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CS Professional · Insolvency and Bankruptcy - Law and Practice · Liquidation of Corporate Person

Sunrise Textiles Ltd is in liquidation. The liquidator, CS Meera Iyer, verifies a claim by a supplier and decides to reject it in part. Which of the following must she do under the Code?

The liquidator must record the reasons for a rejection in writing and communicate the admission or rejection decision to the creditor and the corporate debtor within seven days. No Tribunal approval is needed, and the period is seven days, not thirty.

  1. ARecord in writing the reasons for the rejection and communicate her decision to the creditor and the corporate debtor within seven daysCorrect
  2. BCommunicate the decision only to the creditor, since the corporate debtor has no interest in the claim
  3. CObtain prior approval of the Adjudicating Authority before rejecting any part of a claim
  4. DCommunicate the decision within thirty days of the liquidation commencement date

Explanation

Under section 40, the liquidator may admit or reject a claim in whole or in part. Where a claim is rejected, the reasons must be recorded in writing. The decision must be communicated to the creditor and the corporate debtor within seven days. The option of giving the decision only to the creditor ignores the corporate debtor. No prior Adjudicating Authority approval is required, and the period is seven days, not thirty.

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