Skip to content

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

Meridian Textiles Ltd, an Indian company, has a subsidiary in Dubai that is also in financial distress. Mr. Rao, an insolvency professional, is appointed to handle Meridian's insolvency process in India. Under the Code's text on functions of insolvency professionals, in which of the following situations does Mr. Rao's statutory function arise?

An insolvency professional's statutory function arises once an insolvency resolution, fresh start, liquidation or bankruptcy process has been initiated. Section 208(1) does not require foreign recognition, a specific Board direction or creditor claims abroad before the professional must take the necessary actions.

  1. AWhere an insolvency resolution, fresh start, liquidation or bankruptcy process has been initiatedCorrect
  2. BOnly after a foreign court has recognised the Indian proceeding
  3. COnly when the Insolvency and Bankruptcy Board of India directs him in writing in each case
  4. DOnly when the creditors of the Dubai subsidiary file claims in India

Explanation

Section 208(1) provides that where any insolvency resolution, fresh start, liquidation or bankruptcy process has been initiated, it is the function of an insolvency professional to take necessary actions in the listed processes. Foreign recognition or Board directions are not conditions for this function. Hence option A is correct and the others add conditions not found in the text.

Did you get it right without looking?

One question tells you little. A timed set on Cross Border Insolvency shows your real accuracy, how long you take and where you lose marks.

Practise Cross Border InsolvencyFree diagnostic mock

More Cross Border Insolvency questions