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CS Professional · Insolvency and Bankruptcy - Law and Practice · Group Insolvency

Lotus Infra Ltd's liquidator wants to pool the assets of Lotus and its affiliate because their affairs were so intermingled that separating them is impracticable. Which UNCITRAL-recognised remedy fits, and what is its nature?

Substantive consolidation fits. It is an exceptional remedy under the UNCITRAL guide, treating assets and liabilities of group members as a single estate, used where intermingling makes separation impracticable or where fraud exists, with safeguards for creditors. Procedural coordination merely aligns proceedings without pooling assets.

  1. AProcedural coordination; it is routine and always used
  2. BSubstantive consolidation; it is an exceptional remedy treating group members' assets and liabilities as one estateCorrect
  3. CCross-border recognition; it applies only to foreign creditors
  4. DVoluntary liquidation; it needs a members' resolution only

Explanation

UNCITRAL allows substantive consolidation only in limited circumstances such as fraud or assets so intermingled that separation is disproportionately costly. It combines assets and liabilities as one estate, unlike procedural coordination.

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