CS Professional · Insolvency and Bankruptcy - Law and Practice · Bankruptcy for Individuals and Partnership Firms
After a bankruptcy order is passed against Anil Verma, an unsecured creditor, Sharma Finance, wants to file a recovery suit against him for its bankruptcy debt. Under the Code, what is the position?
Sharma Finance can commence a suit only with the leave of the Adjudicating Authority, on such terms as the Authority may impose. After the bankruptcy order, creditors of bankruptcy debts are barred from actions against the bankrupt's property or from legal proceedings without that leave.
- AIt may sue freely because unsecured creditors are not restricted
- BIt may sue only with the leave of the Adjudicating Authority and on terms the Authority may imposeCorrect
- CIt may sue only after the bankruptcy trustee gives written consent
- DIt may sue only after thirty days from the bankruptcy commencement date
Explanation
On the bankruptcy order, a creditor with a debt claimed as 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 such terms as it may impose. The trustee's consent and the thirty-day period are not the test.
Did you get it right without looking?
One question tells you little. A timed set on Bankruptcy for Individuals and Partnership Firms shows your real accuracy, how long you take and where you lose marks.
More Bankruptcy for Individuals and Partnership Firms questions
- Mr. Arvind Shah, a bankrupt, died, and after the trustee paid all debts, administration costs and interest under section 178 in full, a surp…
- Vikram Joshi, a bankrupt, owns a single unencumbered dwelling unit of a prescribed value, an unencumbered life insurance policy in his spous…
- Kishore, an individual debtor in Pune, is a defendant in a recovery suit before a civil court, and a creditor has also raised a dispute on p…
- Under Part III, Anil's spouse, his dependent parents and his employee are being examined to decide who counts as his associate. Which statem…
- After administering and distributing the estate of bankrupt Mr. Sanjay Verma, the bankruptcy trustee convenes a meeting of the committee of …
- A creditor is owed Rs 50,000 by an individual and wants to initiate the insolvency resolution process under Part III. Which statement correc…