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CS Professional · Corporate Restructuring, Valuation and Insolvency · Application for Corporate Insolvency Resolution Process

Sunrise Textiles Ltd, a corporate debtor, is admitted into a pre-packaged insolvency resolution process (PIRP). On the pre-packaged insolvency commencement date, along with the order of admission, which of the following must the Adjudicating Authority do?

On the pre-packaged insolvency commencement date, with the admission order, the Adjudicating Authority declares a moratorium, appoints a resolution professional, and causes the resolution professional to make a public announcement immediately after appointment, as section 54E provides.

  1. ADeclare a moratorium and appoint a resolution professional, with a public announcement to be made by the resolution professional immediately after appointmentCorrect
  2. BDeclare a moratorium and direct the committee of creditors to appoint the resolution professional within seven days
  3. CAppoint a liquidator and declare a moratorium for ninety days only
  4. DDeclare a moratorium only after the public announcement is completed by the corporate debtor's promoters

Explanation

Section 54E requires the Adjudicating Authority, along with the admission order, to declare a moratorium, appoint a resolution professional and cause a public announcement by the resolution professional immediately after appointment. The other options invent a CoC appointment, a liquidator, a fixed 90-day moratorium or promoter-led announcement, none of which is in the section.

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