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CS Professional · Corporate Restructuring, Valuation and Insolvency · Resolution Strategies

Sunrise Textiles Ltd is undergoing CIRP. The CIRP period is about to expire, but the Adjudicating Authority has not yet passed any order on the resolution plan approved by the committee of creditors. Ms. Rao, the resolution professional, asks whether her management of the corporate debtor's operations ends on the last day of the CIRP period. What is the correct position under Section 23?

The resolution professional continues to manage the corporate debtor after the CIRP period ends. She stays in charge until the Adjudicating Authority passes an order approving the resolution plan under section 31(1) or appointing a liquidator under section 34, so expiry of the period does not end her role.

  1. AHer role ends on the expiry of the CIRP period, and the board of directors resumes management
  2. BShe continues to manage the operations until an order approving the plan under section 31(1) or appointing a liquidator under section 34 is passedCorrect
  3. CShe continues only until the committee of creditors passes a fresh resolution authorising her
  4. DShe continues for a maximum of 90 days after the CIRP period, whatever the Adjudicating Authority does

Explanation

The proviso to Section 23(1) says the resolution professional continues to manage the corporate debtor's operations after the CIRP period expires, until the Adjudicating Authority passes an order approving the resolution plan or appointing a liquidator. The board does not resume control on expiry, and no CoC resolution or fixed 90-day cap is stated.

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