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

IP Rahul Mehta was proposed and approved as resolution professional for Delta Forgings Pvt Ltd. Within the ninety-day period stated in the directors' declaration, the company does not file the application. Separately, in another case, the application is admitted. Which statement about his duties under section 54B is correct?

The insolvency professional's pre-initiation duties under section 54B cease when the corporate debtor fails to file within the time period stated in the declaration, and also when the Adjudicating Authority admits or rejects the application. Fee payment does not determine when the duties end.

  1. AHis pre-filing duties continue indefinitely until the Board directs otherwise
  2. BHis duties cease in both situations, on failure to file in time and on admission or rejection of the applicationCorrect
  3. CHis duties cease only if the application is rejected, not if it is admitted
  4. DHis duties cease only when the corporate debtor pays his fees

Explanation

Under section 54B(2), the pre-initiation duties cease if the debtor fails to file within the declared time period, or if the application is admitted or rejected by the Adjudicating Authority. His fees form part of the process costs only if the application is admitted, but fee payment does not decide when duties end.

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