This case has been cited 2 times or more.
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2011-06-15 |
DEL CASTILLO, J. |
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| Corporate rehabilitation is defined as "the restoration of the debtor to a position of successful operation and solvency, if it is shown that its continuance of operation is economically feasible and its creditors can recover by way of the present value of payments projected in the plan more if the corporation continues as a going concern than if it is immediately liquidated." [56] It was first introduced in the Philippine legal system through PD 902-A, as amended. [57] The intention of the law is "to effect a feasible and viable rehabilitation by preserving a floundering business as a going concern, because the assets of a business are often more valuable when so maintained than they would be when liquidated." [58] This concept of preserving the corporation's business as a going concern while it is undergoing rehabilitation is called debtor-in-possession or debtor-in-place. This means that the debtor corporation (the corporation undergoing rehabilitation), through its Board of Directors and corporate officers, remains in control of its business and properties, subject only to the monitoring of the appointed rehabilitation receiver. [59] The concept of debtor-in-possession, is carried out more particularly in the SEC Rules, the rule that is relevant to the instant case. [60] It states therein that the interim rehabilitation receiver of the debtor corporation "does not take over the control and management of the debtor corporation." [61] Likewise, the rehabilitation receiver that will replace the interim receiver is tasked only to monitor the successful implementation of the rehabilitation plan. [62] There is nothing in the concept of corporate rehabilitation that would ipso facto deprive [63] the Board of Directors and corporate officers of a debtor corporation, such as ASB Realty, of control such that it can no longer enforce its right to recover its property from an errant lessee. | |||||
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2011-06-01 |
NACHURA, J. |
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| Rehabilitation proceedings in our jurisdiction have equitable and rehabilitative purposes. On the one hand, they attempt to provide for the efficient and equitable distribution of an insolvent debtor's remaining assets to its creditors; and on the other, to provide debtors with a "fresh start" by relieving them of the weight of their outstanding debts and permitting them to reorganize their affairs.[55] The purpose of rehabilitation proceedings is to enable the company to gain a new Lease on life and thereby allow creditors to be paid their claims from its earnings.[56] | |||||