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CS Professional · Corporate Restructuring, Valuation and Insolvency · Role, Functions and Duties of IP, IRP and RP

Meera Textiles Ltd is in liquidation under the IBC. The liquidator, Mr. Rao, finds that a bidder for the company's machinery is a person who is not eligible to be a resolution applicant. Which statement is correct?

The liquidator must not sell the corporate debtor's property to a person who is ineligible to be a resolution applicant. The bar applies regardless of price, mode of sale or creditor consent, because the proviso to the liquidator's sale power prohibits such a sale outright.

  1. AHe may sell to that bidder if the price is the highest offered at a public auction
  2. BHe may sell to that bidder only with the consent of all secured creditors
  3. CHe must not sell the property to a person who is not eligible to be a resolution applicantCorrect
  4. DHe may sell to that bidder by private contract but not by public auction

Explanation

The proviso to section 35(1)(f) bars the liquidator from selling the movable or immovable property or actionable claims of the corporate debtor to any person who is not eligible to be a resolution applicant. The mode of sale (auction or private contract) and the price do not cure this ineligibility, so the other options are wrong.

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