(a) In relation to each type of insolvency procedure available in the legal system of this economy, by what means may the administration of the corporate debtor be terminated?

 

Under the Insolvency Law, an insolvent may offer terms of composition to his creditors. (Sec. 63) Composition is an agreement between the debtor and the creditors whereby the latter accept payment which is usually less than the whole amount of their claims in discharge and satisfaction of the whole debt. Once accepted by the creditors, the court may ratify the composition.

Under PD 902-A, the administration of the corporate debtor may be terminated by the SEC upon the recommendation of the management committee or the rehabilitation receiver.

(b) Who may initiate the termination of each type of insolvency procedure?

 

The termination of the insolvency procedure may be initiated by the management committee or the rehabilitation receiver.

(c) On what grounds may each type of insolvency procedure be terminated?

 

For proceedings pending with the SEC, the decision of whether or not the proceedings should be terminated would depend on the on the SEC.

(d) What are the consequences for the corporate debtor of termination of the insolvency procedure? (for example to whom does control of the debtor revert following termination of the procedure; or if the debtor no longer exists, what are the procedures for and consequences of its dissolution?)

 

This would largely depend on the SEC. If it determines that the debtor is insolvent and may not be rehabilitated, the SEC may order the liquidation of the debtor and the distribution of its assets. The secured creditors whose claims have not been satisfied shall maintain their security, and may revive their respective court actions and foreclose on their security.

If, on the one hand, the SEC is convinced that the corporation has been duly rehabilitated, control of the corporation reverts back to the board of directors.