Skip to content

CS Professional · Insolvency and Bankruptcy - Law and Practice · Corporate Insolvency Resolution Process

An insolvency professional, CS Rohan Iyer, was approved by unrelated financial creditors under section 54A(2)(e) as the proposed resolution professional of Kaveri Auto Pvt Ltd. The directors' declaration specified filing the PPIRP application within 60 days, but the company never filed. Which statement is correct about his duties and fees under section 54B?

His pre-initiation duties cease because the company failed to file within the period in the declaration. Under section 54B(3), his fees count as PPIRP costs only if the application is admitted, so with no filing they do not become PPIRP costs.

  1. AHis duties continue until the company files, however long it takes
  2. BHis pre-initiation duties cease when the company fails to file within the declared period, and his fees form part of PPIRP costs only if the application is admittedCorrect
  3. CHis duties cease only when the Board directs, and his fees are always borne by the creditors
  4. DHis duties cease on filing failure, and his fees automatically become liquidation costs

Explanation

Section 54B(2)(a) ends the duties if the debtor fails to file within the declared period. Under section 54B(3), his fees form part of PPIRP costs only if the application is admitted. Here no application was filed, so the fees cannot be PPIRP costs, and nothing makes them liquidation costs.

Did you get it right without looking?

One question tells you little. A timed set on Corporate Insolvency Resolution Process shows your real accuracy, how long you take and where you lose marks.

Practise Corporate Insolvency Resolution ProcessFree diagnostic mock

More Corporate Insolvency Resolution Process questions