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CS Professional · Insolvency and Bankruptcy - Law and Practice · Group Insolvency

Gamma Infra Ltd and its sister concern Delta Projects Ltd are in separate CIRPs. A financial creditor of Gamma only argues that Delta's assets should be pooled with Gamma's to repay Gamma's dues, solely because they share a promoter. Applying the judicial approach, how is this claim best treated?

Common promoters alone do not justify pooling assets. Separate legal personality is the baseline, and consolidation needs strong facts such as deep intermingling of assets, finances and operations. The Code does not forbid coordination outright, and the other company's resolution professional's consent is not the test.

  1. AGranted automatically, because common promoters always justify pooling
  2. BRejected in principle, because the Code forbids all group coordination
  3. CNot granted merely on common promoters; pooling needs strong facts like deep intermingling of assets, finances and businessCorrect
  4. DGranted only if the resolution professional of Delta agrees

Explanation

Separate corporate personality is the baseline, and common ownership alone does not erase it. Tribunals look at factors such as intermingling of funds, interdependence of operations and whether creditors dealt with the group as a single unit. The Code does not outright forbid coordination, so rejecting it in principle is wrong, and an RP's consent is not the test.

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