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CS Professional · Corporate Restructuring, Valuation and Insolvency · Pre-Packaged Insolvency Resolution Process

Sharma Components Pvt Ltd is registered as a medium enterprise under the MSMED Act, 2006 and has defaulted on a debt. It is not under CIRP and has no liquidation order. Which statement about its eligibility to apply for a pre-packaged insolvency resolution process is correct?

Sharma Components is eligible because section 54A(1) permits a pre-pack application for any corporate debtor classified as a micro, small or medium enterprise under the MSMED Act, 2006. No listing or absence of financial creditors is required for this eligibility.

  1. AIt is eligible because it is classified as a micro, small or medium enterpriseCorrect
  2. BIt is eligible only if its default exceeds the threshold set for large companies
  3. CIt is eligible only if it has no financial creditors
  4. DIt is not eligible because only companies with a listed debt can apply

Explanation

Section 54A(1) allows an application in respect of a corporate debtor classified as a micro, small or medium enterprise under the MSMED Act, 2006. The other options add conditions (no financial creditors, listed debt, a large-company threshold) that the section does not impose for this eligibility.

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