Skip to content

CS Professional · Insolvency and Bankruptcy - Law and Practice · Resolution Strategies (Elective 7.5)

After the first CoC meeting of Nandini Textiles Ltd, the RP wants to incur insolvency resolution process costs for hiring a valuer. Under the IBBI CIRP Regulations, what is the correct position?

After the first CoC meeting, all insolvency resolution process costs may be incurred only with the prior approval of the committee of creditors. Reporting later or relying on earlier estimates is not enough.

  1. AThe RP may incur it freely and report to the CoC after completion of the CIRP
  2. BThe RP needs prior approval of the CoC before incurring the costCorrect
  3. CThe RP needs prior approval of the Board only
  4. DThe RP may incur it if the cost is below the previously approved estimate, without any approval

Explanation

Regulation 31B(4) says that after the first CoC meeting all CIRP costs are incurred only with the CoC's prior approval. Costs till the first meeting are placed for approval at that meeting with justification. Reporting afterwards, as in the first option, would breach the prior-approval requirement.

Did you get it right without looking?

One question tells you little. A timed set on Resolution Strategies (Elective 7.5) shows your real accuracy, how long you take and where you lose marks.

Practise Resolution Strategies (Elective 7.5)Free diagnostic mock

More Resolution Strategies (Elective 7.5) questions