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

During a PPIRP of Bharat Polymers Ltd, the resolution professional finds that an officer is managing the company's affairs to defraud creditors after the pre-packaged insolvency commencement date. What action does section 67A permit?

The Adjudicating Authority may, on the resolution professional's application, penalise the officer under section 67A. The penalty must be at least one lakh rupees and may extend to one crore rupees, for managing affairs with intent to defraud creditors after the commencement date.

  1. AThe creditors may directly fine the officer at their meeting
  2. BThe Adjudicating Authority may, on the RP's application, impose a penalty of not less than ₹1 lakh and up to ₹1 crore on the officerCorrect
  3. CThe Adjudicating Authority may impose a penalty of up to ₹10 lakh only, on the RP's application
  4. DThe Board may impose imprisonment on the officer without reference to the Adjudicating Authority

Explanation

Section 67A lets the Adjudicating Authority, on the RP's application, penalise an officer who manages the debtor's affairs fraudulently after the commencement date. The penalty is at least ₹1 lakh and may extend to ₹1 crore. Creditors and the Board have no such power under this section.

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