CHAPTER 19 o To establish a more systematic framework for

FINANCIAL REHABILITATION AND INSOLVENCY ACT insolvency proceedings

OF 2010 o To provide equitable treatment to all parties
involved in a financial reconstructing or
o R.A. 10142 promulgated on July 18, 2010. rehabilitation
o To maximize the changes for the survival of
1. PROCEEDINGS UNDER FRIA the company concerned by providing an
a. REHABILITATION PROCEEDINGS ailing enterprise four different remedies: (1)
(1) Voluntary Rehabilitation1 Fast-track rehabilitation; (2) Court-supervised
(2) Involuntary Rehabilitation2 rehabilitation; (3) Negotiated rehabilitation;
(3) Petition for Approval of Pre-Negotiated (4) Dissolution-liquidation
Rehabilitation.3 3. PERSONS INVOLVED
b. PETITION FOR SUSPENSION OF PAYMENT OF o DEBTOR- Refers to a sole proprietorship duly
INDIVIDUAL DEBTOR registered with DTI, a partnership duly
c. VOLUNTARY LIQUIDATION OF SOLE registered with SEC, a corporation existing
PROPRIETORSHIP, PARTNERSHIP OR under PH laws, an individual who has become
CORPORATION4 insolvent
d. INVOLUNTARY LIQUIDATION OF SOLE INDIVIDUAL DEBTOR a natural
PROPRIETORSHIP, PARTNERSHIP OR person who is a resident and citizen of
CORPORATION5 the Philippines that has become
e. VOLUNTARY LIQUIDATION FOR INDIVIDUAL insolvent
DEBTOR GROUP OF DEBTORS- (1)
f. INVOLUNTARY LIQUIDATION OF INDIVIDUAL Corporations that are financially
DEBTOR related to one another as parent
o NATURE OF PROCEEDINGS corporations, subsidiaries or affiliates;
Under Section 3 of FRIA, proceedings are (2) Partnerships that are owned more
judicial in nature that are classified as than 50% by same person; (3) Single
proceedings in rem. proprietorships that are owned by
same person.
2. RATIONALE AND STATE POLICIES When a petition covers a group
of debtors, all reference under
1 these rules to debtor shall
2 include and apply to the group
3 of debtors.
4 A group of debtors may jointly
file a voluntary rehabilitation
5
 under FRIA and the
participation of other members
of the group is essential under
the terms and conditions under
the Rehabilitation Plan.
EXCLUDED DEBTORS (1) Banks; (2)
Pre-Need Companies; (3) Insurance
Companies; (4) National and Local
Government Units.
o JURIDICAL ENTITIES AND RELATED
ENTERPRISE
Each juridical entity shall be considered as a
separate entity under the proceedings in this
Act. Under these proceedings, the assets and
liabilities of a debtor may not be commingled
or aggregated with those of another, unless
the latter is a related enterprise that is
owned or controlled directly or indirectly by
the same interests: Provided, however, That
the commingling or aggregation of assets and
liabilities of the debtor with those of a related
enterprise may only be allowed where: (a)
there was commingling in fact of assets and
liabilities of the debtor and the related
enterprise prior to the commencement of the
proceedings;(b) the debtor and the related
enterprise have common creditors and it will
be more convenient to treat them together
rather than separately; (c) the related
enterprise voluntarily accedes to join the
debtor as party petitioner and to commingle
its assets and liabilities with the debtor's;
and(d) The consolidation of assets and
liabilities of the debtor and the related
enterprise is beneficial to all concerned and
promotes the objectives of rehabilitation.
Provided, finally, That nothing in this section
shall prevent the court from joining other
entities affiliated with the debtor as parties
pursuant to the rules of procedure as may be
promulgated by the Supreme Court
o INSOLVENT DEBTOR
Insolvent shall refer to the financial
condition of a debtor that is generally
unable to pay its or his liabilities as
the fall due in the ordinary course of
business or has liabilities that are
greater than his assets.
Liabilities shall refer to monetary
claims against the debtor
Ordinary course of business shall refer
to transactions in pursuit of the
individual debtors business operation
prior to rehabilitation or insolvency
proceedings.
Insolvency shall refer to the financial
incapacity of the debtors to pay their
liabilities as they fall due in the
ordinary course of business or
whenever their liabilities is greater
than their assets.
o CREDITOR- shall refer to a natural or
juridical person which has a claim against
the debtor on or before the Commencement
Date
Commencement Date- date on which
the court issues the Commencement
Order which shall be retroactive to
the date of filing of the petition for
voluntary or involuntary
proceedings
 General Unsecured Creditor- shall debtor continues as a going concern than if
refer to a creditor whose claims is it is immediately liquidated
neither secured, preferred nor o In BPI v Sarabia Mano Hotel Corporation,
subordinated under FRIA the SC explained that rehabilitation shall be
Secured Creditor-shall refer to a taken when it is shown that the
creditor with Secured Claim
Secured Claim- A claim that is
secured by a Lien
Lien- a statutory or contractual
claim or judicial charge on real or
personal property that entitles a
creditor to resort to said property
for payment of the claim or debt
secured by such lien.
.4. LIABILITY FOR UNLAWFUL DISPOSITION
OF ASSETS
o Under Section 10, Individual Debtors,
Partners, Owner and Director and Officers
are made liable for double the property
sold or transaction involved, which is
higher to be recovered for the benefit of the
creditor and debtor if having notice of the
proceeding or anticipation thereof willfully
commit the ff acts: (1)Dispose the property
of the debtor in a grossly disadvantageous
manner to the creditor/debtor; (2) Conceal
from creditors or embezzles or
misappropriates the property of the debtor.
5.REHABILITATION
o Restoration of the debtor to a condition of
successful operation and solvency, if it is
shown that its continuance of operation is
economically feasible and its creditors can
recover by way of the present value of
payments projected in the plan, more if the
TYPE OF TYPE OF WHO WILL
ORGANIZATION REHABILITATION APPROVE/FILE
OR BUSINESS PROCEEDING PETITION
1. Sole Voluntary Owner/Proprietor
Proprietorship Rehabilitation
2. Partnership Voluntary Majority of Partners
Rehabilitation
3. Corporation Voluntary (1) Majority of
Rehabilitation the Directors o continued
or Trustees operation of
(2) Stockholders the
representing corporation is
2/3 of the economically
Outstanding more feasible
Capital
and its
4. Sole Involuntary Whichever is Higher:
Proprietorship, Rehabilitation Creditor or Group of creditors can
Partnership and Creditors with a claim recover, by
Corporation of: way of
(a) Agreggate o present value
claim of P1M of payments
(b) At least 25% projected in
of the the plan, more
subscribed if the debtors
capital stock continue the
or partners going
share concerns than
5 Sole Pre- Negotiated The insolvent debtor if liquidated.
Proprietorship, Rehablitation and the Rehabilitation It enables the
Partnership and (Petition for Plan is endorsed or company to
Corporation Approval of Pre- approved by creditors
gain a new
Negotiated holding atleast 2/3 of
Rehabilitation) the total liabilities of lease on life
the debtor including and thereby
secured creditors allows the
holding 50% of the creditors to be
total secured claim paid their
and unsecured claims from
creditors holding its earnings.
more than 50% of
unsecured claims
5.01 KINDS OF
6. Sole Voluntary Insolvent Debtor
Proprietorship, Liquidation
REHABILITATION
Partnership and a. VOLUNTARY
Corporation REHABILITATIO
7. Sole Involuntary a. Three or more
N- Established
Proprietorship, Liquidation creditors in a verified
Partnership and
Corporation b. The
aggregate
claim is at
least 1M or at
least 25% of
the
subscribed
capital stock
or partners
 Petition filed by the Debtor Corporation: (1) 5.02 REHABILITATION PLAN
The insolvency of the debtor; (2) Viability of o Should be in the prescribed form of the law.
its Rehabilitation. o REHABILITATION PLAN- a plan by which the
b. INVOLUNTARY REHABILITATION- A creditor financial well-being and the viability of an insolvent
or groups of creditors may initiate debtor can be restored using various means
involuntary proceedings against the debtor including, but not limited to, debt forgiveness, debt
by filing a petition for rehabilitation with the rescheduling, re-organization, dacion en pago, debt
court if: equity conversion and sale of the businesses as
(1) There is no genuine issue of fact or going concern or setting up of a new business entity
law on the claims of the petitioners or other similar arrangements as may be approved
and that the due and demandable by the courts or the creditors
payments have not been made for at o The rehabilitation plan once approved is binding
least 60 days or the debtor has failed upon the debtor and all persons who may be
generally to meet its liabilities as affected by it, including the creditors, whether or
they fall due. not such persons have participated in the
(2) A creditor, other than the proceedings or opposed to it.
petitioner/s has initiated foreclosure o CIRCUMSTANCES THAT MISGHT DEMONSTRATE
proceedings against the debtor and IN A CONVINCING AND COMPELLING MANNER
prevent the debtor from paying its THAT THE DEBTOR COULD BE REHABILITATED
debt as the become due or will (1) The business fortunes of the debtor
render it insolvent. has improved since the petition was
filed
(2) There is a forecast or support the
likelihood that the debtors business
could be revived
(3) Debtor improved its operating
efficiency
(4) The debtor has successfully
addressed risks that will be a
hindrance in its rehabilitation
(5) The majority of the secured and
unsecured creditors are willing to
compromise on their claims
(6) The debtors shareholders expressed
c. REHABILITATION PROCEEDINGS AND a willingness to dilute their equity in
PERSONS WHO WILL FILE AND/OR connection with debt equity swap
APPROVE
o The Rehabilitation Plan:
(1) Must be approved by crediotrs (50% of the total
claim)
(2) Confirmed by the court after approval of the
creditors or even without such approval or even
over the objection of the Courts
o A Rehabilitation Plan may be(1) Pre-Negotiated
Rehabilitation Plan; (2) An out-of court informal
rehabilitation
o CRAM DOWN RULE:
The Rehabilitation Plan confirmed by the
Court shall be binding upon the debtor and
all persons who may be affected by it
including, creditors, whether or not they have
participated on the proceedings or opposed
the Plan or whether or not their claims have
been scheduled.
The Cram Down Rule is necessary to curb the
majority of the creditors natural tendency to
dictate their own terms and conditions to the
rehabilitation, absent due regard to the
greater long-term benefit of all stockholders.
o STAY ORDER:
Included in the Commencement Order issued
by the Court having jurisdiction of the
Rehabilitation
Pre-supposes a prospective application.
(1) Suspend all action or proceedings, in
court or otherwise, for the enforcement of
claims against the debtors
(2)Suspend all action to enforce judgment,
attachment or all provisional remedies
against the debtor
(3) Prohibit the debtor from selling,
encumbering, transferring or disposing in
any manner any of its properties except in
the ordinary course of business.
(4) Prohibit the debtor from making any
payment of the liabilities outstanding as of
the commencement date except as may be
provided herein
SUSPENSION OF CLAIMS
o Claims- shall refer to all claims or
demands of whatever nature or
character against the debtor or its
property, whether for money or
otherwise
(1) All claims of the government.
(2) Claims against directors and
officers of the debtor arising
from acts done in the discharge
of their functions falling within
the scope of their authority
o The creditors are all in equal footing.
Neither one of them is given
preference
(1) To enable the rehabilitation receiver to
effectively exercise its power unburdened
by any judicial or extrajudicial
interference that may unduly hinder or
prevent the rescue of the debtor company
(2) To enable the management committee or
the rehabilitation receiver to substitute
the defendant in any pending action
against it.
SECURED CREDITORS AND
FORECLOSURE
The Order will stay all actions for claims
against the debtor including claims by
secured and unsecured creditors.
 (1) Foreclosure of mortgage is likewise
suspended according to Section 6 of
FRIA
(2) The preferred status of creditors are
suspended. However, if the rehabilitation
is no longer feasible, and the claims
against the distressed corporation would
eventually have to be settled, the secured
creditors shall enjoy preference over the
unsecured creditors.
STAGE OF SUSPENDED ACTIONS
GENERAL RULE: All actions for claims
against a corporation pending before any
court, tribunal or board shall ipso jure be
suspended in whatever stage such actions
may be found upon the appointment of SEC
of a management committee or rehabilitation
receiver.
EXCEPTIONS:
(1) To cases already pending appeal in the SC
as of commencement date. Any final and
executor judgment arising from such
appeal shall be referred to the
rehabilitation court for appropriate action
(2) Subject to the discretion of the Court, to
cases pending or filed at a specialized
court or quasi-judicial agency which, upon
determination by the court is capable of
resolving the claim more quickly, fairly an
efficiently than the court. Any final and
executor judgment of such court or
agency shall be referred to the
rehabilitation court and shall be treated
as non-disputed claim
(3) To the enforcement of claims against
sureties and other persons solidarily
liable with the debtor and 3rd party or
accommodation mortgagors as well as
issuers of letters of credit, unless the
property subject of the 3rd party or
accommodation mortgage is necessary for
the rehabilitation of the debtor as
determined by the court upon
recommendation by the rehabilitation
receiver
(4) To any form of action of customers or
clients of a securities market participant
to recover or otherwise claim moneys and
securities entrusted to the latter in the
ordinary course of the latters business as
well as any action of such securities
market participant or the appropriate
regulatory agency to pay or settle such
claims or liabilities
(5) To the actions of a licensed broker or
dealer to sell pledged securities of a
debtor pursuant to margin agreement for
the settlement of securities transaction in
accordance with the provisions of the
Securities Regulation Code
(6) The clearing and settlement of financial
transactions through the facilities of
clearing agency or similar entities like
BSP and the SEC as well as any form of
actions of such agencies to reimburse
themselves for any transactions settled
for the debtor
(7) Any criminal action against individual
debtor or owner, partner, director or other
officer of a debtor shall not be affected by
any proceeding under FRIA
 o However, if the Court already
awarded indemnification (ex. BP 22
cases), only to this extent can the
order of suspension be obligatory
upon any court. Suspension is only
possible if it is the corporation who
commits a crime through its officers
or agents or when there is vicarious
liability on the part of the
corporation.
MANAGEMENT
o Generally, the existing Board and/ or
Management of the debtor shall
continue to function while Petition for
Rehabilitation is pending.
o However, upon Motion, the court may
appoint either a Rehabilitation
Receiver or Management Committee
in the ff cases: (1) Actual or Imminent
Danger of loss or destruction of the
debtors assets or properties; (2)
Paralyzation of the business operation
of the debtor; (3) Gross
mismanagement of the debtor or
other wrongful conduct or violations
of the provisions of FRIA by the
existing management of the debtor,
owner, partner, director, officer etc.
The control and management
of the corporation must be
transferred pende lite to an
independent party to ensure
preservation of the corporates
assets.
ADMINISTRATIVE EXPENSES shall be
paid even if there is a Stay Order (e.g. rents)
DISPOSITION OF THE CASE: The Court
may take any of the ff alternative actions in a
rehabilitation proceeding
(1) Give due course to the Petition upon
finding that:
a. The debtor is insolvent
b. That there is a substantial likelihood that
the debtor can be successfully
rehabilitated
(2) Dismiss the Petition upon finding that:
a. The debtor is not insolvent
b. The petition is a sham-only to delay
the enforcement of the rights of the
creditors
c. The petition, Rehabilitation Plan or
any materials therein are materially
false or misleading
d. The debtor has committed acts of
misrepresentation or in fraud of
creditors
(3) Convert the Proceedings to Liquidation
Proceedings upon finding that:
a. The debtor is insolvent
b. There is no substantial likelihood that
the debtor can be successfully
liquidated.
OUT OF COURT REHABILITATION
Advantages;
(1) Expeditious and the parties enjoy
flexibility
(2) Economical because it avoids the
superstructure of reorganization
(3) More sensible because it contemplates
participation of the parties in interest in
good faith, conciliation
 REQUIREMENTS corporation. It can also be a result
(1) The debtor must agree to the out-of-court from a rehabilitation proceeding that
Rehabilitation Plan was converted by the court to a
(2) Approved by creditors representing at liquidation proceeding
least 67% of the secured obligations of the DISTRIBUTION OF ASSETS
debtor o The assets of the insolvent debtor
(3) It must be approved by creditors shall be divided among the creditors
representing at least 75% of the unsecured in accordance with the Liquidation
obligations of the debtor Plan
(4) It must be approved by creditors holding o The rules on concurrence and
at least 85% of total liabilities, secured or preference of credits under the NCC
unsecured. and Article 110 of the Labor Code
does not apply in rehabilitation
A. STANDSTILL PERIOD proceedings. Only if the rehabilitation
o An agreement to a standstill period may proceedings is no longer feasible and
be binding under Section 85 of FRIA the assets of the corporation are
provided: finally liquidated the rules on
(a) Agreement is approved by concurrence and preference of credit
creditors representing more than applies. This happens if the court
50% of the total liabilities of the converts rehabilitation proceedings to
debtor a liquidation proceedings.
(b) Notice thereof is published in a
newspaper of general circulation 6. PETITION FOR SUSPENSION OF PAYMENTS
in the PH once a week for 2 o A petition for suspension of payment is a
consecutive weeks petition that can be filed by an individual
(c) The standstill period does not debtor who has sufficient properties to cover
exceed 120 days from the date of all his debts but he foresees the impossibility
effectivity of meeting his debts when they respectively
B. CRAM DOWN RULE fall due for the purpose of asking the court to
o Same effect as that of court Rehabilitation order the suspension or delay of payment of
Proceeding his indebtness.
o REQUIREMENTS
LIQUIDATION PROCESS (1) The petitioner should be an individual
o The liquidation of a corporation can debtor
result by virtue of direct petition for (2) The debtor has sufficient properties to
liquidation of an insolvent cover his debts
 (3) The debtor foresees the impossibility of Applies only to individual May be availed of by juridical
meeting his debts when they respectively debtor debtors and individual
fall due debtors
(4) The purpose of the petition is to suspend Filed by the debtor May be initiated by the debtor
or delay payments or by the creditors
o The amount of indebtness and the number of No minimum requirement The claims of the aggregate
creditors are immaterial for the amount of claims claims against the debtor is at
6.01 DISTINCTIONS least P1M or 25% of the
SUSPENSION OF LIQUIDATION subscribed capital stock or
PAYMENTS share whichever is higher.
Debtor is solvent Debtor is insolvent
Payment of obligation is The obligations are 6.02. SUSPENSION ORDER
stayed discharged
Applies only to individual Juridical and Individual GENERAL RULE: The Court may issue an
debtor debtors order suspending any pending execution
May be filed by the debor May be filed by the debtor or against the individual debtor
the creditors (1) Properties held as security by secured
There is no minimum The debt of the individual creditors shall not be subject of such
amounts of liabilities debtor must be at least 500k suspension order
prescribed (2) The suspension order shall lapse when 3
The rules on preference and The rules on preference and months have passed without the
concurrence of credits does concurrence of credits under proposed agreements being accepted by
not apply 2236 and 2251 of the NCC he creditors or as soon as such
applies agreement is denied
(3) No creditor shall sue or institute
proceedings to collect his claims from the
debtor from the time of the filing of the
SUSPENSION OF REHABILITATION petition for suspension of payments and
PAYMENTS for as long as proceedings remain
Applies to individual Applies to Business pending.
debtor Organizations
The debtor has sufficient The debtor is insolvent EXCEPTIONS:
assets to cover his (1) Those creditors having personal claims
liabilities for personal labor, maintenance, expense
Secured debtors are not Secured debtors are affected of last illness and funeral of the wife or
affected by Stay Order children of the debtor incurred in the 60
 days immediately prior to the filing of the o EFFECT OF DISAPPROVAL OF
petition CREDITORS
(2) Secured creditors. If there is disapproval of the double
o These excepted creditors are not majority, the suspension of payment
affected by the proposed agreement proceedings will be terminated and the
with the debtor unless the same creditors shall be at liberty to enforce
creditors participated and voted in the their rights that correspond to them
creditors meetings.
6.03 PROHIBITED ACTS
a. Selling, transferring, encumbering or disposing in 7. LIQUIDATION: INDIVIDUAL DEBTORS
any manner of his properties except those used in
the ordinary course of business in which the VOLUNTARY LIQUIDATION INVOLUNTARY
petitioning individual debtor is engaged sol long as OF INDIVIDUAL DEBTOR LIQUIDATION OF
the proceedings relative to the suspension of INDIVIDUAL DEBTOR
payments are pending Debtor is insolvent Debtor is insolvent
b. Making any payment outside of the necessary or Acts of insolvency need not Creditors must prove act of
legitimate expenses of his business to be proved insolvency
The debts must be at least The debts must be at least
6.04. CREDITORS MEETINGS P500K 500k
o The proposed agreement shall be The individual debtor files Creditor or group of
approved or rejected in the Creditors petition creditors filed the petition
Meeting. The presence of creditors The debtor is not absent as Applies even in the case of
claims holding at least 3/5 of the he files Petition Absent Debtor
liabilities of the debtor is necessary for Posing of Bond by creditors Posting of Bond by crditrs is
the meeting is not required required
o A creditor has no right to vote if he
Liquidation Order is issued Liquidation Order is issued
incurred credit within 90 days prior to without trial after Trial
the filing of suspension of payment
o DOUBLE MAJORITY
INVOLUNTARY INVOLUNTARY
(1) 2/3 of the creditors voting unite LIQUIDATION OF LIQUIDATION
upon the same proposition INDIVIDUAL DEBTOR BUSINESS
(2)The claims represented by ORGANIZATIONS
said majority vote amount to at At least 3 creditors is There can be one or
least 3/5 of the total liabilities of required more creditors
the debtor mentioned in the The debt must be at The claims of the
petition. least 500k aggregate claims against
TYPE OF BUSINESS NATURE OF the
WHO debtor is at
WILL FILE OR least (3) In case of juridical person, ordering it dissolved
ORGANIZATION PETITION APPROVE
P1M or 25% THE of the (4) Prohibiting payments and/or transfer of property
FILING
subscribed capital stock by the debtor
Sole Proprietorship, Voluntary orInsolvent
share Debtor
whichever is (5) Directing all claims to be filed with the liquidator
Partnership and Liquidation
higher. 8.02 EFFECTS OF LIQUIDATION ORDER
Corporation
The individual can The business or (1) The juridical debtor shall be deemed dissolved and its
Sole Proprietorship, Involuntary There are 3 or more
Partnership continue his business
and Liquidation organization
creditors and willhe be corporate or juridical existence terminated
Corporation dissolved
aggregate claims (2) Legal title and control of all assets of the debtor except
against the debtor is those that may be exempt from execution shall be deemed
at least P1M or 25% vested in the liquidator
of the subscribed (3) All contracts of the debtor shall be deemed terminated
capital stock or and/or breached, unless the liquidator, within 90 days from
share whichever is the date of his assumption of office, declares otherwise and
higher. the contracting party agrees
Individual Debtor Suspension of Individual Debtor (4) No separate action for collection of an unsecured claim
Payment
shall be allowed (actions already pending shall be
Individual Debtor Voluntary An individual debtor
Liquidation who have at least transferred to the Liquidator)
500k debt and does (5) No foreclosure proceeding shall be allowed for the
not have sufficient period of 180 days.
assets to cover
liabilities 8.03 RIGHTS OF SECURED CREDITORS
Individual Debtor Involuntary Any creditor or o Section 114 of FRIA expresses the rule that the
Liquidation group of creditors Liquidation Order shall not affect the rights of a
with a claim of at secured creditor to enforce his lien in accordance
least 500k
with the applicable contract or law
7.01 WHO CAN FILE o Although there is a Suspension or Stay Order, the
court upon motion, may allow a secured creditor to
enforce his security or lien, or foreclose upon the
8. LIQUIDATION PROCESS
property of the debtor securing his claim, if the
o This is the proceeding where claims are filed and the
property is not necessary for the rehabilitation of his
assets of the insolvent debtor are disposed and the debtor. The secured creditor shall be admitted to the
proceeds are divided among the creditors. rehabilitation proceedings only for the balance, if
8.01. LIQUIDATION ORDER any, of his claim.
o The Court that has jurisdiction over the liquidation (1) Waive his right under the security or lien, prove his
proceeding shall issue a Liquidation Order: claim in the liquidation proceedings and share in the
(1) Declaring that the debtor is insolvent distribution of assets of the debtor
(2) Ordering the Liquidation of the debtor
(2) Maintain his rights under the security or lien
a. The value of the property may be fixed in the
manner agreed upon by the creditor and
liquidator
When the property is less than the
claim it secures, the liquidator may
convey the property to the secured
creditor and the latter will be admitted
in the liquidation proceeding as the
creditor form the balance.
If the value of the property exceeds the
claim secured, the liquidator may
convey the property to the creditor and
waive the debtors right to redemption
upon receiving the excess from the
creditor
9. DISTRIBUTION OF ASSETS
o The assets of the insolvent debtor shall be distributed
according to the Liquidation Plan approved by the
Court
o The rules on preference and concurrence of credit
shall be applied under the Liquidation Plan
10. CROSS-BORDER INSOLVENCY
o The FRIA adopted the Model Law on Cross-Border
Insolvency of UN Center for International Trade and
Development
o If there is a rehabilitation proceeding filed by a
foreign entity in another jurisdiction, a petition may
be filed by the latters representative

b. The liquidator may sell the property and

satisfy the secured creditors entire claim
from the proceeds of the sale
c. The secured creditor may enforce the lien or
foreclose on the property pursuant to
applicable laws