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CS Professional · Insolvency and Bankruptcy - Law and Practice · Corporate Insolvency Resolution Process

The Adjudicating Authority approves the resolution plan for Kaveri Textiles Ltd under section 31(1). Which consequence follows immediately after the approval order, as stated in section 31(3)?

After the approval order, the section 14 moratorium ceases to have effect and the resolution professional must forward all records of the insolvency process and the approved plan to the Insolvency and Bankruptcy Board of India for recording on its database.

  1. AThe moratorium under section 14 ceases to have effect, and the resolution professional forwards all records of the process and the plan to the Board for its databaseCorrect
  2. BThe moratorium continues until the resolution applicant obtains all approvals under other laws
  3. CThe moratorium ceases, but the resolution professional keeps the records until implementation is complete
  4. DThe Adjudicating Authority must pass a liquidation order if the plan is not fully implemented within one year

Explanation

Section 31(3) provides two consequences after the approval order: the section 14 moratorium ceases to have effect, and the resolution professional forwards all records relating to the process and the plan to the Board to be recorded on its database. The one-year period in section 31(4) relates to obtaining approvals under other laws, not to continuing the moratorium or an automatic liquidation.

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