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CS Professional · Insolvency and Bankruptcy - Law and Practice · Pre-Packaged Insolvency Resolution Process (Elective 7.5)

The majority of directors of Anand Components Pvt Ltd sign a declaration under section 54A(2)(f) stating that the company will file its pre-packaged application within 120 days. Which assessment is correct?

The declaration is defective. Section 54A(2)(f)(i) requires the majority of directors to declare that the application will be filed within a definite time period not exceeding ninety days, so 120 days exceeds the limit, and creditor consent cannot extend it.

  1. AThe declaration is valid because the time period only needs to be definite
  2. BThe declaration is valid if the financial creditors consent to the 120 days
  3. CThe declaration is defective because the definite time period cannot exceed ninety daysCorrect
  4. DThe declaration is defective because the declaration must be made by all directors

Explanation

Section 54A(2)(f)(i) requires the declaration to state a definite time period not exceeding ninety days, and 120 days breaches this. The declaration is by the majority of directors, not all, so option D is wrong, and creditor consent cannot extend the statutory cap.

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