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CS Professional · Insolvency and Bankruptcy - Law and Practice · Cross Border Insolvency (Elective 7.5)

The Central Government notifies that, for a reciprocating country, the Code will apply to the property of a corporate debtor's personal guarantor situated there, subject to specified conditions. Which statement is correct under Sections 234 and 235?

The notification is valid. Section 234(2) covers personal guarantors' assets abroad, subject to specified conditions. Under Section 235, the RP, liquidator or bankruptcy trustee may apply, and the Adjudicating Authority, if satisfied, may issue a letter of request to the competent foreign court or authority.

  1. AThe notification is invalid because Section 234 covers only corporate debtors
  2. BThe notification is valid, and an RP, liquidator or bankruptcy trustee may apply to the Adjudicating Authority for evidence or action regarding such assets if the Adjudicating Authority is satisfied it is neededCorrect
  3. CThe notification is valid, but a letter of request can be issued only in liquidation, not in CIRP
  4. DThe notification makes the foreign court bound to follow the Code without any conditions

Explanation

Section 234(2) covers assets of a corporate debtor or debtor, including a personal guarantor of a corporate debtor, in a reciprocating country, subject to specified conditions. Section 235 allows the RP, liquidator or bankruptcy trustee to apply in insolvency resolution, liquidation or bankruptcy, and the Adjudicating Authority may issue the letter if satisfied. Options C and D contradict this text.

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