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CS Professional · Insolvency and Bankruptcy - Law and Practice · Corporate Insolvency Resolution Process

Lakshmi Steels Ltd defaulted on a debt on 10 April 2020. A financial creditor wants to file a section 7 application for that default. Under section 10A, what is the position?

No application can be filed for that default. Section 10A suspends initiation for defaults arising on or after 25 March 2020 during the notified suspension period, and its proviso says no application shall ever be filed for a default occurring in that period.

  1. ANo application may be filed for that default, as it arose on or after 25 March 2020 within the suspension period, and none may ever be filed for itCorrect
  2. BThe application may be filed after the suspension period ends
  3. CThe application may be filed if the default exceeds the threshold
  4. DOnly a corporate applicant may file under section 10

Explanation

Section 10A bars applications under sections 7, 9 and 10 for defaults arising on or after 25 March 2020 during the suspension period. The proviso states that no application shall ever be filed for a default occurring during that period. Hence waiting until the period ends does not help.

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