RFBT Reviewer - FRIA

PROCEEDINGS COVERED BY THE FRIA:

Pre-Negotiated (Out-of-
Suspension of Payments Rehabilitation Liquidation
Court) Rehabilitation
Calling the creditors to
a meeting
 Agree on a
schedule of Liquidation is the proceeding where:
payments The restoration of the debtor 1. Claims are filed; and
Definition  To prevent the to a condition of successful 2. The assets of the insolvent debtor are disposed;
debtor from operation and solvency. and the
making any 3. Proceeds are divided among the creditors.
Requirements:
payment outside
1. The debtor must agree
 The issuance of to the out-of-court or
suspension order informal
Voluntary – initiated by the restructuring/workout Voluntary
debtor, agreement or 1. Acts of insolvency need not be alleged and proved.
1. The debtor has a. The debtor is insolvent; rehabilitation plan; 2. The individual debtor files the petition.
sufficient b. The viability of 2. Approved by creditors: 3. The debtor is not absent.
properties. rehabilitation a. 67% of the secured 4. Posting of bonds by creditors not required.
2. The purpose is to i. SP – owner obli 5. Liquidation order issued without trial.
suspend or delay ii. Partnership – majority b. 75% of the 6. Number of creditors immaterial
the payment of iii. Corporation – unsecured obli
Features debts. majority of BOD and c. 85% of total liab Involuntary
3. The amount of 2/3 of OSC 1. Creditors must prove acts of insolvency.
indebtedness is not 2. A creditor or group of creditors files the petition.
affected. Involuntary – initiated by 3. Applies even in the case of an absence debtor.
4. The number of the creditors, 4. Posting of bonds by creditors is required.
creditors is a. No genuine issue of fact 5. Liquidation order issued only after trial.
immaterial. b. No payments on the due 6. Must be 3 or more creditors whose claim is at least
and demandable ebts for 1M or at least 25% of the subscribed capital stock,
at least 60 days. whichever is higher
Distinction Applies only to Applies to business Also applies to business organizations
s individual debtors organizations also
Debtor has sufficient Debtor is insolvent Debtor is already insolvent
assets to cover its
liabilities
Secured debtors are not Secured debtors are affected
affected by stay order
Filed by the debtor Maybe filed by creditors May be initiated by the creditors
No minimum When creditors file, the Debt of the individual must be at least 500,000
requirement for the claims must be:
RFBT Reviewer - FRIA
amount of claims 1. At least 1M or
2. At least 25% of the
subscribed capital stock
or partner’s
contribution, whichever
is higher
Payment of obligations Obligations are discharged
is stayed
Rules on concurrence Applicable
and preference of
credits DO NOT apply