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CS Professional · Insolvency and Bankruptcy - Law and Practice · Group Insolvency

Which fact most strongly supports a request for substantive consolidation, rather than merely procedural consolidation, of three group companies in insolvency?

Free movement of funds and assets that makes it impossible to identify which company owns what most strongly supports substantive consolidation. Common promoters, a shared bench or similar industry may justify coordinated handling, but pooling estates needs such deep intermingling that separate treatment is impracticable.

  1. AThe three companies have a common promoter
  2. BThe three companies' proceedings are before the same bench
  3. CFunds and assets were moved among the companies so freely that it is impossible to tell which entity owns whatCorrect
  4. DThe three companies carry the same industry classification

Explanation

Hopelessly intermingled assets and affairs make separate estates impracticable, the classic ground for pooling. Common promoter, same bench and same industry may justify coordination only and do not by themselves merge estates.

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