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

In the liquidation of Lotus Pharma Ltd, the liquidator consults two stakeholders entitled to a distribution under section 53 about the timing of asset sales. A third stakeholder, Mahesh Finance, was not consulted. Which statement is correct?

The consultation is permitted but not binding on the liquidator. Section 35(2) requires that records of the consultation be made available to stakeholders who were not consulted, in the manner specified by the Board. Consulting everyone together or obtaining tribunal permission is not required.

  1. AThe consultation binds the liquidator, and Mahesh Finance may challenge it only if it is a secured creditor
  2. BThe liquidator may not consult any stakeholder without the Adjudicating Authority's order
  3. CConsultation is valid only if all stakeholders are consulted together
  4. DThe consultation is not binding, and its records must be made available to stakeholders not consulted, in the manner specified by the BoardCorrect

Explanation

Section 35(2) lets the liquidator consult any stakeholder entitled to distribution under section 53. The consultation is not binding, and records must be made available to the other stakeholders not consulted, as specified by the Board. Consulting all together is not required, and no tribunal order is needed.

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