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CS Professional · Insolvency and Bankruptcy - Law and Practice · Pre-Packaged Insolvency Resolution Process (Elective 7.5)

During the PIRP of Kaveri Textiles Ltd, the RP finds the Board has breached its obligations under the pre-packaged process provisions. What duty does the Code place on the RP in this situation?

The RP must inform the committee of creditors of the breach. His role is to monitor the debtor's management and report any breach of the Board's obligations under the pre-packaged process provisions. He does not take over management, order liquidation or levy penalties himself.

  1. ATake over management of the company immediately and suspend the Board
  2. BInform the committee of creditors of the breachCorrect
  3. CFile for liquidation of the company on his own authority
  4. DImpose a penalty on the directors himself

Explanation

The RP must monitor the management of the debtor's affairs and inform the committee of creditors if the Board or partners breach their obligations under this Chapter and its rules and regulations. The Code gives the RP no power to suspend the Board, order liquidation or levy penalties himself.

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