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CS Professional · Insolvency and Bankruptcy - Law and Practice · Pre-Packaged Insolvency Resolution Process (Elective 7.5)

Mehta Engineering Ltd is not an MSME but has defaulted. It completed a corporate insolvency resolution process 18 months ago. Its financial creditors are keen on a PPIRP. Which eligibility condition under section 54A(2) stands in the way?

The bar is the condition that the corporate debtor must not have undergone a PPIRP or completed a CIRP during the three years preceding the initiation date. A CIRP completed 18 months ago falls inside that three-year window, so Mehta Engineering is ineligible.

  1. AIt must not have undergone a PPIRP or completed a CIRP during the three years preceding the initiation dateCorrect
  2. BIt must have no financial creditors who are related parties
  3. CIt must have completed a CIRP within the preceding five years
  4. DIt must pass an ordinary resolution of members

Explanation

Section 54A(2)(a) bars a corporate debtor that has undergone a PPIRP or completed a CIRP in the three years before the initiation date. Completion 18 months ago falls within that window. Members must pass a special resolution, not an ordinary one, and the other options misstate the Code.

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