Financial Rehabilitation and Insolvency Act (FRIA of 2010)
Remedies for Individual Debtors who are NOT Businessmen:
Suspension of Payment (TA > TL) Effect of issuance by court of an Order: No creditor shall sue or collect claim except Filing of o Creditors with claims for personal labor Petition o Fully secured creditors
Duration of Suspension: 3 months Action by
the Court Meeting of Creditors: Quorum: 3/5 of the Liabilities Approval of Proposal (Double Majority) Meeting of Debor cannot sell or transfer Publication Creditors properties of Order 2/3 of the creditors voting Claims represented by said majority amounts to at least 3/5 of total liability Approved: court shall order that all parties are No creditor who incurred his credit within 90 bound. Other orders necessary may be enforced days prior to filing shall be entitled to vote Failure: All rights creditor rights are revested. Debtor may be made subject to liquidation. Liquidation of Individual Debtor (TL > TA) Voluntary Involuntary Debtor owing debts EXCEEDING ₱500,000 Creditor/s with claims AT LEAST ₱500,000 May apply to be discharged from debts by Acts of insolvency must be alleged by the filing a verified petition with the court of the creditors in the petition province or city Posting of bond by creditors If the court finds the petition sufficient in o If debtor not insolvent, creditors are liable form and substance, it shall WITHING 5 WORKING DAYS, issue liquidation order Orders the court may issue during IL Court shall issue Show Cause Order Requirements: Forbid debtor from making payments. 1. Total Liabilities > Total Assets o No order may impair the rights of 2. Debts exceed ₱500K secured creditor
Remedies for Insolvent Businessmen
Rehabilitation Court-supervised Pre-negotiated Out-of-Court Restructuring Voluntary Pre-negotiated by the debtor Allowed as long as the Involuntary – claims AT and its creditors requisites of FRIA are present LEAST ₱1,000,000
Required vote Required vote (higher) Petition for Rehabilitation o Majority of partners o Creditor claims of AT (Partnership) LEAST ₱1,000,000 or establish the insolvency of debtor and viability of rehabilitation o Majority of BOD and 2/3 o 25% of subscribed capital Stockholders (Corporation) stock or partner’s o 2/3 of members (Nonstock) contribution Commencement Order
Grounds Grounds If sufficient in form and substance, a
CO shall be issued within 5 days o Debtor unable to pay o No issue with creditors’ o Total liabilities > total assets claims. The claim is due and demandable, and Receivership Minimum Allegations payments have not been A qualified natural or juridical person o Establish the insolvency made for AT LEAST 60 may serve as receiver. Can be o Establish viability of days appointed or nominated.
rehabilitation o A creditor, other than
petitioners, has initiated foreclosure proceedings Conservatorship Elected liquidator by creditors or court-appointed Banking Laws Philippine Deposit Insurance Law (RA 3591) Insurable Deposits Not Covered by PDIC Savings deposits NOW Investment products (bonds, securities) Special savings Time Deposits Deposits that are fraudulent, emanate from Demand/Checking FC Deposit unsafe/unsound practices and unlawful proceeds
Required to File Insurance Claim (w/i 2 years) Other Procedures
Accounts with deposits more than 100,000 Period of payment – as soon as possible Those with outstanding obligations Mode of payment – cash or money order Those without updated addresses Requirement before payment – proof of claims or, if not Those who maintain their accounts under the name satisfied, final determination of court of business entities Period of payment – within 6 months from filing Account not eligible for early payment PDIC will be legally subrogated to all rights.
General Banking Law Bank Secrecy Law
Banks – lending of funds in the form of deposits Instances of Violations Quasi-banks – borrowing of funds through acceptance of Public prosecutor handling estafa case substitute deposits BIR officer auditing the VAT of accused Credit investigator of lending institution Single Borrower’s Limit – 20% of Net Worth of Bank and may be increased by an additional 10% the current rate was raised to 25% in 2004. Batas Pambansa 22 (Bouncing Check Anti-Money Laundering Council Law) Penalty Covered Transactions o imprisonment of not less than 30 days but not Cash or other equivalent exceeding 500K more than 1 year or Transaction exceeding 1M for jewelry dealers o fine of not less than, but not more than twice the Casino Cash transaction of excess of 5M amount of the check, in no case shall exceed Real estate transactions exceeding 500K ₱200,000 or o both imprisonment and fine Record keepings – 5 years Quantum of Evidence Transaction reporting – within 5 working days unless o To convict: proof beyond reasonable doubt AMLC prescribes a different period not exceeding 15 o To prove civil damages: preponderance of days evidence Suspicious Transactions – not more than 10 calendar o To sue: prima facie/probable cause days to determine
In the Matter of In The Matter Of Foreclosure Of Tax Liens By Proceeding In Rem Pursuant To Article Eleven Of The Real Property Tax Law by the County of Schuyler. Notice and Petition of Foreclosure: Index No. 16-195.