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CS Professional · Corporate Restructuring, Valuation and Insolvency · Pre-Packaged Insolvency Resolution Process

Kaveri Plastics Ltd completed a corporate insolvency resolution process 18 months before the date it proposes to initiate a pre-pack. It is not currently in CIRP and no liquidation order has been passed. Under section 54A(2), what is the position on the three-year condition?

Kaveri Plastics fails the condition. Section 54A(2)(a) bars a debtor that has undergone a pre-pack or completed a CIRP in the three years before the initiation date. Completing CIRP 18 months ago falls inside that window, regardless of who started it or whether liquidation followed.

  1. AIt fails the condition, as it completed CIRP within the three years preceding the initiation dateCorrect
  2. BIt satisfies the condition, because only a prior pre-pack counts against eligibility
  3. CIt satisfies the condition, because the bar applies only if liquidation followed the CIRP
  4. DIt fails the condition only if the CIRP was started by an operational creditor

Explanation

Section 54A(2)(a) requires that the debtor has not undergone a pre-pack or completed a CIRP during the three years preceding the initiation date. Completion of CIRP 18 months earlier falls within that window, so the debtor is ineligible. The identity of the applicant in the earlier CIRP is irrelevant.

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