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CS Professional · Corporate Restructuring, Valuation and Insolvency · Cross Border Insolvency

Under section 235, a liquidator applies to the Adjudicating Authority for a letter of request regarding assets of the corporate debtor in a reciprocal-arrangement country. Which statement most accurately describes the Adjudicating Authority's power?

The Adjudicating Authority has a discretionary power. It may issue a letter of request to a competent foreign court or authority, but only after being satisfied that evidence or action relating to the assets is required for the insolvency or liquidation process. It is not obliged to issue it automatically.

  1. AIt must issue the letter of request on receiving any application from the liquidator
  2. BIt may issue the letter of request to a court or authority of that country competent to deal with it, only on being satisfied that evidence or action relating to the assets is required in connection with the processCorrect
  3. CIt may issue the letter only to the Central Government, which then forwards it abroad
  4. DIt may issue the letter only if the committee of creditors has approved by a prescribed majority

Explanation

Section 235(2) says the Adjudicating Authority, on receipt of the application and on being satisfied that evidence or action is required, may issue a letter of request to a competent foreign court or authority. It is discretionary, not mandatory, and no creditor vote is mentioned.

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