Skip to content

CS Professional · Insolvency and Bankruptcy - Law and Practice · Liquidation of Corporate Person

In the liquidation of Greenfield Agro Ltd, the liquidator proposes to sell the plant by private contract to Vikram Holdings, a promoter-linked entity that is not eligible to be a resolution applicant. The price offered is higher than the valuation. Which statement is correct under section 35?

The sale is barred. The proviso to section 35(1)(f) prohibits the liquidator from selling the corporate debtor's property or actionable claims to anyone ineligible to be a resolution applicant, regardless of price, creditor consent or recorded reasons.

  1. AThe sale is permitted, as the higher price protects creditors
  2. BThe sale is permitted if the committee of creditors consents
  3. CThe sale is barred, because the liquidator shall not sell property of the corporate debtor in liquidation to any person who is not eligible to be a resolution applicantCorrect
  4. DThe sale is permitted if the liquidator records reasons in writing

Explanation

The proviso to section 35(1)(f) says the liquidator shall not sell immovable or movable property or actionable claims to any person not eligible to be a resolution applicant. The proviso is absolute, so a higher price, consent or recorded reasons do not cure it. The power to sell by public auction or private contract exists but is limited by this proviso.

Did you get it right without looking?

One question tells you little. A timed set on Liquidation of Corporate Person shows your real accuracy, how long you take and where you lose marks.

Practise Liquidation of Corporate PersonFree diagnostic mock

More Liquidation of Corporate Person questions