Practice question
Management is diverting assets while the rehabilitation case proceeds. An interested party moves for displacement and presents clear and convincing evidence of imminent dissipation. Management argues it can never be displaced because the debtor initially remains in possession. Which is best?
- Section 36 permits the court to direct receiver management or appoint a management committee upon the stated showing
- Debtor control is absolute regardless of dissipation
- Only management may decide its own replacement
- A private creditor may seize the company without court direction
- The receiver becomes owner of every share automatically
Legal references
- RA 10142, Section 36: https://lawphil.net/statutes/repacts/ra2010/ra_10142_2010.html
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