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CS Professional · Insolvency and Bankruptcy - Law and Practice · Bankruptcy Order for Individuals and Partnership Firms

A bankruptcy order under section 126 is passed against Kiran, a sole individual debtor. Unsecured creditor Meera wants to file a suit to recover her bankruptcy debt. What must she do under the Code?

Meera needs the leave of the Adjudicating Authority, which may attach terms. After a bankruptcy order a creditor of a bankruptcy debt cannot start a suit or other legal proceedings, or act against the bankrupt's property, without that leave.

  1. AObtain leave of the Adjudicating Authority, which may impose termsCorrect
  2. BFile freely, since only action against property is barred
  3. CObtain consent of the bankruptcy trustee alone
  4. DFile the suit only after the discharge order

Explanation

On the bankruptcy order, a creditor claiming a bankruptcy debt cannot initiate action against the bankrupt's property or commence any suit or legal proceedings except with the leave of the Adjudicating Authority and on its terms. Trustee consent is not the stated requirement.

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