INSOLVENCY LAW (FRIA of 2010 – RA 10142) o Debtor may be made subject to liquidation

GROUNDS FOR INSOLVENCY LIQUIDATION (filed for insolvency)

o Assets > Liabilities but unable to pay liabilities 1) VOLUNTARY LIQUIDATION
Remedy: file petition for suspension of payments - Initiated by debtor
o Liabilities > Assets - Debts > P500k
Remedy: file for insolvency - Liquidation order issued w/in 5 working days
2) INVOLUNTARY LIQUIDATION
SUSPENSION OF PAYMENTS - Initiated by creditor or group of creditors
- Sufficient property to pay debts - Any group of creditors who have claim > 500k
- Postponement by court order - Creditor(s) must post a bond
DURATION: 3 months - If debtor is not insolvent, they’ll be liable
EFFECT: No creditor shall sue/demand payment except: - Orders the Court may issue:
o Fully secured creditors o Show Cause order: require debtor
o Claims for labor, expenses of last illness & funeral to show cause
of wife or children incurred 60 days prior filing o Forbidding debtor to transfer
property or to make payments
FILING OF PROCEDURES
The meeting of creditors shall
PETITION 1) Issuance of Liquidation Order
approve a proposed agreement:
- No foreclosure proceeding for 180 days
QUORUM: 3/5 of liabilities
2) Appointment of Liquidator
ACTION BY VOTE: 2/3 of quorum provided
THE COURT G.R: Creditor(s) shall appoint liquidator
their claims amount to 3/5 of
Exception: The Court may appoint liquidator
liabilities
3) Oath-taking and filing of bond by liquidator
Meeting of EXCLUDED: those with credit
4) Preliminary registry of claims of creditors
Creditors incurred within 90 days prior
5) Submission of liquidation plan (within 3
PROCEDURES months)
6) Sale of Assets in liquidation
IFAPPROVED: Parties are all bound G.R: Sale be made at a public auction
IF DEBTOR FAILED TO PERFORM Exception: Private sale for perishable of nature or
o Creditor rights are re-vested for the interests of debtor and creditors
7) Payment of claims (preference: services by
employees and laborers)