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CS Professional · Insolvency and Bankruptcy - Law and Practice · Resolution Strategies (Elective 7.5)

In the CIRP of Kaveri Steels Ltd, the first meeting of the committee of creditors has been held and costs up to that meeting were approved. The RP now wants to incur further process costs before the next meeting. What is the position under the regulations?

After the first meeting of the committee of creditors, all insolvency resolution process costs can be incurred only with the committee's prior approval. The RP cannot spend first and seek ratification later, so the approval must come before the cost is incurred.

  1. ACosts may be incurred freely, with ratification at the end of the process
  2. BCosts may be incurred only with the prior approval of the committeeCorrect
  3. CCosts may be incurred with approval of the Adjudicating Authority alone
  4. DCosts up to a prescribed limit may be incurred without any approval

Explanation

After the first meeting, all insolvency resolution process costs can be incurred only with the committee's prior approval. Ratification later is not what the regulation provides.

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