Bankruptcy: Not the end of the world
On March 17, the business sector, for whose benefit the new insolvency law and its implementing rules were principally promulgated, will have the opportunity to be briefed about the finer points of the new law and its implementing rules, and have a dialogue with experts on the field on their practical application in real life.
I’m referring to a whole day seminar forum being organized by the Shareholders’ Association of the Philippines (SharePHIL) on the Financial Rehabilitation and Insolvency Act (Fria) and the Financial Rehabilitation Rules of Procedure (FR Rules) promulgated by the Supreme Court to implement the law.
The Fria replaces the Insolvency Act that was enacted way back in 1909. It was one of our flagship projects when I was president of the Philippine Stock Exchange as our antiquated Insolvency Law was adversely impacting on investor confidence in our capital markets.
Fria is one of the most modern insolvency laws that I have ever seen. In fact, after I made a presentation on it in a recent foreign international conference, one German insolvency expert commented that little did he realize that what they have in Germany is antiquated when compared to what we have in the Philippines.
Also, under the World Bank/IFC “Ease of Doing Business” global competitiveness survey, the Philippines went up more than 150 notches in world ranking since 2011 in the area of insolvency, principally because of the Fria and FR Rules.
The importance of a responsive insolvency system has been demonstrated in the not-so-distant past. Failing business behemoths like General Motors, Air Canada and Daewoo Motors got rehabilitated in no time because of a mature insolvency system.
On the other hand, our big companies like the Philippine Airlines, Maynilad, Bayantel and Ramcar encountered difficulties in getting rehabilitated because our rehabilitation system then had much to be desired. The Fria and FR Rules seek to change that.
The seminar forum will feature BSP Governor Amando Tetangco Jr. and the members of the Supreme Court that drafted the FR Rules, led by Associate Justice Estela Perlas-Bernabe, Court of Appeals Justices Japar Dimaampao, Apolinario Bruselas Jr. and Judge Reynaldo Daway.
Other insolvency experts, both local and foreign, will also speak during the conference.
SharePHIL’s partner institutions for the conference will include Bankers’ Association of the Philippines, Financial Institute of the Philippines, and Management Association of the Philippines.
The conference will not only deal with the legal and tax aspects of rehabilitating an insolvent debtor, it will also touch on the business and commercial aspects of it.
Opportunities presented by an insolvency situation, such as investment options for both creditors and debtors, will be taken up. Even the concept of distressed debt will be discussed.
First-hand experiences of companies that underwent rehabilitation will be shared. A dialogue between the business sector and the members of the Supreme Court committee that drafted the FR Rules will be a key feature of the seminar forum.
A lot of things can be learned during the seminar forum. For example, can a single proprietorship benefit from the new law? Are banks, insurance companies and other financial institutions covered by the law? How do you prepare a feasible rehabilitation plan or restructuring agreement? What are the effects of initiating a rehabilitation proceeding on existing contracts? What are the key takeaways for finance officers, financial advisors and investment bankers under the new law? Can a debtor have a rehabilitation or restructuring plan that is binding on all its creditors even without going to court? What happens to nonparticipating or objecting creditors? What are the mandatory timelines for the different modes of rehabilitation? What is the effect of the new law on transactions in the financial markets? What can listed companies, stockbrokers and investors in the capital markets expect under the new regime? What investment opportunities are available in a rehabilitation setting? Can directors and officers of the debtor be held personally liable for prerehabilitation transactions? Will criminal cases against erring directors and officers be suspended pending rehabilitation proceedings? What tax reliefs are available during rehabilitation? Can a juridical entity like a professional partnership serve as a rehabilitation receiver? What are the new disqualifications and obligations of a rehabilitation receiver under the new law? What are the restrictions for professionals employed by rehabilitation receivers to assist them? What remedies are available to an injured party if either the debtor or any of its creditors fail to abide by the terms of a rehabilitation plan or restructuring agreement? What are the opportunities and remedies for Philippine companies under rehabilitation that have cross-border creditors? What can companies with offshore assets do to protect themselves, pending rehabilitation proceedings in the Philippines?
These and a multitude of other questions will be answered during the seminar forum.
For more details about the seminar forum, please access any of these websites: www.sharephil.org; www. finex.org.ph and www.map.org. Alternatively, you can e-mail [email protected] for inquiries or contact Ada Mabbayad at 6375535 or 6374262, Laling Ordonez at 8308025 or Teresa Ramos at 8308161. Due to the limited space and the interest that has been demonstrated so far, reservation will be on a first-come, first-served basis.
(The author is a senior partner at Angara Abello Concepcion Regala Law Offices and president of Shareholders’ Association of the Philippines. He may be contacted at [email protected].)
