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CS Professional · Corporate Restructuring, Valuation and Insolvency · Pre-Packaged Insolvency Resolution Process

The Adjudicating Authority had earlier passed an order under Section 54J(2) in respect of Rathi Polymers Pvt Ltd, and the PIRP is now required to be terminated under Section 54N(1). What follows under Section 54N(4)?

The Adjudicating Authority must order liquidation of the corporate debtor and declare that the PIRP costs form part of the liquidation costs. Section 54N(4) overrides the usual termination route where an order under Section 54J(2) had been passed.

  1. ASimple termination, with costs borne by the corporate debtor
  2. BFresh PIRP initiation with a new resolution professional
  3. CAn order of liquidation, with PIRP costs included in the liquidation costsCorrect
  4. DMandatory conversion into a corporate insolvency resolution process

Explanation

Section 54N(4) overrides the rest of the section: where an order under Section 54J(2) was passed and termination is required, the Adjudicating Authority orders liquidation under section 33(1)(b)(i)-(iii) and declares that PIRP costs form part of liquidation costs. Simple termination with the debtor bearing costs is the ordinary route, not this one.

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