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Weekend MCQ Self Challenge #021 Insolvency & Bankruptcy Code

Insolvency & Bankruptcy Code

 

Dear Professional Seniors & Friends,
Welcome to this wonderful weekend MCQ self challenge!

This weekend challenge is on Insolvency & Bankruptcy Code having 5 MCQs to be self answered by participants to take self challenge. The detailed answer of these MCQs shall be posted on Monday for the self assessment of the participants. This post shall be of immense use of the participant.

MCQ 21.1: Mr. Nirav Modi had defaulted in payment of dues amounting to Rs 8500 Crore to Punjab National Bank and some other Financial Creditors. With respect to the Insolvency and Bankruptcy code answer the following Questions -Under the IBC default is said to be occurred on the fulfillment of condition/s-

A. Debts becoming due and payable.
B. Non- payment of the debt.
C. Liability /obligation in respect of a claim which is due.
D. Both (a) & (b)

MCQ 21.2: PNB initiated Corporate Insolvency Resolution Process against Nirav Modi Pvt Ltd for the default in the capacity of-

A. Corporate debtor
B. Operational debtor
C. Financial creditor
D. Resolution applicant

MCQ 21.3: PNB through an agreement, assigned here the debt to the X trust. X trust filed the petition for initiation of corporate Insolvency resolution process (CIRP) against Nirav Modi Pvt Ltd. State the correct statement with respect to the competency of the X trust in the filing of the petition in the above situation-

A. X Trust is not a competent applicant as per section 6 of the IBC.
B. X Trust is being authorized by the PNB to file an application.
C. X Trust in the capacity of financial creditor can file a valid petition.
D. None of the above.

MCQ 21.4: A person X, being an Insolvency Professional can be appointed as Resolution Professional, if:

A. He is eligible to be appointed as an independent director under section 149 of the Companies Act, 2013.
B. he is not a related party of the corporate debtor.
C. only (a).
D. Both (a) and (b).

MCQ 21.5: Which of the following persons are not eligible to make an application to initiate the corporate insolvency resolution process.
A. A corporate debtor undergoing insolvency resolution process
B. A corporate debtor having completed corporate insolvency resolution process 12 months preceding the date of making of the application
C. A corporate debtor in respect of whom a liquidation order is being made.
D. All of the above

Sincere Regards!

CA Sanjay Kumar Agrawal
Mobile: 9810116321

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Answer MCQ Self Challenge #021

 

Dear Professional Seniors & Friends,

Warm Greetings!

 

This post of MCQ is on the provisions relating to Insolvency & Bankruptcy Code

 

Answer MCQ 21.1: D.  Both (a) & (b)

Answer MCQ 21.2: C.  Financial creditor

Answer MCQ 21.3: C.  X Trust in the capacity of financial creditor can file a valid petition.

Answer MCQ 21.4: D.  Both (a) and (b)

Answer MCQ 21.5: D.  All of the above

 

Insolvency Resolution Process: It is the process by which Entity can be revived in a Time Bound Manner. Under this Code ‘Corporate Insolvency Resolution Process’ is provided to revolve the state of Insolvency. The process is mandated to be completed within 180days extendable upto maximum of 90 days. Under the process of Insolvency resolution, possibility to revive the Business its assessed, and if such possibility is ruled out, it results into liquidation i.e winding up of the Entity.

 

Practical Analysis for MCQ 21.1:

As per Section 3(12) Default means non-payment of Debt when whole or any part of the instalment of the amount of Debit has become due and payable and is not repaid by the Debtor or the corporate debtor as the case may be.

Based on the above analysis, correct answer to MCQ 21.1 D. Both (a) & (b).

 

Practical Analysis for MCQ 21.2 & 21.3:

As per Section (7) Financial Creditor means any person to whom debt to whom a financial debt is owed and includes a person a person to whom such debt is assigned or transferred to.

Based on the above analysis, correct answer to MCQ 21.2 C. Financial creditor and Correct Answer to MCQ 21.3 C.  X Trust in the capacity of financial creditor can file a    valid petition.

 

Practical Analysis for MCQ 21.4:

  • Regulation 3 of the Insolvency and Bankruptcy Board of India Regulations Deal with the provisions relating to the eligibility of resolution professionals
  • An insolvency professional shall be eligible to be appointed as a resolution professional if he is Independent of Corporate Debtor.
  • A person will be considered independent of Corporate Debtor if he
  • Is eligible to be appointed as an Independent Director on the Board of the Corporate Debtor under Section 149 of the Companies Act ,where the corporate Debtor is a company
  • Is not a related party of the Corporate Debtor
  • Is not an Employee or proprietor or partner-
  • Is a firm of Auditors or Company Secretaries in Factories or cost auditors of the Corporate Debtor
  • Of a legal or consulting Firm that has or had any transaction with the corporate debtor amounting to Ten Percent or more of the Gross turnover of Such Firm in Last three Financial years.

 

Based on the above analysis Correct answer to MCQ 21.4 D)Both (a) and (b)

 

Practical Analysis for MCQ 21.5:

As per Section 11 of the Insolvency & Bankruptcy Code the following persons are not eligible to make an application to initiate the corporate insolvency resolution process

 

  • A corporate debtor undergoing insolvency resolution process
  • A corporate debtor having completed corporate insolvency resolution process 12 months preceding the date of making of the application
  • A corporate debtor in respect of whom a liquidation order is being made
  • A corporate debtor or financial creditor who has violated any of the terms of the resolution plan which was approved 12 months before the date of making an application for initiating Corporate Insolvency

Based on the above analysis, Correct answer to MCQ 21.5: D.  All of the above

 

(Disclaimer: The objective of the MCQ post is just to discuss the concept, it may happen, by change of facts, the answer may be different. Please do not treat this as professional opinion; you can definitely have your own opinion.)

 

Sincere Regards!

 

CA Sanjay Kumar Agrawal

Mobile: 9810116321

 

To access MCQ posts regularly, please Join Telegram Channel:
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