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CS Professional · Corporate Restructuring, Valuation and Insolvency · Resolution Strategies

Arjun Infra Ltd's promoters filed for a pre-packaged insolvency resolution process. After the PPIRP began, Ms. Nair, as resolution professional, found that the board had breached its obligations under the pre-pack Chapter. Under Section 54F(2), what is her duty?

In a pre-packaged process, the resolution professional must inform the committee of creditors when the board of directors or partners of the corporate debtor breach their obligations under that Chapter and its rules. She is to monitor management, not wait for a request or take over entirely.

  1. AInform the committee of creditors of the breachCorrect
  2. BDissolve the board and take over every function herself
  3. CWait until the Adjudicating Authority asks for a report
  4. DDisclose it only to the Insolvency and Bankruptcy Board after the plan is approved

Explanation

Section 54F(2)(e) obliges the resolution professional to inform the committee of creditors if the board of directors or partners breach any obligation under the Chapter and its rules and regulations. The same sub-section also requires her to monitor management of the affairs of the corporate debtor, so no wait-and-see approach is permitted.

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