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CS Professional · Insolvency and Bankruptcy - Law and Practice · Insolvency Resolution of Individuals and Partnership Firms

Sunrise Traders, a partnership firm in Jaipur, owes Rs 6 lakh to a supplier. The supplier wants to start an insolvency resolution process under Part III for this partnership debt. Which course is open to the creditor under the Code?

The creditor may apply against the firm, or against any one or more of its partners, for a partnership debt. The Code gives this choice, so the creditor is not limited to the firm alone, to a single senior partner, or to a prior dissolution.

  1. AApply only against the firm, since partners cannot be proceeded against individually
  2. BApply only against the partner holding the largest profit share
  3. CApply against the firm, or against any one or more partners of the firmCorrect
  4. DApply only after the firm is first dissolved

Explanation

A creditor may apply in relation to any partnership debt owed to him against any one or more partners of the firm, or against the firm itself. The Code does not restrict the choice to the firm alone or to the largest partner, nor does it require dissolution first.

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