What happens here is that there is an ailing corporation needing
reprieve from its creditor/s. The corporation files a petition in the Regional
Trial Court for the purpose of approving a Rehabilitation Plan. In the
meantime, all claims against the corporation are suspended.
Policies (Sec. 2)
1.To encourage debtors, both juridical and
natural persons, and their creditors to collectively and realistically resolve
and adjust competing claims and property rights. (achieve compromise/ amicable
settlement)
2. Ensure a timely,
fair, transparent, effective and efficient rehabilitation or liquidation of
debtors.
3. The rehabilitation
or liquidation shall be made with a view to:
- ensure or maintain certainty and predictability in
commercial affairs
- preserve and maximize the value of the assets of
these debtors
- recognize creditor rights and respect priority of
claims
- ensure equitable treatment of creditors who are
similarly situated.
When rehabilitation is not
feasible
Resort to speedy and orderly liquidation of the
debtor's assets and the settlement of their obligations.
Meaning of Rehabilitation
Restoration of the debtor to a condition
of successful operation and solvency, if it is shown that its continuance of
operation is economically feasible and its creditors can recover by way of the
present value of payments projected in the plan, more if the debtor continues
as a going concern than if it is immediately liquidated.
Difference between Rehabilitation and
Liquidation
Rehabilitation – connotes reopening or reorganization. Aim is to restore
corporation to its successful operation and continue corporate life
Liquidation – connotes winding up or settling with creditors and debtors.
Kinds of Proceedings
Involuntary proceedings shall refer to proceedings
initiated by creditors.
Voluntary proceedings shall refer to proceedings
initiated by the debtor.
Nature of Proceedings (Sec. 3)
Petition for Rehabilitation is:
1. In rem - Jurisdiction
over all persons affected by the proceedings shall be considered as acquired
upon publication of the notice of the commencement of the proceedings in any
newspaper of general circulation in the Philippines in the manner prescribed by
the rules of procedure to be promulgated by the Supreme Court.
This
is not in personam where jurisdiction
is acquired only thru personal service.
2. Summary – Because
it establishes a status or fact (that the corporation needs to be
rehabilitated)
3. Non-adversarial –
Parties to achieve win-win solution
Petition for rehabilitation is a special proceedings since its purpose is to establish a fact.
