Course Code: Banking Laws

Module #8

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

Lesson title: P1 - Quiz 2 Materials:

Lesson Objectives: Student Activity Sheet
At the end of this module, I should be able to assess my learning:
1. Financial Rehabilitation and Insolvency Act

PART 1: Write TRUE beside the number if the statement is correct and FALSE if not.

__________ 1. It is declared in R.A 1405 that it is the policy of the State to encourage debtors, both
juridical and natural persons, and their creditors to collectively and realistically resolve and adjust
competing claims and property rights. FALSE
__________ 2. Administrative expenses under FRIA refers to reasonable and unnecessary expenses
that can be incurred in the ordinary course of business of the debtor after the commencement
date. FALSE
__________ 3. FRIA claims shall refer to all claims or demands of whatever nature or character
against the debtor or its property. TRUE
__________ 4. Commencement order shall refer to the 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. FALSE
__________ 5. Control can be presumed under the FRIA. TRUE
__________ 6. Debtor shall refer to a natural or juridical person which has a claim against the
creditor that arose on or before the commencement date. FALSE
__________ 7. Involuntary proceedings shall refer to proceedings initiated by creditors. TRUE
__________ 8. Insolvent debtor shall refer to a natural person who is a resident and citizen of the
Philippines that has become insolvent as defined herein. FALSE
__________ 9. A corporation is considered a subsidiary with fifty-one percent (51%) of the voting
stock of which is owned or controlled directly or indirectly through one or more intermediaries by
another corporation, which thereby becomes its parent corporation. TRUE
__________ 10. An insolvent debtor may initiate voluntary proceedings under FRIA when approved
by a majority of the partners in case of a corporation. FALSE
__________ 11. Any creditor or group of creditors with a claim of, or the aggregate of whose claims
is, Php1,000,000.00 or at 25% of the subscribed capital stock, may initiate involuntary proceedings
against the debtor. TRUE

This document is the property of PHINMA EDUCATION

 Course Code: Banking Laws
Module #8

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

__________ 12. Rehabilitation is the plan, the receiver is the person and the plan is the restoration.
FALSE
__________ 13. A commencement order serves as a legal basis for rendering null and void any setoff
after the commencement date of any debt owed to the debtor by any of the debtor's creditors.
TRUE
__________ 14. An out-of-court or formal restructuring agreement or Rehabilitation Plan that meets
the minimum requirements prescribed in this chapter is hereby recognized as consistent with the
objectives of FRIA. FALSE
__________ 15. Any criminal action against an individual debtor or owner, partner, director or officer
of a debtor shall not be affected by any proceeding, including the stay and suspension order,
commend under FRIA. TRUE

PART 2: Write the letter of your choice beside the number.

__________ 1. The following are covered persons under FRIA, except

a. A juridical person who is a resident and citizen of the Philippines that has become
insolvent
b. A sole proprietorship duly registered with the Department of Trade and Industry
c. A partnership duly registered with the Securities and Exchange Commission
d. An individual debtor who has become insolvent

__________ 2. By filing a verified petition with the court for the approval of a pre-negotiated
Rehabilitation Plan which has been endorsed or approved by creditors holding at least two-thirds
(2/3) of the total liabilities of the debtor, including
a. Secured creditors holding more than fifty percent (50%) of the total secured claims of the
debtor
b. Unsecured creditors holding more than fifty percent (50%) of the total unsecured claims
of the debtor
c. Secured creditors holding more than fifty percent (50%) of the total secured claims
of the debtor and unsecured creditors holding more than fifty percent (50%) of the
total unsecured claims of the debtor
d. Secured creditors holding more than fifty percent (50%) of the total secured claims of the
debtor or unsecured creditors holding more than fifty percent (50%) of the total unsecured
claims of the debtor

This document is the property of PHINMA EDUCATION

 Course Code: Banking Laws
Module #8

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

__________ 3. The petition for voluntary rehabilitation proceedings shall exclude

a. The grounds upon which the petition is based
b. Statement of the fact of and the cause of the debtor's insolvency or inability to pay its
obligations as they become due
c. Identification of the creditor, its principal activities and its addresses
d. The specific relief sought pursuant to this FRIA

__________ 4. The petition for involuntary rehabilitation proceedings shall not include
a. A Rehabilitation Plan
b. The circumstances sufficient to support petition to initiate involuntary rehabilitation
proceedings
c. The names of at least three (3) nominees to the position of rehabilitation receiver
d. Identification of the creditor, its principal activities and its address

__________ 5. Requirements of Out-of-Court or Informal Restructuring Agreements and

Rehabilitation Plans are as follows, except
a. The debtor must agree to the out-of-court or informal restructuring/workout agreement
or Rehabilitation Plan.
b. It must be approved by debtors representing at least sixty-seven percent (67%) of
the secured obligations of the creditor.
c. It must be approved by creditors representing at least seventy-five percent (75%) of the
unsecured obligations of the debtor.
d. It must be approved by creditors holding at least eighty-five percent (85%) of the total
liabilities, secured and unsecured, of the debtor.

__________ 6. Stay or Suspension Order shall

a. Suspend all actions or proceedings, in court or otherwise, for the enforcement of claims
against the debtor
b. Suspend all actions to enforce any judgment, attachment or other provisional remedies
against the debtor
d. Prohibit the debtor from making any payment of its liabilities outstanding as of the
commencement date except as may be provided herein
d. All as enumerated

__________ 7. The petition for involuntary liquidation proceedings shall include

This document is the property of PHINMA EDUCATION

 Course Code: Banking Laws
Module #8

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

a. A schedule of the debtor's debts and liabilities including a list of creditors with their
addresses, amounts of claims and collaterals, or securities, if any
b. The names of at least three (3) nominees to the position of liquidator
c. There is no substantial likelihood that the debtor may be rehabilitated
d. An inventory of all its assets including receivables and claims against third parties

__________ 8. The petition for voluntary liquidation proceedings shall include

a. A schedule of the debtor's debts and liabilities including a list of creditors with
their addresses, amounts of claims and collaterals, or securities, if any
b. There is no genuine issue of fact or law on the claim/s of the petitioner/s, and that the
due and demandable payments thereon have not been made for at least one hundred
eighty (180) days or that the debtor has failed generally to meet its liabilities as they fall due
c. There is no substantial likelihood that the debtor may be rehabilitated
d. An inventory of all its liabilities including receivables and claims against third parties

__________ 9. Financial Rehabilitation and Insolvency Act is

a. R.A. 1405
b. B.P. 22
c. R.A. 3591
d. R.A. 10142

__________ 10. Which of the following is incorrect about the cram-down effect?
a. It forces the creditors to accept the terms and conditions of the rehabilitation plan.
b. Its power is exercised by the Rehabilitation Court.
c. It maintains that the court may approve a rehabilitation plan over the objection of the
creditors.
d. All of the above

This document is the property of PHINMA EDUCATION