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CS Professional · Insolvency and Bankruptcy - Law and Practice · Resolution Strategies (Elective 7.5)

Veda Textiles Ltd is undergoing a corporate insolvency resolution process. At the first meeting of the committee of creditors, the resolution professional (RP) places a Going Concern Assessment Report showing estimated cash flows and working capital needs. What is the committee's role on this report?

The committee of creditors decides, based on the Going Concern Assessment Report placed by the RP at its first meeting, whether the corporate debtor's operations continue and, if they do, the scope and duration of those operations. The RP only prepares and presents the report.

  1. AIt must only note the report, since continuing operations is the RP's sole decision
  2. BIt decides whether operations continue and, if so, the scope and duration of such operationsCorrect
  3. CIt must forward the report to the Board, which decides on continuing operations
  4. DIt decides only the duration, because scope is fixed by the corporate debtor's management

Explanation

Under the regulations, the RP places the Going Concern Assessment Report at the first meeting and, based on it, the committee decides whether operations continue and the scope and duration of such operations. The RP does not decide this alone, so noting the report is wrong.

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