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

Rohit Menon applies to the Adjudicating Authority for bankruptcy and proposes Anita Rao, an insolvency professional, as bankruptcy trustee. On receiving the application, what must the Adjudicating Authority do under Section 125 about Anita's proposed appointment?

The Adjudicating Authority must, within seven days of receiving the bankruptcy application, direct the Board to confirm that no disciplinary proceedings are pending against the proposed insolvency professional. The ten-day period belongs to the Board's response, not to the Authority's direction.

  1. ADirect the Board within seven days to confirm that no disciplinary proceedings are pending against herCorrect
  2. BDirect the Board within ten days to confirm that no disciplinary proceedings are pending against her
  3. CAppoint her at once without reference to the Board because the debtor proposed her
  4. DDirect the insolvency professional agency, not the Board, to certify her record within seven days

Explanation

Section 125(1) requires the Adjudicating Authority to direct the Board within seven days of receiving the application to confirm that no disciplinary proceedings are pending against the proposed professional. The ten-day period is the Board's time to respond, so the second option confuses the two periods. The Board, not the agency, is the body asked.

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