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CS Professional · Corporate Restructuring, Valuation and Insolvency · Preparation and Approval of Resolution Plan

Himalaya Polymers Ltd's resolution plan was submitted to the Adjudicating Authority after the 2022 Second Amendment came into force. It is silent on how proceedings for avoidance transactions or fraudulent or wrongful trading will be pursued after approval. Under Regulation 38(2), what is the position?

The plan is deficient. A resolution plan must provide how avoidance transactions and fraudulent or wrongful trading proceedings will be pursued after approval and how any proceeds will be distributed. The exemption covers only plans submitted to the Adjudicating Authority on or before the Second Amendment's commencement.

  1. AThe plan is deficient because it must provide the manner of pursuing such proceedings after approval and distributing any proceedsCorrect
  2. BThe plan is valid because avoidance proceedings automatically lapse on approval
  3. CThe plan is valid because only the Adjudicating Authority may decide how proceeds are distributed
  4. DThe plan is deficient only if the applicant is a related party of the corporate debtor

Explanation

Regulation 38(2)(d) requires the plan to provide the manner in which avoidance and fraudulent or wrongful trading proceedings will be pursued post-approval and how proceeds will be distributed. The exemption applies only to plans submitted on or before the Second Amendment commencement, which is not the case here.

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