Skip to content

CS Professional · Corporate Restructuring, Valuation and Insolvency · Cross Border Insolvency

Kaveri Steels Ltd is undergoing CIRP before the NCLT, Chennai. Its lender, Madras Bank, has a pending suit against Kaveri's corporate guarantor, Palar Alloys Ltd, in a civil court, and a fresh application relating to Palar's insolvency is proposed. Under Section 60 of the Code, what is the position?

Such an application must be filed before the NCLT already handling the principal debtor's CIRP, and any pending insolvency or liquidation proceeding against the corporate guarantor in a court or tribunal stands transferred to that same Adjudicating Authority, so that related proceedings are handled together.

  1. AThe application must be filed before the NCLT dealing with Kaveri's CIRP, and the pending proceeding in the court stands transferred to itCorrect
  2. BThe application may be filed before any NCLT bench chosen by the bank, and the civil suit continues
  3. CThe application must go to the Debt Recovery Tribunal, and the civil suit is dismissed
  4. DThe application is filed before the NCLAT, with the civil suit staying until its decision

Explanation

Section 60(2) requires insolvency or liquidation applications relating to the corporate guarantor of a debtor under CIRP to be filed before the same NCLT. Section 60(3) transfers pending proceedings in any court or tribunal to that Adjudicating Authority. The other options contradict this.

Did you get it right without looking?

One question tells you little. A timed set on Cross Border Insolvency shows your real accuracy, how long you take and where you lose marks.

Practise Cross Border InsolvencyFree diagnostic mock

More Cross Border Insolvency questions