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ATTY. MICHAEL B. BONGALONTA CPA,MICB,MBA,CTT,DBA, MRIS,MRITAX
FINANCIAL REHABILITATION AND INSOLVENCY ACT (FRIA) 2023
1. What is the purpose of financial rehabilitation and
insolvency proceedings?
a. To punish financially troubled companies for their
mismanagement
b. To rehabilitate financially troubled companies and
protect the interests of their creditors
c. To provide financial incentives to companies in
financial difficulties
d. None of the above
2. What is the law that governs financial rehabilitation
and insolvency proceedings in the Philippines?
a. Republic Act No. 11122
b. Republic Act No. 10142
c. Republic Act No. 9501
d. Republic Act No. 10519
3. What is the meaning of insolvency?
a. The inability of a company to pay its debts as they
become due
b. The unwillingness of a company to pay its debts
c. The mere default of a company in any of its
obligations
d. None of the above
4. What is a rehabilitation plan?
a. A plan that outlines the liquidation of a company's
assets
b. A plan that outlines the restructuring of a company's
debts and obligations
c. A plan that outlines the takeover of a company's
management by creditors
d. None of the above
5. What is the difference between voluntary insolvency
and involuntary insolvency?
a. There is no difference, the terms are synonymous
b. Voluntary insolvency is initiated by the debtor while
involuntary insolvency is initiated by the creditor
c. Voluntary insolvency is initiated by the creditor while
involuntary insolvency is initiated by the debtor
d. None of the above
6. What is the role of the Securities and Exchange
Commission (SEC) in insolvency proceedings?
a. To act as the mediator between the debtor and the
creditor
b. To oversee all insolvency proceedings and ensure
that they comply with applicable laws and regulations
c. To provide financial assistance to the company in
financial difficulties
d. None of the above
7. What is the effect of filing a petition for insolvency?
a. It immediately stops all collections and foreclosure
proceedings against the debtor
b. It automatically grants the debtor a discharge of all
its debts
c. It immediately puts the company into bankruptcy
d. None of the above
8. What is the difference between a receiver and a
rehabilitation receiver?
a. There is no difference, the terms are synonymous
b. A receiver is appointed to manage the assets of the
company, while a rehabilitation receiver is appointed to
develop a rehabilitation plan for the company
c. A receiver is appointed by the debtor, while a
rehabilitation receiver is appointed by the creditor
d. None of the above
9. What is the effect of a stay order in insolvency
proceedings?
a. It prevents the creditor from liquidating the assets
of the debtor
b. It prevents the debtor from filing for bankruptcy
c. It prevents the debtor from applying for a
rehabilitation plan
d. None of the above
10. What is the role of the creditors in the
development of a rehabilitation plan?
a. To decide on the terms and conditions of the
rehabilitation plan
b. To provide financial assistance to the debtor
c. To appoint a rehabilitation receiver to develop the
rehabilitation plan
d. None of the above
11. Can a creditor file a petition for involuntary
insolvency against a single debtor?
a. Yes, if the creditor has a claim against the debtor
that exceeds the minimum amount required by law
b. No, a petition for involuntary insolvency must be
filed by at least three creditors
c. Yes, as long as the debtor is a corporation
d. None of the above
12. What is the effect of a receivership order in
insolvency proceedings?
a. It immediately grants the debtor a discharge of all
its debts
b. It allows the creditor to take over the management
of the debtor's assets and operations
c. It suspends all collections and foreclosure
proceedings against the debtor
d. None of the above
13. What is a pre-negotiated rehabilitation?
a. A rehabilitation plan that has been negotiated and
agreed upon by the debtor and its creditors before the
filing of a petition for rehabilitation
b. A rehabilitation plan that is negotiated and agreed
upon during the course of rehabilitation proceedings
c. A rehabilitation plan that is developed by a court-
appointed rehabilitation receiver
d. None of the above
14. Can shareholders of a debtor company be held
liable for its debts?
a. No, shareholders are not liable for the debts of the
company
b. Yes, shareholders can be held liable if they have
personally guaranteed the debts of the company
c. Yes, shareholders can be held liable if their
misconduct contributed to the insolvency of the
company
d. None of the above
15. Who can file a petition for voluntary rehabilitation?
a. Only the debtor company can file a petition for
voluntary rehabilitation
b. Any creditor or group of creditors with a claim
against the debtor may file a petition for voluntary
rehabilitation
c. Only the Securities and Exchange Commission (SEC)
can file a petition for voluntary rehabilitation
d. None of the above
16. What is the effect of a declaration of insolvency?
a. It immediately grants the creditor the right to
liquidate the assets of the debtor
b. It suspends all collections and foreclosure
proceedings against the debtor
c. It immediately puts the company into bankruptcy
d. None of the above
17. What is the duration of the automatic stay order in
insolvency proceedings?
a. 120 days from the filing of a petition for
rehabilitation
b. 180 days from the filing of a petition for
rehabilitation
c. 365 days from the filing of a petition for
rehabilitation
d. None of the above
18. What is the role of the rehabilitation receiver in
insolvency proceedings?
a. To liquidate the assets of the debtor and distribute
the proceeds to the creditors
b. To develop a rehabilitation plan for the debtor and
oversee its implementation
c. To act as the mediator between the debtor and its
creditors
d. None of the above
19. Can a secured creditor participate in the
rehabilitation process?
a. No, secured creditors are not affected by the
rehabilitation proceedings
b. Yes, secured creditors can participate in the
rehabilitation process but their claims are given priority
over unsecured creditors
c. Yes, secured creditors can participate in the
rehabilitation process but their claims are given a lower
priority than unsecured creditors
d. None of the above
20. Can a creditor appeal a final order or judgment
issued in insolvency proceedings?
a. No, final orders or judgments issued in insolvency
proceedings are not appealable
b. Yes, final orders or judgments issued in insolvency
proceedings can be appealed to the Court of Appeals
within a certain period of time
c. Yes, final orders or judgments issued in insolvency
proceedings can be appealed to the Supreme Court
within a certain period of time
d. None of the above
21. What is the difference between a liquidation sale
and an rehabilitation sale?
a. There is no difference, the terms are synonymous
b. A liquidation sale involves the sale of all the assets
of the debtor, while a rehabilitation sale involves the
sale of only a portion of the debtor's assets
c. A liquidation sale is conducted during liquidation
proceedings, while a rehabilitation sale is conducted
during rehabilitation proceedings
d. None of the above
22. What is the difference between corporate recovery
and rehabilitation?
a. There is no difference, the terms are synonymous
b. Corporate recovery refers to the overall financial
turnaround of a company, while rehabilitation refers to
the specific process of restructuring a company's debts
and obligations
c. Corporate recovery is initiated by the debtor, while
rehabilitation is initiated by the creditors
d. None of the above
23. Can a debtor company apply for a judicial
foreclosure during insolvency proceedings?
a. Yes, a debtor company can apply for a judicial
foreclosure even if it is under insolvency proceedings
b. No, a debtor company cannot apply for a judicial
foreclosure during insolvency proceedings
c. Yes, a debtor company can apply for a judicial
foreclosure but only with the permission of the court
d. None of the above
24. What is the difference between an insolvent
company and a bankrupt company?
a. There is no difference, the terms are synonymous
b. An insolvent company is one that is unable to pay its
debts as they become due, while a bankrupt company
is one that has been adjudged by the court as
bankrupt
c. An insolvent company is one that has filed a petition
for insolvency, while a bankrupt company is one that
has been judged to be beyond rehabilitation
d. None of the above
25. What is the effect of a rehabilitation plan on
pending claims against the debtor?
a. It extinguishes all pending claims against the debtor
b. It allows the debtor to renegotiate the terms of
pending claims with its creditors
c. It suspends all collections and foreclosure
proceedings against the debtor while the rehabilitation
plan is being implemented
d. None of the above
26. Who can file a petition for involuntary
rehabilitation?
a. Only one creditor with a claim against the debtor
that exceeds the minimum amount required by law
b. Three or more creditors with claims against the
debtor that exceed the minimum amount required by
law
c. The debtor company itself
d. None of the above
27. What is the role of the court in insolvency
proceedings?
a. To act as the mediator between the debtor and its
creditors
b. To oversee the rehabilitation proceedings and ensure
that they are conducted in accordance with applicable
laws and regulations
c. To make all the decisions related to the rehabilitation
plan
d. None of the above
28. Can a rehabilitation plan be amended?
a. Yes, a rehabilitation plan can be amended at any
time during the rehabilitation proceedings
b. No, a rehabilitation plan is final and cannot be
amended once it is approved by the court
c. Yes, a rehabilitation plan can be amended but only if
all the creditors approve the amendment
d. None of the above
29. What is the difference between an insolvent and an
illiquid company?
a. There is no difference, the terms are synonymous
b. An insolvent company is one that is unable to pay its
debts as they become due, while an illiquid company is
one that is unable to meet its financial obligations due
to a lack of cash flow
c. An insolvent company is one that has filed a petition
for insolvency, while an illiquid company is one that
has not yet filed for insolvency
d. None of the above
30. What is the meaning of rehabilitation stay rule?
a. A rule that stops all collections and foreclosure
proceedings against the debtor as soon as a petition
for rehabilitation is filed
b. A rule that requires the debtor to submit a
rehabilitation plan within a certain period of time after
the filing of a petition for rehabilitation
c. A rule that allows the debtor to continue operating
its business while under rehabilitation proceedings
d. None of the above
31. Can a creditor collect from the debtor's assets after
a rehabilitation plan has been approved by the court?
a. No, all the debtor's assets are turned over to the
rehabilitation receiver after a rehabilitation plan is
approved
b. Yes, a creditor can collect from the debtor's assets
but only if their claim is not covered by the
rehabilitation plan
c. Yes, a creditor can collect from the debtor's assets
but only if the rehabilitation plan is not successful
d. None of the above
32. What is the effect of conversion from rehabilitation
to liquidation?
a. It automatically extinguishes all pending claims
against the debtor
b. It allows the debtor to renegotiate the terms of
pending claims with its creditors
c. It imposes an automatic stay on all collections and
foreclosure proceedings against the debtor
d. None of the above
33. Can a rehabilitation plan be confirmed even if some
creditors do not agree to it?
a. No, all creditors must agree to a rehabilitation plan
for it to be confirmed by the court
b. Yes, a rehabilitation plan can be confirmed even if
some creditors do not agree to it as long as it meets
the requirements of the law
c. Yes, a rehabilitation plan can be confirmed by the
court but only if it is submitted by the rehabilitation
receiver
d. None of the above
34. What is the effect of a declaration of suspension of
payments?
a. It immediately puts the company into bankruptcy
b. It immediately stops all collections and foreclosure
proceedings against the debtor
c. It automatically grants the debtor a discharge of all
its debts
d. None of the above
35. What is the difference between an equity receiver
and a rehabilitation receiver?
a. There is no difference, the terms are synonymous
b. An equity receiver is appointed to manage the
assets of the debtor, while a rehabilitation receiver is
appointed to develop a rehabilitation plan for the
debtor
c. An equity receiver is appointed by the creditor, while
a rehabilitation receiver is appointed by the court
d. None of the above
36. Who can file a motion for a change of rehabilitation
receiver?
a. Only the debtor company or its creditors
b. Only the current rehabilitation receiver
c. Anyone who has a direct or indirect interest in the
rehabilitation proceedings
d. None of the above
37. What is the primary objective of a rehabilitation
plan?
a. To pay off all the debts of the debtor in full
b. To allow the debtor to continue operating its
business while satisfying its obligations to its creditors
c. To liquidate the assets of the debtor and distribute
the proceeds to its creditors
d. None of the above
38. Can a creditor appeal an order approving or
disapproving a rehabilitation plan?
a. No, orders approving or disapproving a rehabilitation
plan are final and not appealable
b. Yes, orders approving or disapproving a
rehabilitation plan can be appealed to the Court of
Appeals within a certain period of time
c. Yes, orders approving or disapproving a
rehabilitation plan can be appealed to the Supreme
Court within a certain period of time
d. None of the above
39. What is the purpose of a notice of suspension of
payments?
a. To inform the creditors that the debtor has filed a
petition for suspension of payments
b. To provide the creditors with a copy of the petition
for suspension of payments
c. To inform the public that the debtor is in financial
difficulties and is undergoing rehabilitation proceedings
d. None of the above
40. Can a corporation be held criminally liable for
insolvency?
a. No, only the individuals responsible for the
insolvency can be held criminally liable
b. Yes, a corporation can be held criminally liable for
insolvency
c. Yes, but only if the insolvency was caused by
criminal acts or fraud
d. None of the above
41. What is the role of the rehabilitation receiver in
relation to the management of the debtor?

a. To completely take over the management of the

debtor

b. To supervise the management of the debtor and

ensure that it is conducted in accordance with the
rehabilitation plan

c. To act as a consultant to the management of the

debtor

d. None of the above

42. Can an order of the court approving a rehabilitation

plan be rescinded or amended?

a. No, an order approving a rehabilitation plan is final

and not subject to rescission or amendment

b.