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CS Professional · Corporate Restructuring, Valuation and Insolvency · Cross Border Insolvency

Bharat Cement Ltd is in liquidation. The liquidator, Mr. Iyer, applies under section 235 saying overseas bank records are needed to trace sale proceeds of a plant held abroad in a reciprocating country. What must the Adjudicating Authority be satisfied of before issuing a letter of request?

The Adjudicating Authority must be satisfied that evidence or action relating to the foreign assets is required in connection with the liquidation. The Code does not demand prior foreign recognition, a value threshold or a creditor vote before it may issue the letter of request.

  1. AThat evidence or action relating to the foreign assets is required in connection with the liquidationCorrect
  2. BThat the foreign court has already agreed to recognise the Indian order
  3. CThat the value of the foreign assets exceeds the debts of the corporate debtor
  4. DThat the committee of creditors has approved the request by majority

Explanation

Section 235(2) requires the Adjudicating Authority to be satisfied that evidence or action relating to the assets is required in connection with the process or proceeding. No prior foreign consent, asset-value test or creditor vote is stated. Hence the first option alone is correct.

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