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

During the pre-packaged process of Kaveri Engineering Ltd, the RP notices that the Board has breached its obligations under the pre-pack Chapter and the related rules and regulations. Which duty of the RP is directly engaged?

The RP must inform the committee of creditors when the Board breaches its obligations under the pre-pack provisions. He does not penalise directors, terminate the process or push liquidation on his own, because those steps need CoC decisions or Adjudicating Authority orders.

  1. ATo inform the committee of creditors of the breachCorrect
  2. BTo terminate the process himself by written notice to the Board
  3. CTo directly impose a penalty on the directors
  4. DTo seek liquidation of the company immediately without any CoC decision

Explanation

Section 54F(2)(e) requires the RP to inform the committee of creditors if the Board of Directors or partners breach their obligations under the Chapter, rules and regulations. The RP cannot impose penalties or terminate on his own; termination needs a CoC decision of at least 66% or an application to the Adjudicating Authority.

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