Proceedings Under the FRIA

The following is a list of proceedings under the Financial Rehabilitation and Insolvency Act (RA 10142) and the pertinent parties:

1.) Voluntary Rehabilitation/Debtor-initiated Rehab

For voluntary rehab of a sole proprietorship, it’s the owner who will approve or file the petition. In case of a partnership, it has to be the majority of the partners. For a corporation, the petition must be approved/filed by the majority of the board of directors/trustees as well as stockholders representing 2/3 of the outstanding capital stock, or 2/3 of the members in case of non-stock corporations.

2.) Involuntary Rehabilitation/Creditor-initiated Rehab

For the involuntary rehab of a sole proprietorship, partnership or corporation, the petition must be filed/approved by a creditor or group of creditors with a claim or aggregate claim equal to at least 25% of the subscribed capital stock/partners’ contributions or at least Php1,000,000.00 –whichever is higher.

3.) Pre-Negotiated Rehab

This is for the petition for the approval of the pre-negotiated rehab plan and applies to sole proprietorships, partnerships and corporations. The insolvent debtor and the rehab plan must be approved by creditors holding at least 2/3 of the debtor’s total liabilities including secured creditors holding more than 50% of the secured claims and unsecured creditors holding more than 50% of the unsecured claims.

4.) Voluntary Liquidation

An insolvent debtor in a partnership, sole proprietorship or corporation will file/approve the petition for voluntary liquidation.

5.) Involuntary Liquidation

This covers corporations, sole proprietorships and partnerships. The petition must be filed/approved by 3 or more creditors with an aggregate claim of at least Php1,000,000.00 or 25% of the outstanding capital stock/partner’s contributions –whichever is higher.

6.) Suspension of Payment

The individual debtor files/approves the petition.

7.) Voluntary Liquidation

The individual debtor files/approves. He must have at least Php500,000.00 in debts and doesn’t have sufficient assets to pay his liabilities.

8.) Involuntary Liquidation

The subject is once again the individual debtor and the petition is for acts of insolvency. The petition is filed by a creditor/group of creditors whose claim/aggregate claim is at least Php500,000.00.