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CS Professional · Corporate Restructuring, Valuation and Insolvency · Role, Functions and Duties of IP, IRP and RP

Ms. Iyer, the IRP of Nair Polymers Ltd, is taking control of assets. The corporate debtor's records show: (1) a plant owned by it and recorded in its balance sheet; (2) machinery owned by a vendor but held by the debtor under a bailment arrangement; (3) a patent owned by the debtor; (4) assets of its wholly owned Indian subsidiary. For which of these is she NOT required to take control and custody under the duty to control assets?

She need not take custody of (2) and (4). Third-party assets held under bailment or similar contractual arrangements, and assets of any Indian or foreign subsidiary, are excluded from 'assets'. The owned plant and the patent, an intangible, must be taken into control and custody.

  1. AOnly (1) and (3)
  2. B(2) and (4)Correct
  3. COnly (4)
  4. DOnly (2)

Explanation

The duty covers assets over which the debtor has ownership rights, including tangible and intangible assets such as intellectual property. The Explanation excludes assets owned by a third party held under trust or contractual arrangements including bailment, and assets of any Indian or foreign subsidiary. So items (2) and (4) are excluded; (1) and (3) are covered. Shares held in the subsidiary would still be covered, but not the subsidiary's own assets.

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