DISSOLUTIO

COOPERA
N OF
TIVES
 DISSOL
DISSOL
UTION
Dissolution refers to the termination or cessation
of the cooperative’s business.

UTION
Dissolution of Cooperatives 2
Voluntary
Dissolu
tion
• It comes about when the
cooperative itself, through
a resolution of the board
of directors and the
general assembly.
• No creditors are affected
 • The rules to be followed
are:
1. Resolution from the board
2. Resolution from the general
assembly
3. Notice of meeting
4. Receipt by member of notice of
meeting
5. Filling of dissolution papers

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 Procedures in voluntary
dissolution where
creditors are affected
• Signed by a majority of its board members or other
officers managing its affairs
• Verified by the cooperative’s president or secretary
or one of its director
• It lays down all claims and demands against the
cooperative
• It is resolved by the affirmative vote of at least
two-thirds of all members with voting rights, at a
5 meeting called for that purpose.
Processing Of Dissolution
1. The Petition
CDA will examineAt the The CDA
petition and if it finds
the petition sufficient in form and substance, it will
issue an order that recites therein the purpose of
the petition and shall fix a date on or before which
any person may file objections to the petition for
dissolution.

2. Objections to the petition for dissolution may be

filed with the CDA within a period not less than 30
days nor more than 60 days after the entry of the
order.
 3.Within the thirty-day period, a copy of the order is
published at least once a week for three
consecutive weeks in a newspaper that is either
published or circulating in the municipality or city
where the principal office of the cooperative is
situated.

4. A similar copy of the order is posted for three

consecutive weeks in three public places in the
municipality or city where the principal office of the
cooperative is situated.
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 5. Within five days after the maximum sixty-day period
to file objections to the petition for dissolution has
expired, the CDA issues a notice that it will proceed
to hear the petition and try any issue arising from
the objections submitted.
6. If no objections have been filed, the dissolution shall
be granted.
7. If there are objections filed, the CDA shall hear them
and if the objections are found of insufficient merit
and the material allegations of the petition for
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dissolution are true, the petition for dissolution shall
 8.The grant for dissolution is contained in an order
dissolving the cooperative and directing the
disposition of its assets as justice requires.

9.The order of dissolution includes the assets and

liabilities of the cooperative; the claim of any
creditor; the number of members; and the nature
and extent of the interest of the members of the
cooperative.
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Involuntar
Dissolu
y
tion
A cooperative may be dissolved
by order of a competent court
such as the Regional Trial Court
(RTC), after a due hearing on the
grounds of violation of any law,
regulation, or provisions of its by-
laws; or insolvency.
 PROCEEDINGS UPON
INSOLVENCY
Under the Insolvency Law, a bankrupt cooperative can be permitted to
either suspend payments or be discharged from its debts and liabilities.
Suspension of payments is allowed when the assets of the cooperative are
sufficient to pay all its maturing obligations. Discharge from debts and
liabilities may be obtained when the assets of the cooperative are not enough
to pay off all debts or liabilities of the cooperative.
The fact that cooperatives can seek relief under the Insolvency Law does
not produce creditors of cooperatives from seeking protection from the law. A
debtor who has been granted a discharge from his debts and liabilities under
the Insolvency Law is issued a Certificate of Discharge and this operates as a
complete bar to all suits brought on any such debts and liabilities discharged.
If a creditor after receiving his pro rata share in the Insolvency proceedings
has an unpaid balance, he cannot recover the balance anymore from the
insolvent debtor. 11
 Dissolution By Order Of
The CDA
CDA can with due process, suspend or revoke the certificate of
registration of a cooperative on any of the following grounds:

a.The cooperative obtained its registration by fraud.

b.The cooperative exists for an illegal purpose.
c.The cooperative has willfully violated, despite notice by the
Authority, the provisions of the Code or its by laws.
d.The cooperative has willfully failed to operate on a
cooperative basis.
e.The cooperative has failed to meet the required minimum
number of members.
A Suspension Order Does Not
Dissolve The Co-op
In any of the above grounds, the order of suspension
will not dissolve the cooperative. During the
suspension period, the CDA can rehabilitate the
cooperative and the co-op could have a new lease on
life. An order suspending the certificate of
registration amounts to an order asking the
cooperative to cease and desist, until further notice
from operating as a cooperative.
 Revocation Of A Co-ops
Certificate Of Registration
Dissolves The Co-op
It is revocation of the certificate of registration
that will effect a dissolution of the cooperative. If
the cooperative cannot be rehabilitated, or refuses
to remedy its questioned practices and/or
repeatedly does it, the suspension will lead to the
revocation of the certificate of registration.
 Dissolution Due To Failure To
Organize And Operate
Upon receipt of its certificate of registration, a cooperative as
a matter of procedure, shall organize itself for the purpose of
commencing operations. The initial act of the cooperative in
commencing business is for the elected members of the
board to meet and constitute themselves as a body politic for
the purpose of transacting business. In the first meeting, the
board appoints the general manager and other officers of te
cooperative. In a credit cooperative, the board will adopt a
loan policy, preferably a consolidated loan policy. It will
choose a depository bank and designate the signing
authorities to the checking or current accounts.
Signing Mode Of Checks
For security reasons, the treasurer and the
chairman sign the disbursed checks, with the vice
chairman as an alternative signature in case one of
the two regular signatories is unavailable. The
signing mode should be ‘’treasurer and chairman,’’
and never ‘’treasurer and/or chairman’’. After this
initial meeting the cooperative is ready to
commence business.
 CDA Can Dissolve A Co-op
That Fails To Organize And
Operate Within Two Years
If a cooperative does not organize or, even if it has
organized, fails to commence the business within two years
after registration, the CDA shall send it a formal inquiry
regarding the status of its operation. The two year period
shall be reckoned from the date shown in the certificate ot
registration. The CDA will strike out from the register of
cooperatives a cooperative ascertained to be in this
predicament without justifiable reasons. Such CDA action
affectively dissolves the cooperative.
Dissolution Due To Failure To
Operate For Two Consecutive
Years

A previously operating co-op can

dissolved by the CDA for failure to
operate for two consecutive years.
 Liquidation of a
dissolved co-op
Art. 60 of the code: " Every terminated cooperative shall
nevertheless be continued as a body cooperative for
three(3) years after the time when it would have been
dissolved, for the purpose of prosecuting and defending
suits by or against it and enabling it to settle and close its
affairs, to dispose of and convey its property of and to
distribute its assets, but not for the purpose of
continuing the business for which it was established.

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 Liquidation comes about as a result of any
of the following:

a. The cooperative charter expires by its own limitation.

This refers to the term of existence of the cooperative
as stated in its article of cooperation, the charter.
( EXPIRATION OF CHARTER)
b. Cooperative existence is terminated by voluntary
dissolution. ( VOLUNTARY DISSOLUTION)
c. Cooperative existence is terminated by appropriate
judicial proceedings. ( DISSOLUTION BY JUDICIAL
PROCEEDINGS). 20
 Trustees during
liquidation
During liquidation the cooperative is authorized
to convey all its property to trustees who will
hold the properties conveyed for and on behalf
of the benefit of members, creditors, and other
persons in interest.

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 Order of priority among payees
and creditors during liquidation
Creditors will be paid first, and the remains will be
distributed pro rata among preferred share capital
holders; otherwise, the members will be left empty-
handed.
- Education fund and the amounts due to an unknown
creditor or member who cannot be found anymore will be
donated to an apex organization.
- Reserve fund will be disposed of in accordance with the
resolution of the board following allowed under Art. 87(c) 22
Two cases a cooperative has
the authority to distribute
assets of property;
1.During liquidation and winding up after
paying claims of creditors.
2.When the co-op decreases its share
capital.
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THANK
YOU
Fetiluna, Sheryl F.
DJean Luceno
Partosa, Marie Grace
Ypanto, Myla Jane S.