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

Meera, an insolvency professional, is advising on a group where Parent Ltd and its two subsidiaries are all in CIRP. She says that group insolvency, as a concept, means treating the three as a single legal entity whose assets are merged automatically. Which statement correctly assesses her view?

Her view is incorrect. Group insolvency concerns coordinating the insolvency processes of distinct legal entities within a group, for example through common forums and cooperation. It does not automatically merge the companies or their assets, since each remains a separate legal person with its own creditors.

1. ACorrect, because the Code treats all group companies as one person once any one is insolvent
2. BCorrect, because the Adjudicating Authority must always merge assets in group cases
3. CIncorrect, because group insolvency is about coordinating the processes of separate legal entities, and consolidation of assets is not automaticCorrect
4. DIncorrect, because group insolvency applies only to individuals and partnership firms