3DEBTOR

or more creditors
LIQUIDATION OF INSOLVENT JURIDICAL
whose claims is either

Voluntary
Liquidation

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

Verification of the
petition

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

Verification of the
petition

1,000,000 php
Atleast 25% of
debtors subscribed
stock of
orthe
Establishcapital
the insolvency
debtor partners
contribution

Issuance of
a schedule of the debtor's debts
Liquidation Order
andWHICHEVER
IS
liabilities

HIGHER
there is no genuine issue of
fact
or law on the claims/s
of
anthe
inventory of all its assets
petitioner
including receivables and claims
against third parties
the due payments have not been
Publication of the
made for at least one
hundred
the names
of at least
three (3)
petition
or motion
in a
eighty (180) days
nominees
to
the
position
of
newspaper in general
liquidator.
circulation
the debtor is insolvent
Filing of comments on
Issuance of
no substantial likelihood that the
the petition/motion w/in
Issuance
of
Order
debtor may be rehabilitated
Liquidation
15 days
from the Order
date of
last publication

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

 w/ a claim or w/
INSOLVENCY OF INDIVIDUAL DEBTORS
aggregate claim of
atleast 500,000 and;
Schedule of Debts &

Properties
not sufficient
The individualLiabilities
debtor
To has
show
cause
why
to cover
debts
committed
anheact
should
not be adjudged
of insolvency
Inventory of Assets
an insolvent.
Debts exceeds 500,000

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

Involuntary
Liquidation
ACT OF

Verification of the
petition

INSOLVENCY!

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

Issuance of a showcause Order

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.
Issuance of
Liquidation Order
As long
as it does not affect/impair the
rights of a secured creditor to enforce
his lien in accordance with its terms.

ACTS OF INSOLVENCY

Intention to defraud his creditors

About to depart/ Departed the Philippines;

Remained absent from the Philippines;

Intention to defraud his creditors or delaying the liquidation procedure

Concealed himself to avoid the service of legal process;

Suffered his property to remain under attachment or legal process for 3 days;

Confessed or offered to allow judgment in favor of any creditor or claimant;

Willfully suffered default judgment to be taken against him;

procured his property to be taken on legal process with intent to give a preference to one or
more of his creditors

Made any assignment, gift, sale, conveyance or transfer of his estate, property, rights or
credits

ACTS OF INSOLVENCY

That he has, in contemplation of insolvency, made any payment, gift, grant, sale,
conveyance or transfer of his estate, property, rights or credits;

That being a merchant or tradesman, he has generally defaulted in the payment of his
current obligations for a period of thirty (30) days;

That for a period of thirty (30) days, he has failed, after demand, to pay any moneys
deposited with him or received by him in a fiduciary; and

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 same

qualifications as the Rehabilitation
Receiver.

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:
Reporting Requirements:
notify all the creditors that will apply
Preliminary
with the court
for of
the
settlement
of his
registry
claims
of secured
account and
his discharge from liability
& unsecured
creditors.
as liquidator.

THE LIQUIDATOR

Creditorreceived
Record
file aof
final
with the
all accounting
moneys
andcourt,
all
Appointed
with proof ofmade
notice
all or
creditors.
disbursements
bytohim
under his
authority.
Oath & Bond
Reporting
The
Election
of accounting will be set for hearing.
If
of the
Requirements
Liquidator
the court finds the same in order,
the
Liquidator
of Liquidator
Render
court awill
discharge
the
liquidator.
quarterly report thereof to the
court, which report shall be made
available to all interested parties.
The court may appoint:
Court
The creditors do not attend the
Appointed
The liquidator shall also submit such election date of the liquidator
reports as may be required by thecourt
Failed/Refused to elect a
from time to time as well as a final liquidator
report at the end of the liquidation
Liquidator fails to qualify
proceedings

Discharge of
the
Liquidator

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.

OUT-OF-COURT OR INFORMAL RESTRUCTURING

AGREEMENTS OR REHABILIATATION PLANS

Standstill Period

Notice of
standstill
agreement

Publication of
the OCRA

Amendment/
Modification of
OCRA if any
CRAM DOWN EFFECT= shall have the same legal
effect as a court-confirmed Rehabilitation Plan

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.