CS Professional · Insolvency and Bankruptcy - Law and Practice · Group Insolvency
Three companies in the Mehra Group are in separate CIRPs. Company A's assets were largely funded by Company B, the three share one workforce, and their books are so intermingled that separating assets is impracticable. A proposal is made to treat them as one pool for creditors. This approach is known as:
This is substantive consolidation, where the assets and liabilities of group entities are pooled and treated as one for creditors, disregarding separate legal personality, typically justified when affairs are so intermingled that separation is impracticable. Procedural consolidation only coordinates administration and keeps the estates separate.
- AProcedural consolidation
- BSubstantive consolidationCorrect
- CCross-border recognition
- DPre-packaged resolution
Explanation
Substantive consolidation treats the assets and liabilities of group entities as a single pool and ignores separate legal personality, justified where affairs are intermingled. Procedural consolidation only coordinates administration while keeping the estates separate, so it does not match the pooling here.
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