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Revise to
read – “Liquidation shall refer to the judicial insolvency proceedings under Chapter V of the Act by which
the assets of an insolvent debtor are recovered and their value preserved and
maximized for the purpose of converting the same into
money, and discharging, to the extent possible, all the claims against the
insolvent debtor.”
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Rule 2 |
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Neither
the FRIA nor the Rules clarify what the grounds for a petition for
debtor-initiated rehabilitation are. Is this the same as the fact and cause
of insolvency?
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The Rules
should use the defined words precisely, specifically the words “debts”,
“liabilities” and “claims”. The
word “debts” remains undefined yet the Schedule of Debts and Liabilities
requires the listing of all creditors and all claims. It should be clarified
if this is supposed to refer only to “liabilities” defined as monetary
claims.
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The
Schedule of Existing Claims should be clarified if the intention is to refer
to all claims as defined by the FRIA. Note also the use of the defined term claim
in the Statement of Possible Claims.
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The word
“debts” is not defined. Does this refer to liabilities or claims as defined
in the FRIA.
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In
relation to 2 (A) (6) above, only the grounds for a creditor-initiated
petition are provided.
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See
comment for 2(A) (6) above on the grounds for the petition.
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Note that
the requirement to send personal notice to each creditor is correctly limited
to creditors holding at least 10% of the total liabilities. Hence the Schedule required in 2 (B)
4 should be limited to liabilities as defined by the FRIA.
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The
concept of filing an ad cautelam action has no basis in the FRIA and
contradicts other provisions of the law, which specifically provide for the
consolidation of all legal proceedings with the rehabilitation court.
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Is it
necessary to specify the duration of a commencement order?
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The
concept of “salvage” has no application to rehabilitation proceedings.
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Although
this is in the FRIA, it may be appropriate for the Rules to clarify the
concept of “control” of the debtor’s assets, in light of the provisions that
clearly provide that the receiver shall not take over management and control
of the debtor.
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The proper
recommendation of the receiver is for the liquidation and not dissolution of
the debtor.
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The
provisions on compensation seem to ignore the fact that the receiver does not
take over management and control of the debtor. Consequently, the Rules should provide as an upper limit
the compensation of the internal auditor or comptroller of the debtor, or
equivalent position.
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Note the
comment for 27(T). It is only at
this point that control may properly be exercised.
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How will
the majority be calculated if the calculation is based on claims as defined
in the FRIA?
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How will
the interest be calculated if the calculation is based on claims as defined
in the FRIA?
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It is the
debtor that should execute the instrument of sale.
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The debtor
should be allowed to apply for the authority to sell.
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Clarify
why the application should be served on the debtor.
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It is the
debtor that should execute the instrument of sale.
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The term
“estate” is not defined and actually has no relevance in a rehabilitation
proceeding.
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Although
this is provided in the FRIA, it should be noted that previously unsecured
creditors are now elevated to the status of secured creditors by virtue of
the application of the Civil Code provisions on concurrence and preference of
credits.
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Because of
the expansive definition of “claims” it may be very difficulty to determine
the 50% value required by the FRIA.
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This
provision is not found in the FRIA and seems to expand the powers granted by
the law to the court. If the
debtor and creditors agree on a Rehabilitation Plan as provided in the law,
the role of the court is to confirm it.
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Note that
rehabilitation receiver may not be required for purposes of implementing and
monitoring the rehabilitation plan.
This is why it is important that the Rules do not give the receiver
functions that may in the end conflict with a rehabilitation plan that does
not require the presence of a receiver.
See comments above.
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The
requirements for amendments may also include the applicability of the
provisions on pre-negotiated rehabilitation.
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This
should be related to the Rule on amendment of rehabilitation plans.
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The FRIA
uses the word liabilities to calculate the 2/3 requirement, and then uses
claims for the 50% requirement. Because of the expansive definition of
“claims” it may be very difficulty to determine the 50% value required by the
FRIA and the Rules.
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Neither
the FRIA nor the Rules clarify what the grounds for pre-negotiated
rehabilitation are. Is this the same as the fact and cause of insolvency?
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The
phrasing of the Rule needs to be clarified.
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Is this
the proper subject of rules of court?
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“This Rule
shall similarly...”
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