Guidelines for Quasi-Reorganization

GUIDELINES FOR QUASI-REORGANIZATION 1. That only companies which are financially in distress, may be allowed to undergo quasi-reorganization. 2. That the company has substantial increment in the market value of its fixed assets as appraised by a reputable licensed appraiser which is adequate to absorb its accumulated past losses. 3. That the appraisal increment to be considered in the plan shall be limited to real properties, permanently installed fixed assets, and other machineries and equipment directly needed and actually used in the operations of the company. 4. That the appraisal increment of fixed assets undergoing repair or will require repair before the same can be put into productive use shall not be included in the appraisal of assets for purposes of quasi-organization. 5. The company shall present a project study on its future operations to support its quasi-reorganization. 6. That the remaining appraisal surplus set up in the books of the company after the deficit shall have been offset will not be used to wipe out losses that may be incurred in the future without prior approval of the Commission. 7. For purposes of dividend declaration, the retained earnings of the company shall be restricted to the extent of the deficit wiped out (and not recovered by accumulated depreciation on appraisal increment) by the appraisal surplus. 8. That after the quasi-reorganization of the company has been effected and approved by the Commission, the company shall disclose in all its financial statement for a minimum period of three (3) years the mechanics, purpose and effect of such quasi-reorganization on the financial condition of the company. cdll