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CS Professional · Corporate Restructuring, Valuation and Insolvency · Liquidation on or after Failing of Resolution Plan

Nirmal Ceramics Ltd is ordered into liquidation. The liquidator wants to file a recovery suit against a defaulting customer on behalf of the company. Which statement is correct as per section 33?

The liquidator may institute the suit on behalf of the corporate debtor, but only with the prior approval of the Adjudicating Authority. After a liquidation order, no other suit or proceeding may be started by or against the company, subject to section 52.

  1. ANo suit may be instituted by anyone, including the liquidator, in any case
  2. BThe liquidator may institute the suit on behalf of the corporate debtor only with the prior approval of the Adjudicating AuthorityCorrect
  3. CThe former directors may file the suit in the company's name
  4. DThe liquidator may file it freely without any approval

Explanation

Once a liquidation order is passed, no suit or legal proceeding may be instituted by or against the corporate debtor, subject to section 52. The proviso allows the liquidator to sue on its behalf with the Adjudicating Authority's prior approval. Filing freely without approval is wrong.

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