Tag Archives: Financial Rehabilitation and Insolvency Act (FRIA) of 2010

Cram-Down Clause under the Financial Rehabilitation and Insolvency Act (FRIA) of 2010

Cram-down is the power of the rehabilitation court to approve and implement a rehabilitation plan notwithstanding the objection of the majority of creditors. As noted in the case of Bank of the Philippine Islands vs. Sarabia Manor Hotel Corporation (G.R. No. 175844, 29 July 2013), the “cram-down” clause, which is currently incorporated in Section 64 of Republic Act No. 10142, also known as the Financial Rehabilitation and Insolvency Act (FRIA) of 2010, “is necessary to curb the majority creditors’ natural tendency to dictate their own terms and conditions to the rehabilitation, absent due regard to the greater long-term benefit of all stakeholders. Otherwise stated, it forces the creditors to accept the terms and conditions of the rehabilitation plan, preferring long-term viability over immediate but incomplete recovery.” Section 64 reads: Continue reading

Insolvency Proceedings under the Financial Rehabilitation and Insolvency Act (FRIA) of 2010


Insolvency is the state of of insolvent, defined as the financial condition of a debtor that is generally unable to pay its or his liabilities as they fall due in the ordinary course of business or has liabilities that are greater than its or his assets. Insolvency proceedings may cover: (a) an individual debtor, referring to a natural person who is a resident and citizen of the Philippines that has become insolvent as defined under Republic Act No. 10142; or (b) a debtor, referring to, unless specifically excluded by a provision of Republic Act No. 10142, a sole proprietorship duly registered with the Department of Trade and Industry (DTI), a partnership duly registered with the Securities and Exchange Commission (SEC), a corporation duly organized and existing under Philippine laws, or an individual debtor who has become insolvent as defined in Republic Act No. 10142. Continue reading