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CS Professional · Insolvency and Bankruptcy - Law and Practice · Corporate Insolvency Resolution Process

In a fast track process for Kaveri Textiles Ltd, the resolution professional finds that the resolution plan cannot be finalised within ninety days. The committee of creditors holds a meeting. What is required before the resolution professional can seek an extension from the Adjudicating Authority?

The resolution professional may apply for an extension only if instructed by a resolution of the committee of creditors passed at a meeting and supported by seventy-five per cent of the voting share. Lower majorities, such as 66 per cent or a simple majority, are not enough under section 56(2).

  1. AA resolution passed at a CoC meeting supported by 75% of the voting share, instructing the resolution professional to applyCorrect
  2. BA resolution passed by a simple majority of the voting share of the CoC
  3. CA resolution passed by 66% of the voting share of the CoC
  4. DA written request from the corporate debtor's promoters

Explanation

Section 56(2) says the RP files the extension application only if instructed by a CoC resolution supported by seventy-five per cent of the voting share. A simple majority or 66% falls short of that. The promoters have no role in instructing the application.

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