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CS Professional · Corporate Restructuring, Valuation and Insolvency · Resolution Strategies

Mr. Khanna is the insolvency professional proposed to act as resolution professional for a pre-packaged insolvency resolution process of Himalaya Foods Ltd. His duties under Section 54B(1) have begun. Under Section 54B(2), when do those duties cease?

The pre-initiation duties cease if the corporate debtor does not file the application within the period stated in its declaration, or once the Adjudicating Authority admits or rejects the application. Section 54B(2) sets these two triggers, not committee constitution or plan approval.

  1. AOnly when the committee of creditors is constituted
  2. BIf the corporate debtor fails to file the application within the time stated in its declaration, or the application is admitted or rejected by the Adjudicating AuthorityCorrect
  3. COnly after the resolution plan is approved by the Adjudicating Authority
  4. DThirty days after the base resolution plan is prepared, whatever happens to the application

Explanation

Section 54B(2) ends the pre-initiation duties if the corporate debtor fails to file the application within the time period stated in its declaration, or when the Adjudicating Authority admits or rejects the application. Constitution of the committee of creditors and plan approval come later and do not govern these duties.

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