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53 Ateneo L.J. 1 (2008-2009)

handle is hein.journals/ateno53 and id is 1 raw text is: Rehabilitating the Law on Corporate Rehabilitation Laurence Hector B. Arroyo* I. INTRODUCTION ................................................... I II. STATUTORY HISTORY OF CORPORATE REHABILITATION ............. 3 A. Act No. 1956 (The Insolvency Law) and Suspension of Payments B. Presidential Decree No. 902-A C. Securities Regulation Code D. Interim Rules on Corporate Rehabilitation III. REHABILITATION AND THE STAY ORDER ........................ 10 A. Purpose of Rehabilitation B. The Stay Order IV. CRAM DOWN ......................................... .........'19 A. The Interim Rules B. Metropolitan Bank & Trust Company v. ASB Holdings, Inc., et al. V. OBSERVATIONS OR RECOMMENDATIONS. .........................24 A. Cram Down B. Rehabilitation and the Impairment of Obligations C. Equality in Equity VI. CONCLUSION ...................................................30 I. INTRODUCTION In a free market, firms are left alone to compete against each other. As with any competition, however, the less efficient and competitive invariably fall by the wayside. The law will generally not come to the succor of the losers so long as the competitors play by the rules. Favoring one company or firm over others in the course of the competition is anathema to the concept of a free market, which presupposes a fair set of rules and a level playing field. There are instances, however, when the law steps in to give the losing company a second chance. To be sure, the law does not intervene out of compassion for the juridical entity. In fact, the law does not bother with * 'o8 M.A., Ateneo de Manila University; '94 J.D., Ateneo de Manila University School of Law. He is a Mandatory Continuing Legal Education (MCLE) Lecturer of Arbitration as a Faster Means of Settling Disputes and of the Rules on Electronic Evidence. The author is a litigation partner and Project Director of the Pro Bono Committee of Quisumbing Torres (Associated with Baker & McKenzie). His past works include On the Heels of the Doctrine of Hot Pursuit, 52 ATENEo L.J. 511 (2007) and Arbitration in the Philippines: Wave of the Future?, 52 ATENEo L.J. I (2007). Digitized from Best Copy Available