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CS Professional · Insolvency and Bankruptcy - Law and Practice · Introduction to Insolvency and Bankruptcy Code

On 1 March, an individual debtor files an application for bankruptcy and proposes an insolvency professional, Mr Rao, as bankruptcy trustee. The Adjudicating Authority receives the application on 1 March. Applying Section 125, which sequence of timelines is correct?

The Adjudicating Authority must direct the Board within seven days of receiving the application to confirm that no disciplinary proceedings are pending against the proposed professional. The Board then has ten days from receiving that direction to confirm the appointment or reject it and nominate another bankruptcy trustee.

  1. AAuthority directs the Board within 7 days to confirm no disciplinary proceedings are pending; Board responds within 10 days of receiving the directionCorrect
  2. BAuthority directs the Board within 10 days; Board responds within 7 days of the direction
  3. CAuthority directs the Board within 7 days; Board responds within 7 days of the direction
  4. DAuthority directs the Board within 14 days; Board responds within 10 days of the direction

Explanation

Under Section 125(1), where an insolvency professional is proposed, the Adjudicating Authority must direct the Board within seven days of receiving the application to confirm no disciplinary proceedings are pending. Under Section 125(2), the Board must then, within ten days of receiving the direction, either confirm the appointment or reject it and nominate another trustee. The 10/7 option reverses the periods.

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