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CS Professional · Drafting, Pleadings and Appearances · Appearance before other Regulatory and Quasi-judicial Authorities

Sunrise Textiles Ltd is undergoing a corporate insolvency resolution process before the NCLT. A supplier has filed a civil recovery suit against the company in a civil court. Ms. Rao, the resolution professional, wants to know whether she can appear and defend the suit. Under the Insolvency and Bankruptcy Code, 2016, what is the position?

The resolution professional can appear and defend the suit. Under the Insolvency and Bankruptcy Code, 2016, she must represent and act on behalf of the corporate debtor with third parties and exercise its rights in judicial, quasi-judicial or arbitration proceedings, so the civil suit is covered.

  1. AShe can represent and act on behalf of the corporate debtor and exercise its rights in judicial, quasi-judicial or arbitration proceedingsCorrect
  2. BShe cannot appear, because only the suspended board of directors may represent the company in any court
  3. CShe can appear only in proceedings before the NCLT and not before any other forum
  4. DShe can appear only after obtaining prior permission of the committee of creditors for each proceeding

Explanation

Section 25(2)(b) of the Code makes it the resolution professional's duty to represent and act on behalf of the corporate debtor with third parties and to exercise rights for its benefit in judicial, quasi-judicial or arbitration proceedings. The text does not confine this to the NCLT and does not require committee approval for each proceeding. Hence the option limiting her to the NCLT is wrong.

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