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All Jurisprudence based

0 tracked cards Commercial and Taxation Laws

Oceanic Bank, a domestic bank, is declared distressed by the Monetary Board. The Bangko Sentral ng Pilipinas appoints Conservator Rosa M. Garcia to take charge and preserve the bank as a going concern. The Conservator immediately (i) suspends the bank’s board of directors and senior officers and installs a temporary management team; (ii) approves a Rescue/Recovery Plan that includes restructuring a large interbank loan via conversion to long‑term notes, disposing of a portfolio of non-core assets through a competitive sale, and imposing temporary restrictions on certain new wholesale funding; (iii) negotiates with a major depositor to extend a maturing funding facility; and (iv) continues to honor existing deposit contracts but imposes a limited withdrawal schedule. Which of the following statements best describes (a) the governing doctrine and the scope of the Conservator’s authority, (b) whether the Conservator’s actions fall within the scope of that authority (specifically suspend/replace of management and the rescue/recovery plan), and (c) the effect of these conservatorship actions on third parties (depositors with withdrawal rights, secured creditors, and pre-existing contracts)?

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Governing doctrine: The Conservator can only monitor liquidity and ensure statutory compliance; any restructuring of interbank loans or asset disposals are not contemplated within the Conservator’s mandate in distress situations. Governing doctrine: Conservator’s power is strictly supervisory and the suspension or replacement of management requires MB approval; the Rescue/Recovery Plan and asset disposals must be MB-approved in all material respects, so the actions described would be ultra vires. Governing doctrine: The Conservator’s actions effectively nationalize the bank; the plan involves government takeover and all contracts are automatically renegotiated or voided. Governing doctrine: BSP’s conservatorship power to preserve distressed banks as going concerns; the Conservator may suspend the board and officers, appoint temporary management, and approve a Rescue/Recovery Plan that can restructure assets and liabilities and impose temporary withdrawal restrictions; these actions are within scope; third parties: depositors’ withdrawal rights may be curtailed under the plan, secured creditors’ rights may be adjusted but not extinguished, and pre-existing contracts continue subject to the plan and applicable law.

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