The Nature of FRIA Proceedings

Now let's go a little more into the proceedings under the FRIA.

FRIA proceedings are, by nature, in rem, summary and non-adversarial. Once notice of the commencement of the proceedings is published in a newspaper of general circulation, jurisdiction over all persons affected by the proceedings can now be properly acquired.

The following things must be kept in mind:

1.) Certainty and predictability in commercial affairs must be ensured and maintained

2.) The value of the debtor's assets must be preserved and maximized

3.) The rights of the creditors must be respected

4.) Creditors who are similarly situated must be treated equitably

5.) Priority of claims must be respected

Debtor

A debtor can either be an individual person or a group of debtors. A group of debtors can consist of the following:

1.) A collection of single proprietorships owned by the same person

2.) A group of partnerships where more than 50% of each one is owned by the same person

3.) Corporations financially related to each other (affiliates, subsidiaries, or parent corporations)

The following are not considered debtors under the FRIA because their rehabilitation comes under other laws:

1.) Banks (or quasi-banks)

2.) Insurance Companies

3.) Pre-need Companies

4.) LGUs and national government agencies

Government-owned financial institutions which aren't banks or quasi-banks and GOCCs are covered by FRIA unless their charters say otherwise. 

If rehabilitaion isn't feasible, the rehab can be converted into a liquidation.

There are 2 kinds of creditors: secured and unsecured. Secured creditors are creditors whose claims are secured by a lien. An unsecured creditor is one whose claim (or a portion of it) isn't secured. There is also what is known as a "general unsecured creditor." This type has a claim (or part of it) that is neither secured, preferred nor subordinated under the FRIA.