Questions: Could the court approve the plan despite the objections of the creditors of X Corporation and could the creditors be compelled to follow the plan? Could Y Corporation, in managing the business of X Corporation in the meantime, be deemed to have taken-over X Corporation itself?
X Corporation applied for its rehabilitation and submitted a rehabilitation plan which called for the entry by it into a joint venture agreement with Y Corporation. Under the agreement, Y Corporation was to lend to X Corporation its credit facilities with certain banks to obtain funds not only to operate X Corporation but also for a part thereof in the amount of P1 million as initial deposit in a sinking fund to be augmented annually in amounts equivalent to 10% of the yearly income from its operation of the business of X Corporation. From this fund the creditors of X Corporation were to be paid annually, starting from the second year of operations, with the entire indebtedness to be liquidated in 15 years. The creditors of X Corporation objected to the plan because Y Corporation would be taking over the business and assets of X Corporation.
Questions:
- Could the court approve the plan despite the objections of the creditors of X Corporation and could the creditors be compelled to follow the plan?
- Could Y Corporation, in managing the business of X Corporation in the meantime, be deemed to have taken-over X Corporation itself?
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