Skip to content

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

In the PPIRP of Lakshmi Textiles Pvt Ltd, the committee of creditors votes, by 70% of voting shares, to terminate the process before any plan is approved by the Adjudicating Authority. The Adjudicating Authority passes an order of termination. Who bears the PPIRP costs, if any?

The corporate debtor bears the PPIRP costs. The 70% vote exceeds the required 66% for the committee to terminate, and where the Adjudicating Authority orders termination, the Code places the process costs on the corporate debtor, not on creditors, the resolution professional or the Board.

  1. AThe financial creditors who voted for termination
  2. BThe corporate debtorCorrect
  3. CThe resolution professional personally
  4. DThe Insolvency and Bankruptcy Board of India

Explanation

Under section 54N(2), a committee decision to terminate needs at least 66% of voting shares, which 70% satisfies. Section 54N(3) then provides that the corporate debtor bears the PPIRP costs, if any, when termination is ordered. Costs go into liquidation costs only in the special case under section 54N(4).

Did you get it right without looking?

One question tells you little. A timed set on Pre-Packaged Insolvency Resolution Process (Elective 7.5) shows your real accuracy, how long you take and where you lose marks.

Practise Pre-Packaged Insolvency Resolution Process (Elective 7.5)Free diagnostic mock

More Pre-Packaged Insolvency Resolution Process (Elective 7.5) questions