Cross-Border Insolvency

Because global trade has been accelerated by the internet, this type of case under the FRIA will become very commonplace in the near future. It's called cross-border insolvency and happens when a foreign corporation doing business in the Philippines becomes insolvent. This part of the FRIA is based on the model put forth by the UN Center for International Trade and Development.

When a foreign corporation initiates insolvency proceedings, its files the petition. The court then issues the following orders:

1.) Suspension of actions to enforce claims against the foreign corporation (or seize/foreclose its property)

2.) Surrender the foreign corporation's property to its representative

3.) Provide other necessary reliefs

The court will consider the following factors in determining whether to grant relief to the foreign corporation:

1.) Protection of the Philippine creditors and the problems they could face if they pursue their case in a foreign proceeding

2.) Resort to a unified insolvency/rehab proceeding for the just treatment of all the creditors

3.) The extent to which the foreign proceeding recognizes the creditors' rights and those of other interested parties in a way that is substantially in line with what is prescribed in the FRIA

4.) The extent to which the foreign corporation recognizes and defers to FRIA proceedings (and previous legislation)

5.) Whether or not other jurisdictions recognize the foreign proceedings