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CS Professional · Insolvency and Bankruptcy - Law and Practice · Liquidation of Corporate Person

The liquidator of Kaveri Agro Ltd, CS Sunita Rao, plans to sell a factory plot by private contract to Deepak Traders Ltd. Deepak Traders is not eligible to be a resolution applicant. What is the legal position?

The sale is barred. The proviso to section 35(1)(f) prohibits the liquidator from selling the corporate debtor's property to anyone not eligible to be a resolution applicant. Neither public auction, recorded reasons nor a higher price removes this restriction.

  1. ASale is allowed if done by public auction instead of private contract
  2. BSale is barred because the liquidator shall not sell property to a person not eligible to be a resolution applicantCorrect
  3. CSale is allowed if the liquidator records reasons in writing
  4. DSale is allowed if the buyer pays more than the evaluated value

Explanation

The proviso to section 35(1)(f) says the liquidator shall not sell immovable or movable property or actionable claims to any person not eligible to be a resolution applicant. The mode of sale, reasons or price do not cure this bar, so the auction and higher-price options are wrong.

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