Manila – The Supreme Court has issued new technical procedural guidelines aimed at streamlining legal processes for financially distressed companies undergoing rehabilitation proceedings. Announced on Thursday, these guidelines, outlined in the case of Pacific Cement Company vs. Oil and Natural Gas Commission, are designed to prevent multiple lawsuits or appeals that challenge a commencement or stay order issued by rehabilitation courts.
According to Philippines News Agency, A key feature of these guidelines is the stay order, which temporarily suspends all claims against a corporation in rehabilitation. The court emphasized that this is a crucial step to prevent the irreversible collapse of the corporation and to allow the management committee or receiver to assess the corporation’s viability without external pressures.
The Supreme Court’s guidelines, under the Financial Rehabilitation and Insolvency Act of 2010 (FRIA) and the Financial Rehabilitation Rules of Procedure (FR Rules), stipulate specific procedures:
Upon appointing a rehabilitation receiver, the rehabilitation court must instruct them to inform all courts or tribunals where the debtor has pending actions about the petition for rehabilitation. This includes the details of the rehabilitation court, the date of filing, and the issuance of commencement and stay orders.
In instances where the debtor initiates the petition, the courts to be notified are those listed in the verified petition and affidavit of general financial condition, as mandated by the FR Rules.
If a creditor files the petition, the rehabilitation court will direct the rehabilitation receiver to identify any pending actions by or against the debtor.
The rehabilitation court will also require the rehabilitation receiver to inform any other court or tribunal of the rehabilitation petition, court details, filing date, and commencement and stay orders if they become aware of additional pending actions. The receiver must also report back to the rehabilitation court about their compliance within five days.
The Supreme Court has instructed the Office of the Court Administrator to distribute copies of the decision to all trial courts, ensuring widespread awareness and adherence to these new guidelines. This move is seen as a significant step towards efficient handling of financial rehabilitation cases, providing a clearer path for corporations in distress and their stakeholders.