As the statutory receiver of closed banks, the PDIC takes over a bank ordered closed by the Monetary Board of the Bangko Sentral ng Pilipinas. It manages the assets and affairs of the closed bank and administers the same for the benefit of the closed bank’s creditors.

The PDIC liquidates a closed bank by converting its non-cash assets into cash/liquid funds through the collection of loans of borrowers and disposal of the closed bank’s remaining assets.

The creditors’ claims which include uninsured depositors are settled by PDIC through the distribution of available funds and/or assignment of unconverted assets in accordance with the Rules on Concurrence and Preference of Credits under the Civil Code of the Philippines and other applicable laws pursuant to a Liquidation Court-approved Asset Distribution Plan.