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Insolvency: the financial incapacity of the debtor to pay his liabilities as they
full due in the ordinary course of business or whenever his liabilities are
greater that his assets.
Voluntary Insolvency: a debtor applying to the discharged from his debts &
liabilities.
Approval
o Sole proprietorship: majority of the partners
o Corporation: majority vote of the BOD or at least 2/3 of the
outstanding capital stock
Contents of petition
o Identification of debtor, its principal activities & its addresses;
o Statement of the fact of & the cause of the debtor’s
insolvency or inability to pay its obligation as they become
due
o The specific relief sought;
o The grounds upon which the petition is based
o Other information that may be required depending on the
form of relief requested;
o Schedule of the debtor’s debts & liabilities including a list of
creditors with their addresses, amounts of claims & collaterals
or securities, if any.
o An inventory of all its assets including receivables & claims
against third parties;
o A rehabilitation plan;
o The names of at least 3 nominees to the position of
rehabilitation receiver, and
o Other documents required to be filed with the petition
pursuant to RA 10142 & the rules of procedure as may be
promulgated by the supreme court.
Involuntary Insolvency: an adjunction of insolvency made on petition of any
creditor or group of creditors with a claim, or the aggregate of whose claims
is, at least P1,000,000 or at least 25% of the subscribed capital stock or
partners contributions, whichever is higher.
Contents of petition
o Identification of the debtor its principal activities & its
address;
o The circumstances sufficient to support a petition to initiate
involuntary rehabilitation proceedings
o The specific relief sought
o A rehabilitation plan
o The name of at least 3 nominees to the position of
rehabilitation receiver
o Other information that may be required depending on the
form of relief requested; and
o Other documents required to be filed with the petition
pursuant to the RA 10142 & the rules procedure as may be
promulgated by the Supreme Court.
FRIA (DEFINITION OF TERMS) 6/2/2018 6:44:00 AM
Administrative Expense
Affiliate
Shall refer to a corporation that directly or indirectly through one or
more intermediaries is controlled by, or is under the common
control of another corporation.
Claim
Shall refer to all claims or demands whatever nature or character
against the debtor or its properties.
Commencement date
Shall refer to the date on which the court issues the
commencement order, which shall be retroactive to the date of
filing of the petition for voluntary or involuntary proceedings
Commencement order
Shall refer to the order issued by the court under Section 16 of RA
10142
Control
Power of a parent corporation to direct or govern the financial &
operating policies of an enterprise so as to obtain benefits from its
activities
Court
Shall refer to the court designated by the Supreme Court to
determine the case brought under the RA 10142
Cram down power
Refers to the power of the court to approve or implement a
rehabilitation plan despite the lack of approval, or objection from
the owners, partners, or stockholders of an insolvent debtors
Creditor
Shall refer to a natural or juridical person which has a claim against
the debtor that arose on or before the commencement date.
Date of liquidation
Shall refer to the date on which the court issues the liquidation
order
Days
Calendar days, unless otherwise stated
Debtor
Sole proprietorship, partnership, or a corporation
Encumbered property
Shall refer to real or personal property of the debtor upon which a
lien attaches
General unsecured creditor
Shall refer to a creditor whose claim or a portion thereof is neither
secured, preferred nor subordinated under RA 10142
Group of debtors
Corporations that are financially related to one another as parent
corporation
Partnerships that are owned more than 50% by the same person
Single proprietorships that are owned by the same persons
Individual debtor
Natural person who is a resident citizen of the Philippines that has
become insolvent
Insolvent
Financial condition of a debtor that is generally unable to pay its or
his liabilities as they fall due in the ordinary course of business or
has liabilities that are greater that its or his assets
Insolvent debtor’s estate
Estate of the insolvent debtor
Involuntary proceedings
Proceedings initiated by the creditors
Liabilities
Monetary claims against the debtor
Lien
Statutory or contractual claim or juridical charge on real or personal
property
Liquidation
Proceedings under Chapter V of RA 10142
Liquidation order
Issued by the court under Section 112 of RA 10142
Liquidator
Natural person or juridical person appointed
If the liquidator is a juridical entity, it must designate a natural
person who possess all the qualifications & none of the
disqualifications as its representatives
Officer
Natural person, holding a management position described in or
contemplated by a juridical entity’s articles of incorporation, by
laws, or equivalent documents
Except: assistant /corporate secretary & the external auditor
Ordinary course of business
Transactions in the pursuit of the individual debtor’s or debtor’s
business operations prior to rehabilitation or insolvency proceedings
& on ordinary business terms
Ownership interest
Ownership interest of third parties in property held by the debtor,
including those covered by trust receipts or assignment of
receivables
Parent
Corporation which has control over another corporation either
directly or indirectly through one or more intermediaries
Party to the proceedings
Debtor; creditor; unsecured creditors; committee. A stakeholder; a
party with an ownership interest etc.
Possessory Lien
Lien on property, the possession of which has been transferred to a
creditor or a representative or agent thereof
Publication notice
Notice through publication in a newspaper of general circulation in
the Philippines
Rehabilitation
Restoration of the debtor to a condition of successful operation &
solvency
Rehabilitation receiver
Person or persons, natural or juridical, appointed as such by the
court & which shall be entrusted with such powers & duties as set
forth therein
Rehabilitation Plan
A plan by which the financial well being & viability of an insolvent
debtor can be restored using various means including debt
forgiveness, debt rescheduling etc…
Secured claim
Claim that is secured by a lien
Secured creditor
Creditor with a secured claim
Secured party
Secured creditor or the agent or representative of such secured
creditor
Securities market participant
Broker, dealer, underwriter, transfer agent or other juridical
persons transacting securities in the capital market
Stakeholder
Addition to a holder of shares of a corporation, to a member of a
non-stock corporations or association or a partner in a partnership
Subsidiary
Corporation more than 50% of the voting stock of which is owned
or controlled directly or indirectly through one or more
intermediaries by another corporation, which thereby becomes its
parent corporation
Unsecured claim
Claim that is not secured by a lien
Unsecured creditor
Creditor with an unsecured claim
Voluntary proceedings
Proceedings initiated by the debtor
Voting creditor
A creditor that is a member of a class of creditors, the consent of
which is necessary for the approval of a Rehabilitation Plan under
RA 10142
6/2/2018 6:44:00 AM