REPUBLIC ACT No. 10142
AN ACT PROVIDING FOR THE REHABILITATION OR LIQUIDATION OF FINANCIALLY
DISTRESSED ENTERPRISES AND INDIVIDUALS
Known as "Financial Rehabilitation and Insolvency Act (FRIA) of 2010"
*The State’s policy is to help debtors and creditors settle debts in a fair, fast, and clear way. If a debtor can
recover, the law supports rehabilitation. If not, it supports liquidation—selling assets to pay creditors. The
goal is to protect asset value, respect creditor rights, and treat creditors fairly.
*Cases under this law cover everyone involved, not just the debtor. Once the case is announced in a
national newspaper, the court officially has authority over all of them.
The process should be fast, simple, and not like a heavy courtroom battle, following rules made by the
Supreme Court.
Section 4. Definition of Terms.
❖​ Administrative expenses are the necessary costs related to handling a debtor’s case. These
include:
1.​ The cost of filing the case,
2.​ Expenses in running the court process (rehabilitation or liquidation),
3.​ Regular business expenses after the case starts,
4.​ New loans or obligations taken to help the debtor recover,
5.​ Payments for the receiver, liquidator, or hired professionals, and
6.​ Any other expenses allowed by the law or the Supreme Court.
❖​ Affiliate means a company that is controlled by another company or is under the same control as
another company.
❖​ Claim means any demand or right against the debtor or their property, no matter what kind—big
or small, certain or uncertain, already due or not yet due, agreed on or still disputed.
This includes:
1.​ All claims of the government (like taxes, tariffs, or customs duties), and
2.​ Claims against the company’s directors or officers for actions they did as part of their official
duties.
But, creditors or other parties can still file cases against those directors or officers personally if the issue
is outside their official functions.
❖​ Commencement date – The date the court officially starts the case (retroactive to the filing date).
❖​ Commencement Order – The court’s order that starts the case.
❖​ Control – When a parent company has the power to run another company’s policies and
activities.
❖​ Court – The special court chosen by the Supreme Court to handle these cases.
❖​ Creditor – A person or business the debtor owes money to (before the case starts).
❖​ Date of liquidation – The date the court issues the Liquidation Order.
❖​ Days – Calendar days (not business days) unless the law says otherwise.
❖​ Debtor – A business (sole prop, partnership, corporation) or an individual who cannot pay debts.
❖​ Encumbered property – Property with a lien (used as security for debt).
❖​ General unsecured creditor – A creditor whose claim has no collateral or priority.
❖​ Group of debtors – Businesses financially connected (parent-subsidiary, affiliates, or same
owner).
❖​ Individual debtor – A Filipino citizen who can’t pay debts.
❖​ Insolvent – When debts are bigger than assets or you can’t pay debts as they’re due.
❖​ Insolvent debtor’s estate – All the debtor’s assets at the time the case starts (except assets
owned by others).
❖​ Involuntary proceedings – When creditors file the case against the debtor.
❖​ Liabilities – What the debtor owes (including advances recorded in books).
❖​ Lien – A creditor’s legal right over a property to secure payment.
❖​ Liquidation – The process of selling assets to pay debts.
❖​ Liquidation Order – The court’s order to begin liquidation.
❖​ Liquidator – The person or entity appointed by the court to handle liquidation.
❖​ Officer – A person holding a management role in a company (not secretary or external auditor).
❖​ Ordinary course of business – Usual business transactions before insolvency.
❖​ Ownership interest – Other people’s ownership rights in the debtor’s property.
❖​ Parent – A company that controls another company.
❖​ Party to the proceedings – Anyone directly affected by the case (debtor, creditors, stakeholders,
etc.).
❖​ Possessory lien – A lien on property the creditor actually holds.
❖​ Proceedings – The court process under this law.
❖​ Property of others – Assets the debtor is holding but actually belong to someone else.
❖​ Publication notice – Public notice printed in a newspaper for 2 weeks.
❖​ Rehabilitation – Helping a debtor recover and continue operations instead of closing down.
❖​ Rehabilitation receiver – Court-appointed person/entity to manage the rehabilitation.
❖​ Rehabilitation plan – The plan to restore financial health (can involve debt forgiveness,
restructuring, sale, etc.).
❖​ Secured claim – A debt backed by collateral (property).
❖​ Secured creditor – A creditor with collateral.
❖​ Secured party – A secured creditor or its agent.
❖​ Securities market participant – Entities like brokers, underwriters, or transfer agents.
❖​ Stakeholder – Shareholders, members, or partners in the company.
❖​ Subsidiary – A company owned/controlled more than 50% by another (the parent).
❖​ Unsecured claim – A debt with no collateral.
❖​ Unsecured creditor – A creditor with an unsecured claim.
❖​ Voluntary proceedings – When the debtor files the case themselves.
❖​ Voting creditor – A creditor whose approval is needed for a rehabilitation plan.
* An individual debtor can file for suspension of payments by presenting a verified petition to the
court, provided they have assets exceeding liabilities but foresee the inability to meet upcoming
debt obligations. Upon the court's approval of the petition, a Suspension of Payments Order
(SPO) is issued, which halts creditors' collection actions and other enforcement proceedings
against the debtor. The process involves a creditors' meeting to propose and approve a debt
repayment plan, which, if confirmed by the court, becomes binding on all parties, guiding the
debtor's path to settling their debts. Eligibility: The debtor must be an individual (natural person)
who owns sufficient property to cover all debts but anticipates being unable to pay them as they
become due.
COURT-SUPERVISED REHABILITATION
An insolvent debtor (someone who can’t pay debts) can ask the court for rehabilitation by filing a petition for
voluntary proceedings.
●​ Who can approve filing?
○​ Sole proprietorship → the owner
○​ Partnership → majority of partners
○​ Corporation → majority of the board + 2/3 vote of stockholders
○​ Non-stock corporation → 2/3 of the members
The petition must prove the debtor is insolvent but still has a chance to recover. It should include:
1.​ Basic details of the debtor (name, business, address),
2.​ Why it can’t pay debts,
3.​ What relief/help it is asking for,
4.​ The legal grounds for asking,
5.​ Other needed information,
6.​ List of debts and creditors (with addresses, amounts, and collateral),
7.​ List of assets and receivables,
8.​ A proposed Rehabilitation Plan,
9.​ Names of at least 3 possible rehabilitation receivers, and
10.​ Any other required documents.
A group of debtors (like parent companies, subsidiaries, or affiliates) can file for rehabilitation together if:
1.​ One or more of them won’t be able to pay debts on time, and
2.​ That financial problem will negatively affect the others in the group, or
3.​ The involvement of the other members is necessary for the success of the proposed
Rehabilitation Plan.
When creditors can force a debtor into rehabilitation (Involuntary Proceedings):
●​ A creditor or group of creditors can file if their total claim is ₱1 million or 25% of the company’s
subscribed capital/partners’ contributions (whichever is bigger).
●​ They may do this if:
1.​ The debtor has not paid for at least 60 days and there’s no valid dispute about the debt, or
2.​ Another creditor has started foreclosure that will make the debtor unable to pay or
insolvent.
What the creditor’s petition must include:
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Debtor’s details (name, business, address),
Circumstances showing why involuntary rehab is needed,
The relief requested,
A proposed Rehabilitation Plan,
At least 3 nominees for rehabilitation receiver,
Other required information,
Other documents required by law or court rules.
When a rehabilitation petition is filed:
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The court has 5 working days to review it.
If the petition is complete and proper, the court issues a Commencement Order.
If it’s incomplete or lacking, the court may allow the petitioner to fix or add what’s missing.
In that case, the 5-day period will start again from the filing of the corrected petition or missing
documents.
Rehabilitation officially starts when the court issues a Commencement Order. This order basically sets
the rules of the case and contains the following:
1.​ Basic info – who the debtor is, their business, and address.
2.​ Grounds – why the case was filed.
3.​ Relief sought – what the debtor/creditor is asking for.
4.​ Legal effects – what happens once the order is issued.
5.​ Declaration – the debtor is officially under rehabilitation.
6.​ Publication – order must be published in a newspaper weekly for 2 weeks.
7.​ Notification – creditors (holding at least 10% of debts) or the debtor must be served copies.
8.​ Receiver – appoints a rehabilitation receiver to oversee the process.
9.​ Claims – sets deadlines and instructions for creditors to file their claims.
10.​ BIR involvement – BIR must file its claims (like taxes).
11.​ Suppliers – must continue supplying goods/services if the debtor pays current orders.
12.​ Expenses – allows admin expenses to be paid as they come due.
13.​ Initial hearing – scheduled within 40 days to check if rehab is feasible.
14.​ Access to info – petition and plan must be available for review/copying.
15.​ Nominations – other parties can suggest names for rehabilitation receiver before the hearing.
16.​ Stay Order – suspends collection and lawsuits against the debtor, stops asset sales, and
prevents payment of old debts (except allowed ones).
Effects of the Commencement Order. - Unless otherwise provided for in this Act, the court's issuance of a
Commencement Order shall, in addition to the effects of a Stay or Suspension Order described in Section
16 hereof:
❖​ The rehabilitation receiver gets full authority (like accessing company records and bank
accounts), once the court approves their performance bond.
❖​ It stops and invalidates any outside actions to seize or sell the debtor’s property or collect debts
(unless the law allows it).
❖​ It cancels any setoff (when a creditor tries to deduct what the debtor owes from what they owe
the debtor) made after the case starts.
❖​ It cancels any new liens placed on the debtor’s property after the case starts.
❖​ All legal cases involving the debtor are consolidated in the rehabilitation court, though the court
may allow some cases filed by the debtor to continue elsewhere.
The Stay Order does NOT apply to:
1.​ Supreme Court cases already on appeal (but final rulings still go back to rehab court).
2.​ Specialized courts or agencies (if they can resolve the case faster and more fairly).
3.​ Claims against guarantors, sureties, co-debtors, or mortgagors (unless their property is
essential for rehab).
4.​ Clients of securities brokers reclaiming money/securities they entrusted.
5.​ Licensed brokers/dealers selling pledged securities to settle stock market transactions.
6.​ Clearing and settlement of financial transactions done through authorized clearing agencies (like
BSP or SEC-recognized entities).
7.​ Criminal cases against the debtor’s owners, partners, directors, or officers (these continue
despite rehab).
Section 19 – Waiver of Taxes and Fees
Once the court issues a Commencement Order, all taxes, fees, penalties, and interests owed to the
national government or LGUs are temporarily waived until either:
●​ the Rehabilitation Plan is approved, or
●​ the petition is dismissed.
This is to help the debtor recover without being burdened by government collections.
The Stay Order (which freezes collections and foreclosures) also applies to government-owned banks or
financial institutions—even if their charters or other laws say otherwise.
The Commencement Order stays in effect for the whole rehabilitation process, as long as there’s a real
chance of success. The court checks:
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The Rehabilitation Plan meets legal requirements.
The rehabilitation receiver is properly monitoring the business.
The debtor has tried to meet with creditors to reach an agreement.
The receiver’s report shows the plan is realistic and viable, based on factors like:
○​ Sufficient assets,
○​ Enough cash flow to keep running,
○​ Owners and officers acting in good faith,
○​ Petition is not just a delaying tactic,
○​ There’s a workable path to recovery.
5.​ No false or misleading info in the petition or plan.
6.​ The debtor or creditor-petitioners made a good faith effort to meet and agree with creditors
holding at least ¾ of total obligations.
7.​ The debtor has not committed fraud or misrepresentation against creditors.
The rehabilitation receiver is a neutral person appointed by the court when a company (or debtor) files
for rehabilitation. Rehabilitation receiver is a court-appointed financial guardian—they don’t own or run
the company but oversee it to help it survive and pay debts fairly.
A. Rehabilitation Receiver
●​ Who can be one?
○​ Any qualified individual or company (local or foreign, but must be residing in the PH).
○​ Must be of good moral character, independent, and knowledgeable about insolvency
laws.
○​ Must not have a conflict of interest (like being related to the debtor or a creditor).
●​ Who appoints them?
○​ The court appoints the receiver.
○​ Creditors and the debtor may suggest nominees.
○​ If more than 50% of creditors agree on a nominee, the court usually appoints that person.
●​ Main duties:
○​ Protect and manage the debtor’s assets.
○​ Check the accuracy of debts and assets.
○​ Evaluate creditor claims.
○​ Recommend and implement the Rehabilitation Plan.
○​ Report regularly to the court.
○​ May take over management if the court orders.
●​ Removal:
○​ The court can remove the receiver for incompetence, negligence, fraud, conflicts of
interest, or lack of independence.
●​ Compensation:
○​ Paid by the debtor, subject to court approval.
●​ Immunity:
○​ Protected from lawsuits for actions done in good faith.
B. Management Committee
●​ If the debtor’s current management is mismanaging, committing fraud, or causing risk of asset
loss, the court can replace them with:
○​ The rehabilitation receiver, OR
○​ A management committee (a group acting as the governing body).
●​ Role:
○​ Take over the powers and duties of management.
○​ Act as officers of the court.
●​ Qualifications:
○​ Set by rules, ensuring no conflicts of interest and competence in handling the business.
A rehabilitation plan is a court-approved strategy to restore a financially distressed debtor to a solvent
state. To restore the financial health and viability of an insolvent debtor through methods like debt
restructuring, debt-equity conversion, or selling the business as a going concern.
Cram down effect is the court's authority to approve a rehabilitation plan despite the formal objection of
creditors, even those holding a majority of the debtor's total liabilities. A plan can be "crammed down" if it
is demonstrably feasible and the opposition to the plan is considered manifestly unreasonable, ensuring
that the plan leads to a viable recovery for the debtor. If a Rehabilitation Plan (or restructuring/workout
agreement) is approved under the informal workout system, it will have the same legal force as if it were
officially confirmed by the court. To make it official, a notice of the plan must be published in a widely
read newspaper once a week for 3 weeks. After the 15th day from the last publication, the plan
automatically takes effect.
Voluntary Liquidation-If a debtor (a person or company) can no longer pay debts and wants to close down
properly, they may file a petition for liquidation in court.
●​ This petition must include:
1.​ A list of all debts and liabilities (who they owe, how much, and if there are collaterals).
2.​ An inventory of all assets (what they own, including receivables).
3.​ The names of at least 3 possible nominees for the role of liquidator (the person who will
handle selling assets and paying debts).
●​ If a debtor is already undergoing rehabilitation proceedings but later realizes recovery is
impossible, they can instead file a motion to convert rehabilitation into liquidation (basically
saying: “We can’t recover, we need to shut down and settle debts”).
●​ If the court finds the petition or motion complete and valid, it will issue a Liquidation Order
(formal start of the liquidation process).
In short: Voluntary liquidation is when an insolvent debtor admits they can’t recover, asks the court to
close down the business, sell assets, and settle debts fairly.
Involuntary Liquidation–Sometimes, it’s not the debtor but the creditors who push for liquidation.
●​ If 3 or more creditors are owed money, and their combined claims equal at least ₱1,000,000 or
25% of the debtor’s capital, whichever is higher, they can ask the court to liquidate the debtor.
For their petition to succeed, they must show:
1.​ The debtor has not paid debts for at least 180 days (6 months), or is generally unable to pay
obligations.
2.​ There is no real chance that the debtor can still be rehabilitated.
●​ If rehabilitation proceedings are already ongoing, creditors can file a motion to convert
rehabilitation into liquidation, meaning: “This company can’t recover, let’s close it down instead.”
●​ If the petition/motion is valid, the court will:
1.​ Order the publication of the petition/motion in a widely circulated newspaper once a
week for 2 weeks.
2.​ Order the debtor and other creditors to submit their comments within 15 days after the
last publication.
●​ After reviewing comments, if the court finds the request justified, it will issue a Liquidation Order
(the formal start of liquidation).
Involuntary liquidation happens when creditors—not the debtor—push the court to shut down the
business, sell its assets, and distribute the proceeds because the debtor can’t pay anymore and has no
chance of recovery.
Section 92. Conversion by the Court into Liquidation Proceedings
While a debtor is undergoing rehabilitation, the court can decide to convert the case into liquidation
(closing down and selling assets) if it becomes clear that rehabilitation is not possible.
This conversion may happen under certain sections of the law (25(c), 72, 75, 90), or anytime the
rehabilitation receiver recommends that saving the debtor is no longer feasible. Once the court decides
this, it will issue a Liquidation Order (formal start of liquidation).
If it turns out that rehabilitation won’t work, the court can step in and switch the process to liquidation to
avoid wasting time and further losses.
Section 104. Liquidation Order. - If the court finds the petition sufficient in form and substance it
shall, within five (5) working days issue the Liquidation Order mentioned in Section 112 hereof.
Effects of a Liquidation Order (Section 112)
1.​ Declaration of Insolvency – The debtor is officially declared insolvent.
2.​ Liquidation & Dissolution – The debtor’s business will be liquidated (assets sold, debts settled).
If it’s a corporation/partnership, it is also dissolved (ends its legal existence).
3.​ Sheriff’s Role – The sheriff takes control of all the debtor’s property (except those exempt from
execution like some personal necessities).
4.​ Publication – The petition or motion must be published in a newspaper (once a week for 2
consecutive weeks) so everyone is notified.
5.​ Payments & Property Transfer – Anyone owing money or property to the debtor must now pay or
turn them over to the liquidator (not the debtor).
6.​ Prohibition – The debtor cannot make payments or transfer property anymore. This prevents
fraud or unfair treatment of some creditors.
7.​ Filing of Claims – All creditors must file their claims with the liquidator within the prescribed
period.
8.​ Expenses – Administrative expenses (like fees for the liquidator, court costs, etc.) can be paid as
they fall due.
9.​ Nominees for Liquidator – Both debtor and creditors can suggest names of people who may
serve as the liquidator.
10.​ Hearing for Appointment of Liquidator – The court sets a hearing (30–45 days after the last
publication) to elect and appoint the liquidator.
Rights of Secured Creditors in Liquidation
When liquidation starts, the Liquidation Order does not cancel the rights of secured creditors. They can
still enforce their lien (claim on the collateral). They have two choices:
Option 1: Waive the lien
●​ The secured creditor can give up the collateral/security.
●​ They then join the pool of creditors in the liquidation proceedings.
●​ This means they will share in the distribution of the debtor’s assets (pro-rata with others).
Option 2: Keep/enforce the lien
If they decide to keep their security, they have three possible scenarios:
1.​ Fix the Value of the Property
○​ Creditor and liquidator agree on the value of the collateral.
○​ If the value is less than the loan → the liquidator gives the property to the creditor, and
the creditor can still claim the balance as an unsecured creditor.
○​ If the value is more than the loan → the creditor takes the property, but must pay the
excess back to the liquidator (to be shared with other creditors).
2.​ Liquidator Sells the Property
○​ The liquidator can sell the collateral.
○​ The secured creditor gets paid in full from the sale proceeds.
○​ If there’s extra after paying, the surplus goes to the pool for other creditors.
3.​ Creditor Forecloses the Property
○​ The creditor can foreclose the collateral (like in a regular foreclosure proceeding) under
applicable law.
Who is the Liquidator?
●​ The liquidator is the person appointed to take over, manage, and sell off the debtor’s assets
when the court orders liquidation.
●​ The goal: turn assets into cash, pay off creditors as much as possible, and dissolve the debtor (if
a corporation).
How is the Liquidator Chosen?
Election by Creditors (Sec. 115)
●​ Creditors with valid claims (filed within deadline) get to vote.
●​ Secured creditors can’t vote unless:
1.​ They waive their lien/security, OR
2.​ They agree with the liquidator on the value of the collateral and claim the balance.
●​ The nominee with the most votes (by claim amount) becomes the liquidator.
Court-Appointed Liquidator (Sec. 116)
The court may appoint if:
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No creditors show up,
Creditors refuse to elect,
The elected liquidator doesn’t qualify, or
The post becomes vacant.​
The court may re-set the election, or just appoint someone.​
The rehabilitation receiver may also be appointed as liquidator
👉
💡
Requirements Before Acting (Secs. 117–118)
●​ Must take an oath and file a bond (to guarantee faithful performance).
●​ Must have the qualifications of a rehabilitation receiver (per Sec. 29).
●​ Can be removed anytime by the court for cause.
Powers & Duties (Sec. 119)
The liquidator is like a court officer tasked with recovering, managing, and selling the debtor’s property.
Main Powers:
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Recover assets – sue to get back debts owed to the debtor.
Take possession of debtor’s properties (except exempt assets).
Sell property (with court approval).
Settle accounts with creditors (subject to court approval).
Recover fraudulently transferred property.
Redeem mortgages/pledges or settle encumbrances.
Recommend creation of a creditors’ committee.
Hire professionals (lawyers, accountants, etc.) with court approval.
💡 Compared to a rehabilitation receiver, a liquidator has the added duty of:
●​ Managing and disposing of all assets,
●​ Paying creditors and stockholders, and
●​ Ending the legal existence of the debtor.
The liquidator is like the executor of bankruptcy—they step in after rehabilitation fails, gather and sell the
debtor’s assets, pay creditors as fairly as possible, and close down the company.
(C) Determination of Claims
1. Registry of Claims (Sec. 123)
●​ Within 20 days of starting his job, the liquidator must prepare a list (registry) of all creditor claims.
●​ Includes secured and unsecured creditors:
○​ If a secured creditor gives up (waives) their lien or agrees on the value of the collateral
with the liquidator, any balance owed is treated as unsecured.
●​ The registry must be open to public inspection, with proper notice published so all stakeholders
(creditors, owners, partners, shareholders) can review it.
●​ Rule: Only proven claims can be paid.
👉 Think of this as the master list of debts that will guide who gets paid and how much.
2. Right of Set-off (Sec. 124)
●​ If the debtor and a creditor owe each other money, their debts are offset against each other.
●​ Only the balance will be considered in liquidation.
👉 Example: Debtor owes Creditor ₱1M, but Creditor also owes Debtor ₱400K.​
Result: Only ₱600K is counted as the claim.
3. Opposition or Challenge to Claims (Sec. 125)
●​ After the filing period for claims, there’s a 30-day window where:
○​ Creditors, debtors, owners, partners, shareholders, or other interested parties can
challenge a claim.
●​ Must be filed in court with copies given to the liquidator and the creditor holding the claim.
●​ After the 30 days:
○​ The liquidator (mistakenly written as “rehabilitation receiver” in the law here) submits a
registry of undisputed claims to the court.
○​ These undisputed claims become final, unless later overturned for fraud, accident,
mistake, or excusable neglect.
👉 This ensures no fake or exaggerated claims sneak in without challenge.
4. Disputed Claims (Sec. 126)
●​ The liquidator investigates disputed claims.
●​ He may even disallow claims he finds invalid.
●​ His findings are submitted to the court, which makes the final decision.
👉 This prevents creditors from claiming more than what’s rightfully owed.
Summary (Layman’s Flow):
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5.​
Liquidator makes a master list of debts (registry).
Set-off rule: Debts between debtor and creditor cancel each other out.
Creditors/debtors can challenge claims within 30 days.
Court + liquidator decide on disputed claims.
Final list = basis for paying creditors during liquidation.
(E) The Liquidation Plan
1. Submission of Liquidation Plan (Sec. 129)
●​ Within 3 months of taking office, the liquidator must submit a Liquidation Plan to the court.
●​ The plan must:
○​ List all the debtor’s assets.
○​ Show a schedule (timeline) for selling assets and paying creditors.
👉 Think of it as the blueprint for wrapping up the company’s financial obligations.
2. Exempt Property (Sec. 130)
●​ Some assets cannot be taken (because they are exempt by law, like a homestead or basic
necessities).
●​ The court decides what property is exempt after a petition and hearing, with proper public notice.
●​ Once approved, the exempt property is set aside for the debtor’s benefit.
👉 This ensures the debtor isn’t left with absolutely nothing.
3. Sale of Assets (Sec. 131)
●​ The liquidator sells the debtor’s assets to turn them into cash.
●​ Normally done via public auction.
●​ Private sale is allowed with court approval if:​
a) Assets are perishable or quickly lose value.​
b) They’re too costly to maintain.​
c) A private deal is better for creditors.
●​ With court approval, assets can also be given directly to a creditor as payment for their claim.
👉 Assets are liquidated in the most efficient and fair way possible.
4. Implementation of the Plan (Sec. 132)
●​ The liquidator carries out the plan exactly as the court approves.
●​ Payments to creditors must follow the Plan.
👉 No shortcuts — everything goes by the approved schedule.
5. Priority of Payments (Sec. 133)
●​ Payments must follow the order of priority in the Civil Code and other laws.
●​ Example:
○​ First priority: Employee wages & labor claims (unless secured by liens).
○​ Other creditors are paid in order of legal preference.
●​ A creditor with priority may waive it, but that’s voluntary.
👉 Not all creditors are equal — some get paid before others.
6. Removal from SEC Registry (Sec. 134)
●​ After liquidation is finished, the court orders the SEC to remove the debtor from the list of
registered entities.
●​ This means the company is officially dissolved.
7. Termination of Proceedings (Sec. 135)
●​ Once the SEC confirms the debtor’s removal from the registry, the court issues an Order
terminating the liquidation case.
👉 That’s the official end of the company’s legal existence.
Layman’s Flow Summary
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Liquidator submits plan (assets + payment schedule).
The court sets aside exempt property.
Liquidator sells assets (auction/private sale).
Proceeds are paid to creditors based on the Plan.
Priority of payments follows Civil Code rules (employees first).
Court orders SEC to strike debtor from registry.
Case is closed — company legally ceases to exist.
REFERENCE: https://lawphil.net/statutes/repacts/ra2010/ra_10142_2010.html