IBL Reviewer

Conservatorship v. Receivership v. Liquidation

Anj Dela Cruz

CONSERVATORSHIP RECEIVERSHIP LIQUIDATION

Attempt to save the bank from bankruptcy and
ultimate liquidation; It is a step short of liquidation;
DEFINITION Manner of helping a bank by effective
management reforms and/or infusion of additional
capital
Summary closure of the Bank by the BSP without prior No hope in rehabilitating the bank; At this point,
notice and hearing after a finding that continuance in it determines and pays the claims of the bank’s
business will involve probable loss to its depositors and creditors
creditors

INSTANCES WHEN PLACED
UNDER SUCH
Based on report of MB that bank is in a state of
inability or unwillingness to maintain a condition
of liquidity deemed adequate to protect the
interest of its depositors and creditors
Upon finding of the MB that: Voluntary liquidation under Sec 68 pf GBL or
a) Unable to pay liabilities upon finding that bank can no longer be
b) Insufficient realizable assets to meet its rehabilitated and cannot continue business after
liabilities the 90 day receivership period
c) Cannot continue business without involving
probable loss to depositors and creditors
d) Willfully violated cease and desist order
under Sec. 37 of NCBA that has become
final involving acts or transactions which
amount to fraud or dissipation of assets of
institution
e) Notifies BSP or publicly announces Bank
Holiday

1 year, no extensions 90 days, no extensions No period stated in the law. May take some
time depending on the determination and
DURATION payment of claims to creditors

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IBL Reviewer
Conservatorship v. Receivership v. Liquidation
Anj Dela Cruz
Conservator  person appointed to take over the
management of the bank and shall assume
PERSON-IN-CHARGE exclusive powers to oversee every aspect of the
bank’s operations and affairs
a) take charge of assets, liabilities and
management of the bank
POWERS OF PERSON-IN-CHARGE b) reorganize the management of the
bank
c) collect all monies and debts due to the
bank/quasi-bank
d) exercise all powers necessary to
restore the viability of the bank/quasi-
bank
 power to overrule or revoke the
actions of the previous
management and board of
directors
 rescind contracts that are to be
enforced and not yet perfected
May not revoke perfected and enforceable
contracts – will result to an infringement of the
LIMITATIONS TO POWER non-impairment clause guaranteed by the
Constitution
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Receiver Liquidator
a) immediately gather and take charge of all To assist the BSP in determining the claims of
assets and liabilities of the bank creditors against the bank
b) administer the assets and liabilities of the
bank for the benefit of creditors
c) exercise general powers of the receiver
under Revised Rules of Court – preserve,
administer and dispose properties in litigation
d) deposit or place the funds of the institution in
non-speculative investments
e) determine as soon as possible, but not later
than 90 days, if the bank may be
rehabilitated or permitted to resume its
business subject to the approval of the MB
May not dispose or sell any assets of the bank; Not n/a
allowed to pay or commit any 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
investments
IBL Reviewer
Conservatorship v. Receivership v. Liquidation
Anj Dela Cruz
a) Bank still continues to operate as a
banking institution. The conservator
EFFECTS merely takes the place of the bank’s
management and board of directors
b) If found that the continuance in
operation of the bank or quasi bank
would involve probable loss to
depositors and creditors,
conservatorship will be terminated and
bank will be placed under receivership
After 1 year period of upon finding of MB that:
a) Bank can continue to operate on its
TERMINATION own
b) When continuance of the business of
the bank, based on report of
conservator, would involve probable
loss to depositors and creditors, in such
event bank placed under receivership
or liquidation
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a) Bank’s assets pass beyond its control into Bank ceases to exist; (d) of receivership
the possession and control of the receiver,
and the appointment of the receiver operates
to suspend the authority of the bank and its
directors and officers over its property and
effects – equivalent to injunction to restrain
the bank officers from intermeddling with the
property of the bank in any way
b) Officers are no longer authorized to transact
business in connection with the bank’s
assets and properties
c) Does not dissolve the bank as a corporation
nor does it interfere with the exercise of
corporate rights; Retain their corporate
personality – can sue and be sued but any
case should be initiated and prosecuted
through the liquidator
d) Assets of the bank deemed in custodia
l egis in the hands of receiver and shall be
exempt from any order of garnishment, levy,
attachment or execution
e) Forbidden by BSP to continue doing
business  fuerza mayor
f) May not grant new loans or accept deposits
BUT is still obliged to collect debts owing to
the bank and foreclose mortgages
g) Will not pay interest on deposits but may still
collect interest and charge on all loans
After 90 day period and upon determination that bank
cannot be rehabilitated:
a) File ex-parte with RTC, without need for prior
notice or any other action, petition for
assistance in the liquidation of bank
b) Convert assets of bank to money, dispose to
creditors and other parties for the purpose of
paying the debts of the bank
c) Institute actions to collect and recover
accounts and assets and defend any action
against the bank
IBL Reviewer
Conservatorship v. Receivership v. Liquidation
Anj Dela Cruz

REMEDY Judicial review will come later (based on “Close now, Hear later”) upon finding of grave abuse of discretion or bad faith.
Judicial action must be filed within 10 days from receipt of notice of Bank’s closure in a petition for certiorari by stockholders of record representing the majority
of the capital stock in RTC where head office of Bank is located and appealed to the CA under petition for review

a) Wait for bank to be viable a) Intervene in the liquidation proceedings;

b) Participate in receivership There will be no preference of claims