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

Kaveri Textiles Ltd completed a corporate insolvency resolution process 18 months before the proposed initiation date and now wishes to start a pre-pack. All other conditions are met. What is the position?

Kaveri Textiles cannot proceed. Section 54A(2)(a) requires that the debtor has not undergone a pre-pack or completed a CIRP in the three years before the initiation date, and 18 months is within that period. Creditor consent does not remove this bar.

  1. AIt can proceed, as the three-year bar applies only to liquidation
  2. BIt can proceed if two-thirds of financial creditors consent
  3. CIt cannot proceed, as it completed a CIRP within the three years preceding the initiation dateCorrect
  4. DIt can proceed if the Adjudicating Authority waives the bar

Explanation

Section 54A(2)(a) requires that the corporate debtor has not undergone a pre-pack or completed a CIRP during the three years preceding the initiation date. 18 months falls within that window, and creditor consent cannot override the condition.

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