PLACEMENT UNDER CONSERVATORSHIP,

RECEIVERSHIP AND LIQUIDATION

By:
Lyanne Gonzales
Izzah May Luciano
Nica Lorraine Nicolas
Conservatorship

• Conservatorship is a tool in restoring the viability of banks

and quasi-banks. It consists of carrying out a package of
administrative, organizational,financial and/or other
measures to address the state of continuing inability or
unwillingness to maintain a condition of liquidity deemed
adequate to protect the interest of depositors and
creditors.
Section 29. Appointment of Conservator

The Monetary Board may:

• Appoint a conservator with such powers as the Monetary Board

shall deem necessary to take charge of the assets and liabilities
• Reorganize the management
• Collect all monies and debts due said institution
• Exercise all powers necessary to restore its viability.
Duration of Conservatorship

The conservator shall receive remuneration to be fixed by the

Monetary Board in an amount not to exceed two-thirds (2/3) of the
salary of the president of the institution in one (1) year, payable in
twelve (12) equal monthly payments,

The conservator should be competent and knowledgeable in bank

operations and management. The conservatorship shall not exceed
one (1) year.
When can the Monetary Board can terminate the Conservatorship?

• Institution can operate on its own

• Institution would involve probable loss to its depositors
and creditors.

Limitations to Power
May not revoke perfected and enforceable contracts. It will
result to an infringement of the non-impairement clause
guaranteed by the Constitution
Receivership
• Receivership is a summary closure of the Bank by the
Bangko Sentral without prior notice and hearing after a
finding that continuance in businesswill involve probable
loss to its depositors and creditors. Receivership is
aharsh remedy to be granted with utmost circumspection
and only in extremesituations.
Section 30. Proceedings in Receivership and Liquidation

Upon report of the head of the supervising or examining

department, the Monetary Board finds that a bank or quasi-bank:
• Unable to pay its liabilities
• Insufficient realizable assets, as determined by the Bangko
Sentral, to meet its liabilities
• Cannot continue in business without involving probable losses to
its depositors or creditors
• Willfully violated a cease and desist order under Section 37 that
has become final, involving acts or transactions which amount to
fraud or a dissipation of the assets of the institution
Duration of Receivership

• The receiver shall determine as soon as possible, but not later

than ninety (90) days from take over, whether the institution may
be rehabilitated or otherwise placed in such a condition so that it
may be permitted to resume business with safety to its depositors
and creditors and the general public: Provided, That any
determination for the resumption of business of the institution
shall be subject to prior approval of the Monetary Board.
• File ex- parte with RTC, without need for prior notice or
any other action, petition for assistance in the liquidation
of bank
• Convert assets of bank to money, dispose to creditors and
other parties for the purpose of paying the debts of the
bank.
• Institute actions to collect and recover accounts and
assets and defend any action against the bank
Powers of Person-In-Charge
• Immediately gather and take charge of all assets and
liabilities of the bank
• Administer the assets and liabilities of the bank for the
benefit of creditors
• Exercise general powers of the receiver under Revised
Rules of Court. Preserve, administer and dispose
properties in litigation
• Deposit or place the funds of the institution in non-
speculative investments
Limitations to Power

• May not dispose or sell any assets of the bank

Not allowed to pay or commit an act that will involve the
transfer or disposition of any asset of the bank except the
payment of administrative expenditures and the deposit or
placement of funds in non-speculative investment.
Liquidation

• In liquidation, there is no hope in rehabilitating the bank. At this point, it

determines and pays the claims of the bank’s creditors. A liquidation
proceeding is a single proceeding which consists of a number of cases
properly classified as ‘claims”. It is basically a two phased proceeding. The
first phase is concerned with the approval or disapproval of claims. The
second phase involves the approval of by the court of the distribution plan
prepared by the duly appointed liquidator.
• Acts of liquidation re those which constitute the conversion of the assets of
the banking institution to money or the sale, assignment or disposition of the
same creditors and other parties for the purpose of the paying debts of such
institution.
Duration of Liquidation

• Voluntary liquidation under Sec 68 pf GBL orupon finding that

bank can no longer berehabilitated and cannot continue business
after the 90 day receivership period.
• No period stated in the law. May take sometime depending on the
determination andpayment of claims to creditors
Powers of Person-In-Charge

• To assist the BSP in determining the claims of creditors

against the bank
Conservatorship vs. Receivership vs. Liquidation
CONSERVATORSHIP RECEIVERSHIP LIQUIDATION

Grounds 1. Continuing inability 1.Inability to pay liabilities as 1.Insolvency

2. Unwillingness to they fall due e.g: bank run, 2.Continuance would
maintain condition of rumors and etc. involve probable loss to its
2.Assets are less that its
liquidity creditors
liabilities
3. Cannot continue business 3.Bank cannot be
without causing damage; rehabilitated.
4.Violation of a cease and
desist order
5.”Bank holiday” for more than
30 days (NCBA, Sec. 30).

Effect 1.Juridicial personality is 1. Juridical personality is 1. Juridical personality is

retained retained.
retained. 2. Suspension of
2. Perfected transactions 2. Perfected transactions
operation/stoppage of
cannot be repudiated.
cannot be repudiated. business
3. Assets deemed in custodia
legis
(In the custody of the law).

When terminated After 1 year Whithin 90 days if liquidation is When debts have been paid
decided upon: in accordance with the
Until the bank is viable again, if liquidation plan
rehabilitation is decided upon