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CS Professional · Insolvency and Bankruptcy - Law and Practice · Debt Recovery and Securitization

Three banks jointly financed Kaveri Steels Ltd. Their outstanding amounts on the agreed record date are: Bank A ₹50 crore, Bank B ₹30 crore, Bank C ₹20 crore. Under section 13(9), which group of creditors agreeing to enforce would allow measures under section 13(4) to be taken, binding all three?

Bank A and Bank B together suffice. Section 13(9) needs creditors representing at least sixty per cent in value of the amount outstanding on the record date. The total is ₹100 crore, so ₹60 crore is required, and A plus B hold ₹80 crore.

  1. ABank B and Bank C together, holding 50 per cent
  2. BBank A alone, holding 50 per cent
  3. CBank A and Bank B together, holding 80 per centCorrect
  4. DAny one bank, since each is a secured creditor

Explanation

Section 13(9) requires agreement of creditors representing not less than sixty per cent in value of the amount outstanding on the record date. Total is ₹100 crore, so ₹60 crore is needed. A+B give ₹80 crore, which qualifies. B+C give ₹50 crore and A alone ₹50 crore, both below 60 per cent.

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