CS Professional · Corporate Restructuring, Valuation and Insolvency · Resolution Strategies
Ganga Steels Ltd's base resolution plan impairs the claims of operational creditors. What must the resolution professional do under Section 54K?
The resolution professional must invite prospective resolution applicants to submit plans that compete with the base resolution plan. Section 54K(5)(b) triggers this when the base plan impairs operational creditors' claims. Termination is not the immediate step.
- ASubmit the base plan directly to the Adjudicating Authority
- BInvite prospective resolution applicants to submit plans to compete with the base resolution planCorrect
- CFile an application for termination of the process immediately
- DAsk the promoters to dilute their shareholding before voting
Explanation
Section 54K(5)(b) provides that where the base plan impairs operational creditors' claims, the resolution professional shall invite prospective resolution applicants to submit competing plans. Termination arises only under the proviso to sub-section (12) when a selected competing plan is not approved.
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