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CS Professional · Insolvency and Bankruptcy - Law and Practice · Bankruptcy Order for Individuals and Partnership Firms

Meera Textiles Traders, a partnership firm, is adjudged bankrupt by a bankruptcy order. Its partners are Anil and Sunita. Who is a 'bankrupt' under the definition in section 79?

Each of the partners, Anil and Sunita, is a bankrupt. Under section 79(3)(b), where a bankruptcy order is made against a firm, each of its partners is treated as a bankrupt, without any separate order against individual partners.

  1. AOnly the firm as a separate legal entity
  2. BEach of the partners of the firmCorrect
  3. COnly the managing partner, Anil
  4. DNeither partner, until a separate order is made against each

Explanation

Section 79(3)(b) defines bankrupt to include each of the partners of a firm where a bankruptcy order has been made against the firm. So both Anil and Sunita are bankrupts. No separate order against each partner is needed.

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