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

Sunrise Textiles Ltd is undergoing a CIRP. The 180-day period has ended, but the Adjudicating Authority has not yet passed an order approving the resolution plan or appointing a liquidator. Ms. Iyer is the resolution professional. What is her position under Section 23?

Ms. Iyer continues to manage the corporate debtor's operations even after the CIRP period expires. Under the proviso to Section 23(1), her management continues until the Adjudicating Authority passes an order approving the resolution plan or appointing a liquidator.

  1. AShe must stop managing the operations because the CIRP period has expired
  2. BShe continues to manage the operations of the corporate debtor until an order approving the plan or appointing a liquidator is passedCorrect
  3. CShe continues only if the committee of creditors passes a fresh resolution
  4. DShe hands over management to the erstwhile board of directors until the order is passed

Explanation

The proviso to Section 23(1) says the resolution professional 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. No fresh CoC resolution is required, and management does not revert to the board.

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