3DEBTOR

or more creditors
LIQUIDATION OF INSOLVENT JURIDICAL
claims is
whose
Publication
of either
the

Voluntary
Liquidation
Filing of petition
for Liquidation w/
the court by the
insolvent debtor

Verification of the
petition

petition or motion in a

1,000,000inphp
newspaper
general

Atleast 25% of
circulation
debtors subscribed
capital
stock or on
Filing
of comments
partners
the
petition/motion w/in
15contribution
days from the date of
Issuance of
last publication
Liquidation Order
WHICHEVER IS
HIGHER

Involuntary
Liquidation
Filing of petition
for Liquidation w/
the court by the
creditors

Verification of the
petition

Issuance of Order

Issuance of
Liquidation Order

LIQUIDATION OF INSOLVENT JURIDICAL

DEBTOR
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

INSOLVENCY OF INDIVIDUAL DEBTORS

w/ a claim or w/
aggregate claim of
To Properties
show
causenot
why
he &
Schedule
ofsufficient
Debts
atleast
500,000
and;
to cover
debts
should
not be
adjudged
Liabilities
an insolvent.
The individual has
Debts
exceedsofAssets
500,000
Inventory
committed
an act of

Voluntary
Liquidation
Filing of petition
for Liquidation w/
the court by an
individual debtor

insolvency
Issuance of
Liquidation Order

The court may issue an order forbidding

him from making payments of any of his
debts & transferring any property
belonging to him.

Involuntary
Liquidation
Filing of petition
for Liquidation w/
the court any
creditor or group
of creditors

Issuance of a showcause Order

As long as it does not affect/impair the

Issuance of
rights of a secured creditor to enforce
Liquidation Order
his lien in accordance with its terms.

LIQUIDATION ORDER AND

IMPLEMENTATION

The liquidation order shall declare the debtor insolvent

Direct:

Payments of any claim & conveyance of any property due the debtor to the liquidator

All creditors to file their claims with the liquidator within the period set by the SC rules of
procedure

Order:

liquidation of the debtor & in the case of juridical debtor, declare it as dissolved

Sheriff to take possession & control of all debtors property, except those may be exempt
from execution

Publication of the petition or motion in a newspaper of general circulation

LIQUIDATION ORDER AND

IMPLEMENTATION

Prohibit payments by the debtor and the transfer of any property by

the debtor;

Authorize the payment of administrative expenses as fall due;

State that the debtor and creditors who are not petitioner/s may
submit the names of other nominees to the position of liquidator

Set the case for hearing for the election and appointment of the
liquidator, which date shall not be less than 30 days nor more than 45
days from the date of the last publication

EFFECTS OF ISSUANCE OF THE

LIQUIDATION ORDER

The juridical debtor shall be deemed dissolved & its corporate existence terminated;

Legal title to and control of all assets except those exempt from execution be vested to
the liquidator or the court

All contracts shall be terminated and/or breached, unless the liquidator, w/in 90 days
from the date of his assumption of office, declares otherwise & the contracting party
agrees

No separate collection action of an unsecured claims shall be allowed

no foreclosure proceeding shall be allowed for a period of one hundred eighty (180) days.

QUALIFICATIONS OF THE LIQUIDATOR

The

liquidator shall have the qualifications

enumerated in Section 29 hereof.

Powers, Duties and Responsibilities of

the Liquidator

Officer of the court

Preserving and maximizing the value & recovering the

assets of the debtor, with the end of liquidating them
and discharging to the extent possible all the claims
against the debtor.

Discharge of Liquidator:

Only creditors:
Who have filed their claims w/in
Reporting Requirements:
notify all the creditors that will apply
the period set by the court;
with the court for the settlement ofWhose
his claims are not barred by
Preliminary
registry of claims of secured
Challenge
to claims:
account and his discharge from liability
the
statute
of
limitations
& unsecured creditors.
Within thirty (30 ) days from the
as liquidator.
Secured creditors
who
for
expiration
1. Waives his securityof
orthe
lienperiod
of
applications
for
file a final accounting
with the court,2. has the filing
Creditor
value
of
the
Record
of all moneys received and all
recognition
with proof of
notice to all creditors.
Appointed
subject of of
hisclaims, interested
disbursements
made by him or under his propertyparties
may
submit
a challenge
security
or
lien
fixed
by
authority.
& Bond
to claims
toReporting
the court, serving a

The
hearing.
Ifagreement
Election
of accounting will be set for Oath
with the
the
Requirements
certified
on the liquidator
the court finds the same in order,of
the
Liquidator
liquidator,
and is copy
admitted
Liquidator
and the of
creditor
ofhis
Liquidator
holding the
court will discharge the liquidator.
for
the
balance
Render
a quarterly report thereof to the
claim. challenged claim.
court, which report shall be made
available to all interested parties.
Upon the expiration of the (30)
The court may appoint:
day period, the rehabilitation
Court
The creditorsreceiver
do not attend
the to the
shall submit
Appointed
THE
LIQUIDATOR
SHALL
RESOLVE
The liquidator shall also submit such election date of the liquidator
court the registry of claims
DISPUTED
& SUBMIT
HIScourt
Discharge of
reports
as mayCLAIMS
be required
by the
Failed/Refused
containing
the
undisputed
to
elect
a
FINDINGS
THE
the
from
time to TO
time
as COURT
well as FOR
a final liquidator claims that have not been
FINAL
Liquidator
report
at APPROVAL.
the end of the liquidation
Liquidator fails
to qualify
subject
to challenge.
proceedings
A vacancy occurs, the court may
set another hearing for election

THE LIQUIDATOR

Challenge to
Claims

RIGHT OF SET-OFF
DEBTOR

CREDITOR

If the debtor and 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.

OUT-OF-COURT OR INFORMAL RESTRUCTURING

AGREEMENTS OR REHABILIATATION PLANS

Minimum requirements:

The debtor must agree to the OCRA

It must be approved by creditors

67% of the secured obligations

75% of the unsecured obligations

85% of the total liabilities, secured & unsecured

Publication of the notice of the OCRA once a week for at least 3

consecutive weeks in a newspaper of general circulation in the
Philippines.

NOTICE OF STANDSTILL AGREEMENT SHALL STATE THE

NOTICE OF OCRA SHALL CONTAIN THE FOLLOWING:
FOLLOWING MINIMUM REQUIREMENTS:

OUT-OF-COURT OR INFORMAL RESTRUCTURING

AGREEMENTS OR REHABILIATATION PLANS

1. Important provisions of OCRA

1. The identity of the debtor, its principal business &
principal place of business.
2. The number of secured creditors who approved the
OCRA & the percentage they represent, which
2. Amount of Liabilities of the debtor, classified into
should be atleast
1. Secured
1. 67%
2. Unsecured
2. 75%
3. 85%
of
3. ThatNotice
the creditors
representing >50% of the TL of
Publication of
the standstill
debtor have agreed to observe a standstill
Standstill Period
3. That the OCRA shall be binding on the debtor & all
the OCRA
agreement
period
which
shall
not
exceed
120 days from its date
affected persons, including the creditors, whether
of effectivity.
or not they participated in the
proceedings/opposed the plan/ their claims have
4. That the SP shall be effective after publication of
been scheduled
the notice in a newspaper
in general circulation in
Amendment/
the Philippines.
4. Payments shall be made to the creditors in Modification of
OCRA if any
accordance with the provisions of OCRA
5. That the OCRA shall be binding on the debtor & all
affected persons, including the creditors, whether
5. The
manner
&
other
requirements
for
amendment
CRAM DOWN EFFECT=
legal
effect
as the in the negotiations, if
or same
not they
will
participate
& modification of OCRA
confirmation of a rehabilitation
plan
approved by
theunder
ff: a
COURT-SUPERVISED rehabilitation
1. Debtor
2. Creditors 67%, 75% & 85%

Approval by creditors
representing more than
50% of the total
liabilities of the debtor

Publication of notice of
the standstill agreement
in a newspaper, once a
week for 2 consecutive
weeks
The SP period shall not
exceed 120 days from
the date of effectivity.