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CS Professional · Insolvency and Bankruptcy - Law and Practice · Resolution Strategies (Elective 7.5)

Sagar Textiles Ltd is in CIRP. The 180-day period has expired, but the CoC has approved a resolution plan and the application for its approval is pending before the Adjudicating Authority. Under Section 23, what is the position of the resolution professional (RP), Mr. Iyer?

The RP continues to manage the corporate debtor's operations after the CIRP period expires, until the Adjudicating Authority passes an order approving the resolution plan or appointing a liquidator. Expiry of the period alone does not end his management role under Section 23.

  1. AHe ceases to manage the operations because the CIRP period has expired
  2. BHe continues to manage the operations of the corporate debtor until the Adjudicating Authority passes an order approving the plan or appointing a liquidatorCorrect
  3. CHe continues only until the CoC meets again to extend his term
  4. DHe hands over management to the erstwhile board of directors until the order is passed

Explanation

The proviso to Section 23(1) says the RP continues to manage the operations after the CIRP period expires, until an order approving the plan under section 31(1) or appointing a liquidator under section 34 is passed. Handing management back to the board or stopping on expiry is contrary to this proviso.

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