shall not be respective claims; (b) the
commissioners shall examine may file objection
property to cover all his circulation; (d)direct clerk the subject of such
the written evidence of within 10 days from
debts but foreseeing of court to cause sending suspension order. The
PUBLICATION- in claims. If the creditors creditors meetings.
impossibility of meeting of copy of order by suspension order shall
newspaper of general present hold 3/5 of liabilities, Objections (1a) defects
them when they fall due. registered mail to all lapse when 3 months meeting open; (c) creditors
circulation published in call of meeting; (b)
To file in court of the creditors; (e)forbidding shall have passed and debtor shall discuss
in the province or city connivance between
province in which he debtor from selling without the proposed proposition in the proposed
in which petition is fled creditors and debtor;
reside for 6 months prior property except in agreement being agreement; (d) to form a
once a week for two majority: (1) 2/3 creditors (c) fraudulent
to filing of petition. ordinary course of accepted by creditors
weeks with first voting for same proposition; conveyance of claims.
Attach to Petition (1) business and while or is denied. No
publication within 7 (2) claims of majority is 3/5 The court shall hear
schedule of debts and proceedings are pending; creditor shall collect his
days from order. of total liabilities ; (e) after the and pass upon such
liabilities; (2) inventory (f) prohibiting debtor claim from the time of result of the voting objection. Court may
of assets and (3) from making payments filing and as long as announced, all protests annul decision of the
proposed agreement outside the necessary or proceedings remain drawn up, commissioner,
creditors. The
with creditors. legitimate expenses and except: (a) those debtor and creditor shall sign
proceedings shall then
as long as proceedings are creditors having claims be terminated.
from personal labor, No creditor who incurred
pending; appointing a
maintenance incurred his credit within 90 days
commissioner to preside
60 days prior to filing; prior to filing of petition
over creditors meeting
(b) secured creditors. shall be entitled to vote.
 VOLUNTARY LIQUIDATION INVOLUNTARY LIQUIDATION

JURIDICAL PERSON INDIVIDUAL DEBTOR JURIDICAL PERSON INDIVIDUAL DEBTOR

Petition for
Conversion of An individual debtor 3 or more creditors
Liquidation (1) Any creditor or group of
rehabilitation whose properties are not whose claims are at least
Verified and (2) Shall creditors with a claim of
establish (a)debtors proceedings into sufficient to cover his 1M or at least 25% of the CONVERSION BY THE
liquidation proceedings. or with claims at least
debts and liabilities; (b) liabilities, and owing subscribed capital stock COURT INTO
P500,000 may file a
inventory of assets; (3)
3 nominees to the
debts exceeding or partners contributions LIQUIDATION
petition for liquidation.
position of liquidator
At any time during the P500,000.00 may apply to be may seek liquidation by filing Petition PROCEEDINGS pursuant to Section 105 - Acts considered as
showing that: (a) there is no genuine issue
pendency of rehabilitation discharged from his debts and liabilities by of fact or law on the claims and that due Section 25 (c), Section 72 or insolvency.
proceedings, the debtor may filing a verified petition with the court of Section 75, (d) Section 90
payments have not been made at least 180
the province or city in which he has Petitioners shall post bond conditioned on
initiate liquidation proceedings resided for six (6) months prior to the
days or that debtor has failed to meet
payment of costs and damages to debtor in
liabilities as they fall due; (b) there is no
by filing a motion in the same filing of such petition. He shall attach likelihood that debtor may be
case petition for liquidation is dismissed.
court. schedule of debts and liabilities and rehabilitated.
inventory of assets.

LIQUIDATION ORDER
The Liquidation Order shall state:
(a) declare the debtor insolvent; (b) order the liquidation of the debtor, and in juridical debtor,
declare it dissolved; (c) order the sheriff to take possession and control of all the property of the debtor, except those exempt from execution; (d) order the
publication of the petition or motion in a newspaper of general circulation once a week for two consecutive weeks; (e) direct payments by the debtor and transfer of any
property of the debtor; (f)prohibit payments by debtor and transfer of any property due to the liquidator; (g) direct all creditors to file their claims with liquidator; (h)
authorize payment of administrative expense; (i)state that debtors and creditors may submit names of the nominees for liquidator; (j) set the case for hearing 45 days
from last publication

EFFECTS OF LIQUIDATION ORDER (a) the juridical debtor shall be deemed dissolved and its corporate or
juridical existence terminated; (b) legal title to and control of all the assets of the debtor, except those exempt from execution
shall be deemed vested in the liquidator or, pending his election or appointment with the court; (c) all contracts of the debtor
shall be deemed terminated and/or breached, unless the liquidator, within 90 days from the date of assumption of office,
declares otherwise and the contracting party agrees; (d)no separate action for the collection of an unsecured claim shall be
allowed. Such actions already pending will be transferred to Liquidator. If the Liquidator disputes the claim, the court shall
allow and resolve the contest except when the case is on appeal. In such a case, the suit may proceed to judgment and any final
judgment shall be filed in court; (e) no foreclosure proceeding shall be allowed for a period of 180 days.

RIGHTS OF SECURED CREDITORS- The Liquidation Order shall not affect the right of a secured creditor to
enforce his lien in accordance with the applicable contract or law. A secured creditor may: (a) waive his right under the
security or lien, prove his claim in the liquidation proceedings and share in the distribution of the assets of the debtor; or
maintain his rights under the security or lien. If the latter, (1) the value of the property may be fixed. If value is less than claim,
balance will be admitted in the liquidation proceedings. If value exceeds, liquidator may waive debtors right of redemption
upon receiving excess from the creditor; (2) Liquidator may sell property and satisfy claim from proceeds; or (3) secure
creditor may enforce the lien or foreclose on the property
as