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

Mr. Vijay Nair, an individual debtor, dies after the Adjudicating Authority passes an order allowing creditors to apply for bankruptcy. Creditor Omega Bank wishes to proceed. Against whom may the bankruptcy application be filed, and what may the creditor propose in it?

The application may be filed against the deceased debtor's legal representatives, and the creditor may propose an insolvency professional as bankruptcy trustee in it. Section 123(5) covers the deceased debtor case and section 123(4) covers the trustee proposal.

  1. AIt cannot be filed since the debtor has died; the creditor may propose nothing
  2. BIt may be filed against his legal representatives; the creditor may propose an insolvency professional as bankruptcy trusteeCorrect
  3. CIt may be filed against the Debt Recovery Tribunal; the creditor must propose a trustee chosen by the tribunal
  4. DIt may be filed only by the legal representatives against the creditor; no trustee may be proposed

Explanation

Section 123(5) allows a bankruptcy application in the case of a deceased debtor to be filed against his legal representatives. Section 123(4) allows the creditor to propose an insolvency professional as the bankruptcy trustee. The other options misstate who the parties are or deny the proposal right.

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