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WONDER BOOK CORPORATION v. PHILIPPINE BANK OF COMMUNICATIONS

This case has been cited 3 times or more.

	GR No. 205469 2015-03-25	BPI FAMILY SAVINGS BANK v. ST. MICHAEL MEDICAL CENTER PERLAS-BERNABE, J.
The failure of the Rehabilitation Plan to state any material financial commitment to support rehabilitation, as well as to include a liquidation analysis, translates to the conclusion that the RTC's stated considerations for approval, i.e., that (a) the plan provides for recovery rates on operating mode as opposed to liquidation values; (b) it contains details for a business plan which will restore profitability and solvency on petitioner; (c) the projected cash flow can support the continuous operation of the debtor as a going concern; and (d) the plan has provisions to ensure that future income will inure to the benefit of the creditors,[58] are actually unsubstantiated, and hence, insufficient to decree SMMCI's rehabilitation. It is well to emphasize that the remedy of rehabilitation should be denied to corporations that do not qualify under the Rules. Neither should it be allowed to corporations whose sole purpose is to delay the enforcement of any of the rights of the creditors, which is rendered obvious by: (a) the absence of a sound and workable business plan; (b) baseless and unexplained assumptions, targets, and goals; and (c) speculative capital infusion or complete lack thereof for the execution of the business plan.[59] Unfortunately, these negative indicators have all surfaced to the fore, much to SMMCI's chagrin.
	GR No. 187581 2014-10-20	PHILIPPINE BANK OF COMMUNICATIONS v. BASIC POLYPRINTERS BERSAMIN, J.
A material financial commitment becomes significant in gauging the resolve, determination, earnestness and good faith of the distressed corporation in financing the proposed rehabilitation plan.[30] This commitment may include the voluntary undertakings of the stockholders or the would-be investors of the debtor-corporation indicating their readiness, willingness and ability to contribute funds or property to guarantee the continued successful operation of the debtor corporation during the period of rehabilitation.[31]
	GR No. 175844 2013-07-29	BANK OF PHILIPPINE ISLANDS v. SARABIA MANOR HOTEL CORPORATION PERLAS-BERNABE, J.
In order to determine the feasibility of a proposed rehabilitation plan, it is imperative that a thorough examination and analysis of the distressed corporation's financial data must be conducted. If the results of such examination and analysis show that there is a real opportunity to rehabilitate the corporation in view of the assumptions made and financial goals stated in the proposed rehabilitation plan, then it may be said that a rehabilitation is feasible. In this accord, the rehabilitation court should not hesitate to allow the corporation to operate as an on-going concern, albeit under the terms and conditions stated in the approved rehabilitation plan. On the other hand, if the results of the financial examination and analysis clearly indicate that there lies no reasonable probability that the distressed corporation could be revived and that liquidation would, in fact, better subserve the interests of its stakeholders, then it may be said that a rehabilitation would not be feasible. In such case, the rehabilitation court may convert the proceedings into one for liquidation.[58] As further guidance on the matter, the Court's pronouncement in Wonder Book Corporation v. Philippine Bank of Communications[59] proves instructive: Rehabilitation is x x x available to a corporation [which], while illiquid, has assets that can generate more cash if used in its daily operations than sold. Its liquidity issues can be addressed by a practicable business plan that will generate enough cash to sustain daily operations, has a definite source of financing for its proper and full implementation, and anchored on realistic assumptions and goals. This remedy should be denied to corporations whose insolvency appears to be irreversible and whose sole purpose is to delay the enforcement of any of the rights of the creditors, which is rendered obvious by the following: (a) the absence of a sound and workable business plan; (b) baseless and unexplained assumptions, targets and goals; (c) speculative capital infusion or complete lack thereof for the execution of the business plan; (d) cash flow cannot sustain daily operations; and (e) negative net worth and the assets are near full depreciation or fully depreciated.[60] (Emphasis and underscoring supplied)