Skip to content

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

Sundaram Fabrics Pvt Ltd, registered as a micro enterprise under the MSMED Act, 2006, has defaulted on a bank loan. Its promoters want to use the pre-packaged insolvency resolution process. Which statement about its eligibility is correct under the Code?

The company is eligible because the Code permits a pre-packaged insolvency application for any corporate debtor classified as a micro, small or medium enterprise under the MSMED Act, 2006. Listing of debt or a prior insolvency process is not a condition.

  1. AIt can apply only if its default is above a threshold fixed for large companies
  2. BIt is eligible because it is classified as a micro, small or medium enterprise under the MSMED Act, 2006Correct
  3. CIt is ineligible because only companies with listed debt securities can use the process
  4. DIt is eligible only after it has first gone through a regular corporate insolvency resolution process

Explanation

Section 54A(1) allows an application for a pre-pack in respect of a corporate debtor classified as a micro, small or medium enterprise under section 7(1) of the MSMED Act, 2006. No listing or prior CIRP is required. The other options add conditions that the Code does not contain.

Did you get it right without looking?

One question tells you little. A timed set on Pre-Packaged Insolvency Resolution Process shows your real accuracy, how long you take and where you lose marks.

Practise Pre-Packaged Insolvency Resolution ProcessFree diagnostic mock

More Pre-Packaged Insolvency Resolution Process questions