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CS Professional · Corporate Restructuring, Valuation and Insolvency · Pre-Packaged Insolvency Resolution Process

During a PPIRP of Mehta Engineering Pvt Ltd, the committee of creditors, before any plan is approved, wants to end the process. Which vote is required, and who bears the PPIRP costs if the Adjudicating Authority terminates the process on that basis (ignoring the liquidation situation in section 54N(4))?

Termination needs a committee of creditors decision approved by not less than sixty-six per cent of the voting shares, and the corporate debtor bears the PPIRP costs. Section 54N(2) sets the vote, and section 54N(3) places the costs on the corporate debtor after the termination order.

  1. AA majority of voting shares; the costs are borne by the financial creditors
  2. BNot less than sixty-six per cent of voting shares; the corporate debtor bears the costsCorrect
  3. CNot less than seventy-five per cent of voting shares; the resolution professional bears the costs
  4. DNot less than sixty-six per cent of voting shares; the costs are borne by the Insolvency and Bankruptcy Board

Explanation

Section 54N(2) requires a CoC decision approved by not less than sixty-six per cent of voting shares to terminate before plan approval. Under section 54N(3), when the Adjudicating Authority passes the termination order, the corporate debtor bears the PPIRP costs. A simple majority or a 75 per cent threshold is not what the section provides.

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