Practice question
A closed bank's borrower argues that liquidation automatically cancels an otherwise valid outstanding loan. Is that correct?
- Yes, closure pays every borrower debt.
- Yes, only depositors owe repayment.
- Yes, records cease to exist legally.
- No; collecting bank assets remains part of liquidation, and closure alone does not extinguish the loan.
- Yes, the borrower becomes the bank's shareholder automatically.
Legal references
- RA7653 Section30 as amended by RA11211: https://lawphil.net/statutes/repacts/ra2019/ra_11211_2019.html
- PDIC Charter as amended by RA11840, Sections5 and12–16: https://lawphil.net/statutes/repacts/ra2022/ra_11840_2022.html
- PDIC Charter as amended by RA10846, Sections12–16, read with RA11840: https://lawphil.net/statutes/repacts/ra2016/ra_10846_2016.html
Answer this question in flashcards to review your response and continue practicing.