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

Mahalaxmi Textiles Ltd is under CIRP in India. The resolution professional finds that the company owns a warehouse in a country with which India has made no reciprocal arrangement under Section 234 of the IBC. He wants the Adjudicating Authority to issue a letter of request to that country's court. What is the position under Section 235?

The letter of request route under Section 235 works only for assets situated in a country with which India has made reciprocal arrangements under Section 234. Since no arrangement exists with this country, the resolution professional cannot use Section 235 for the warehouse.

  1. AThe Adjudicating Authority may issue the letter of request because any foreign asset suffices
  2. BThe route in Section 235 is available only for assets in a country with which reciprocal arrangements have been made under Section 234, so it is not available hereCorrect
  3. CThe letter of request can be issued only after the CIRP has ended
  4. DThe resolution professional may issue the letter of request directly without the Adjudicating Authority

Explanation

Section 235(1) allows the application only where the assets are in a country with which reciprocal arrangements have been made under Section 234. With no such arrangement, the RP cannot invoke the provision. The Adjudicating Authority, not the RP, issues the letter of request, which rules out the last option.

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