COURT-SUPERVISED
rehabilitation.
REHABILITATION
A. VOLUNTARY VS. INVOLUNTARY
Voluntary Proceedings
Petition to Initiate Voluntary Proceedings
by Debtor.
 Who initiates voluntary
proceedings?
1. Owner in case of a sole
proprietorship;
2. Majority of the partner in
case of a partnership;
3. Majority vote of the board of
directors and authorized by
the vote of the stockholders
representing at least 2/3 of
the outstanding capital stock
in a stockholders’ meeting
duly called for the purpose in
case of a stock corporation;
or
4. Majority vote of the trustees
and authorized by the vote
of the members representing
at least 2/3 members in a
member’s meeting duly
called for the purpose in case
of a non-stock corporation.
An insolvent debtor may initiate
voluntary proceedings by filing a
petition for rehabilitation with the
court on the grounds hereinafter
specifically provided.
The petition shall be verified to
establish the insolvency of the
debtor and the viability of its
The following shall be included
whether as an attachment or as part
of the body of the petition:
a. Identification of the debtor,
its activities and its address;
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. The specific relief;
d. The grounds upon which the
petition is based;
e. Other information that may
be required depending on
the form of relief requested;
f. Schedule of the debtors’
debts and liabilities including
a list of creditors with their
addresses, among of claims
and collaterals, or securities,
if any;
g. An inventory of all its assets
including receivables and
claims against third parties;
h. A Rehabilitation Plan;
i. The names of at least 3
nominees to the position of
rehabilitation receiver; and
j. Other documents required to
be filed with the petition.
A group of debtors may jointly file a
petition for rehabilitation when one
or more of its members foresee the
following:
 1. impossibility of meeting made for at least 60 days
debts when they respectively or
fall due, - That debtor has failed
2. the financial distress would generally to meet its
likely adversely affect the liabilities as they fall due;
financial condition and or
operation of the other 2. A creditor, other than the
members of the group petitioner/s, has initiated
and/or the participation of foreclosure proceedings
the other members of the against the debtor that will
group is essential under the prevent the debtor from
terms and conditions of the paying its debts as they
proposed Rehabilitation Plan. become due or will render it
insolvent.
Petition to Initiate Involuntary Proceeding
Involuntary Proceedings
 The creditor/s petition for
Circumstances Necessary to Initiate
rehabilitation shall be verified to
Involuntary Proceedings.
establish the substantial likelihood
 INITIATED BY CREDITOR OR GROUP that the debtor may be
OF CREDITORS. Any creditor or rehabilitated.
group of creditors with a claim of, or
the aggregate of whose claim is, at The petition shall include the
least One Million Pesos (PHP following:
1,000,000) or at least 25% of the
subscribed capital stock or partners a. Identification of the debtor,
contribution, whichever is higher, its principal activities and its
may initiate involuntary proceeding address;
against the debtor. b. The circumstances sufficient
to support a petition to
HOW? By filing a petition for initiate involuntary
rehabilitation with the court if: rehabilitation;
1. c. The specific relief;
- There is no genuine issue d. A Rehabilitation Plan;
of fact on law on the e. The names of at least 3
claim/s of the nominees to the position of
petitioner/s, and rehabilitation receiver;
- That the due and f. Other information that may
demandable payments be required depending on
thereon have not been the form of relief requested;
and
 g. Other documents required  The rehabilitation proceedings shall
to be filed with the petition commence upon the issuance of the
Commencement Order, which shall:
a.

Action on the Petition and Commencement

of Proceedings
Action on the Petition

 SUFFICIENT IN FORM AND

SUBSTANCE. If the court finds the
petition for rehabilitation to be
sufficient in form and substance, it
shall, within 5 working days from the
filing of the petition, issue a
Commencement Order.

 DEFICIENCY IN FORM AND

SUBSTANCE. If the court finds the
petition deficient in form or
substance, the court may, in its
discretion, give the petitioner/s a
reasonable time within which to:

1. Amend; or
2. supplement the petition, or
3. to submit such documents as
may be necessary or proper
to put the petition in proper
order.

In such case, the 5 working days for

the issuance of the Commencement
Order shall be reckoned from the
date of the filing of the amended or
supplement petition or submission
of such documents.
Commencement of Proceedings and
Issuance of a Commencement Order