Policy on the procedure for petitions for suspension of payments and appointment of management committee or rehabilitation receiver in the SEC

October 7, 1997 SEC-SICD * MEMORANDUM FOR : The Honorable Secretary of Finance FROM : The Chairman of the Securities and Exchange Commission RE : Policy on the procedure for petitions for suspension of payments and appointment of management committee or rehabilitation receiver in the SEC Reflected herein is the policy resolved by the Commission en banc in today's meeting: In order to have a uniform set of internal guidelines on petition for suspension of payment and appointment of management committee or rehabilitation receiver in the Securities and Exchange Commission, the Commission en banc hereby resolves the following policy pertinent thereto: I. Composition of the Hearing Panel The Hearing Panel shall be composed of an Associate Commissioner and two Hearing Officers, one of whom will be a Certified Public Accountant-Lawyer. II. Initial Order to be issued In the case of a petition for simple suspension of payments where the corporation, partnership or association possesses sufficient assets to cover all its debts but foresees the impossibility of meeting them when they respectively fall due, the Hearing Panel shall issue a provisional suspension order effective for a period of thirty days from issuance thereof. In the case of a petition for suspension of payments with the appointment of a management committee or rehabilitation receiver, where the corporation, partnership, or association has no sufficient assets to cover its liabilities, the Hearing Panel may motu proprio appoint an interim receiver, if warranted, for a period of thirty days in which event a provisional suspension order for thirty days from issuance thereof against all actions for claims against the corporations partnership, or association shall ensue as a matter of course. III. Supporting documents to be attached to the petition a) Audited financial statement of the petitioner at the end of its last fiscal year; b) Interim financial statement as of the end of the month prior to the filing of the petition; c) List of petitioner's creditors indicating the name and address of each creditor; the amount of the claim, including the principal and interest due as of the date of filing; nature of the claim is admitted, contingent, unliquidated or disputed; d) List of petitioner's equity security holders showing the name of the security holder and the kind of interest registered in the name of each holder. e) List of petitioner's assets stating the specific nature book value, market value, location of property, copies of TCT, OCT, CTC or CCT (if real property) or copies of certificate of ownership in case of personal property. f) Certification of the Bureau of Internal Revenue as to the petitioner's tax liability. This certification may be submitted after the issuance of the initial Order but prior to the resolution of the petition; or this requirement may be so stated in the petition itself which is verified. Its non-production shall be a ground for the dismissal of the petition. The creditors shall be required to comment to the petition within twenty days from receipt of a copy of the petition. IV. Any misrepresentation in the Petition committed by the petitioner and determined as such by the Hearing Panel, during the pendency of the case shall be an automatic ground for the dismissal of the case. V. Resolution of the Case The Order granting the petition for suspension of payment and appointing a permanent rehabilitation receiver or a management committee, if warranted, shall be issued. Otherwise, the Hearing Panel shall deny the petition and order the lifting of the suspension order. cdlex In the meantime, we have appointed a Special Task Force to revisit the rules on petitions for suspension of payments to make them more responsive to the times and to allow equity and fairness to prevail for both the petitioning corporations and the creditors. (SGD.) PERFECTO R. YASAY, JR. Chairman