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CS Professional · Insolvency and Bankruptcy - Law and Practice · Pre-Packaged Insolvency Resolution Process (Elective 7.5)

In a PIRP of Anand Foods Pvt Ltd, the pre-packaged insolvency commencement date is 1 March. The committee of creditors has approved no resolution plan by the end of the ninety-day period under section 54D(2). The resolution professional files for termination. Which statement is correct?

The resolution professional must file for termination on the day after the ninety-day period ends, since no plan was approved. The Adjudicating Authority then has thirty days from the application to pass the termination order. Liquidation is not automatic, and the process does not lapse by itself.

  1. AThe resolution professional must file the termination application on the day after the ninety days expire, and the Adjudicating Authority must decide within thirty days of the applicationCorrect
  2. BThe resolution professional may wait until day 120 before filing the application
  3. CThe process lapses automatically without any application
  4. DThe Adjudicating Authority must order liquidation in every such case

Explanation

Section 54D(3) requires the resolution professional to file the termination application on the day after the 90-day period expires. Section 54N(1) then requires the Adjudicating Authority to pass an order within thirty days of the application. Liquidation follows only in the case under section 54N(4), where an order under section 54J(2) was passed earlier. Waiting until day 120 or automatic lapse has no basis.

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