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

The resolution professional of Himalaya Foods Ltd filed a termination application under section 54D(3) on 1 June because no plan was approved within 90 days. The Adjudicating Authority has not yet passed an order. Which statement is correct under section 54N?

The Adjudicating Authority must, within thirty days of the application, pass an order terminating the PPIRP and providing for the manner of continuation of avoidance and related proceedings, if any. The costs are borne by the corporate debtor, and no 66 per cent CoC vote is needed for a section 54D(3) application.

  1. AThe Adjudicating Authority must pass the termination order within thirty days of the date of the application, and must provide for continuation of avoidance proceedings, if anyCorrect
  2. BThe Adjudicating Authority has sixty days to pass the order, and avoidance proceedings automatically lapse
  3. CThe Adjudicating Authority must pass the termination order within thirty days, and the PPIRP costs are borne by the creditors
  4. DThe Adjudicating Authority may reject the application since termination requires a 66 per cent CoC vote in every case

Explanation

Under section 54N(1), on an application under section 54D(3), the Adjudicating Authority shall within thirty days terminate the process and provide for the manner of continuation of avoidance proceedings. Under section 54N(3) the corporate debtor bears the PPIRP costs. The 66 per cent vote is relevant only to a CoC decision to terminate under section 54N(2).

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