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CS Professional · Insolvency and Bankruptcy - Law and Practice · Group Insolvency

Rohan Steels Ltd and its two subsidiaries are in CIRP before the same NCLT. The same person is proposed as resolution professional for all three, and the creditors of each company have different interests. Which concern is most relevant to such a common-professional arrangement?

The key concern is conflict of interest between the separate estates, since intercompany claims may pit one company's creditors against another's. A common professional can improve coordination and reduce cost, but must act independently and fairly for each estate, with the tribunal overseeing any conflict.

  1. APossible conflict of interest among the estates, which must be managed so the professional acts independently for each estateCorrect
  2. BThe professional cannot be paid any fee
  3. CThe arrangement makes the moratorium inapplicable
  4. DThe professional must also become a director of each company

Explanation

A common professional can cut cost and aid coordination, but the estates may have conflicting claims, such as intercompany debts. The professional owes duties to each estate and must avoid conflicts. Fees are still payable, the moratorium continues, and the professional does not become a director.

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