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

A partnership firm, Kapoor and Sons, defaulted, and the Adjudicating Authority passed an order under section 118(3). Creditor Bharat Ltd files a bankruptcy application against the firm, which is not accompanied by the order permitting it to apply or the records of the earlier resolution process. Which statement is correct?

The application is deficient. Section 123(1) requires it to be accompanied by the records of the insolvency resolution process, a copy of the order permitting the creditor to apply, and debt details as on the application date, plus any prescribed information. Debt details alone do not make it complete.

  1. AThe application is complete if it contains debt details as on the date of application
  2. BThe application is deficient because it must also include the records of the insolvency resolution process and a copy of the order permitting the creditor to applyCorrect
  3. CThe application is deficient only if the creditor is a secured creditor
  4. DThe application is complete because only a partner of the firm can be asked to supply such records

Explanation

Section 123(1) requires the application to be accompanied by the records of the insolvency resolution process, a copy of the Adjudicating Authority's order permitting the creditor to apply, details of debts as on the date of application, and other prescribed information. Debt details alone are insufficient, and the requirement applies to all creditors, not only secured ones.

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