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CS Professional · Insolvency and Bankruptcy - Law and Practice · Introduction to Insolvency and Bankruptcy Code

In a bankruptcy application under section 122, the debtor proposes an insolvency professional as bankruptcy trustee. The Adjudicating Authority receives the application on day 0. What is the correct sequence under section 125?

The Adjudicating Authority must direct the Board within seven days of receiving the application to confirm that no disciplinary proceedings are pending against the proposed professional. The Board then has ten days from receipt to confirm the appointment or reject it and nominate another bankruptcy trustee, under section 125.

  1. AIt directs the Board within 7 days to confirm no disciplinary proceedings are pending; the Board then has 10 days from receipt to confirm or reject and nominate anotherCorrect
  2. BIt directs the Board within 10 days; the Board then has 7 days to confirm or reject
  3. CIt directs the Board within 7 days; the Board has 30 days to respond
  4. DIt appoints the professional itself without reference to the Board

Explanation

Section 125(1) requires the Adjudicating Authority to direct the Board within seven days of receiving the application to confirm no disciplinary proceedings are pending. Under section 125(2) the Board has ten days from receipt to confirm or reject and nominate another trustee. The reversed timelines are wrong.

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