Financial Rehabilitation and Insolvency (FRIA)

• Three (3) or more creditors the aggregate of whose claims is at least either Php1,000,000.00 or at least 25% of the subscribed capital stock or partner’s contributions of the debtor, whichever is higher, may apply for and seek the liquidation of an insolvent debtor by filing a petition for liquidation of the debtor with the court.
• Cram down power refers to the power of the rehabilitation court to approve a rehabilitation plan even over the opposition of the creditors holding a majority of the corporation’s total liabilities if there is a showing that rehabilitation is feasible, and the opposition of the creditors is manifestly unreasonable.
• Suspension of payments can only be availed by individual debtors.
• Commencement order refers to the order issued by rehabilitation court if the court finds the petition for rehabilitation to be sufficient in form and substance.
• Stay or Suspension Order shall refer to an order issued in conjunction with the commencement order that shall suspend all actions or proceedings, in court or otherwise, for the enforcement of claims against the debtor; suspend all actions to enforce any judgment, attachment or other provisional remedies against the debtor; prohibit the debtor from selling, encumbering, transferring or disposing in any manner any of its properties except in the ordinary course of business; and prohibit the debtor from making any payment of its liabilities outstanding as of the commencement date.