Failure of CIRP or Business: Liquidation & Voluntary Liquidation
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Insolvency and Bankruptcy Code 2016 — Insolvency and Bankruptcy Code 2016.
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What happens to the CIRP when a Resolution Applicant fails to infuse the agreed fresh capital without inordinate delay?
The resolution plan fails and the entire repayment time schedule gets disturbed, requiring creditors to report the failure to the Adjudicating Authority and seek liquidation orders.
Under Section 33 of IBC, what must the Adjudicating Authority do if no resolution plan is received before expiry of the resolution process?
It shall pass an order for liquidation of the corporate debtor.
Who must the creditors approach when a resolution plan fails due to the Resolution Applicant's default on capital infusion?
The creditors must report the failure of the plan to the Adjudicating Authority (AA) and obtain orders for liquidation.
Under which section of IBC is the Resolution Professional appointed as Liquidator after a liquidation order?
Section 34 of the Insolvency and Bankruptcy Code 2016.
Is an automatic extension of the CIRP timeline granted when the Resolution Applicant delays capital infusion?
No, there is no provision for automatic extension; the plan fails and liquidation proceedings must be initiated through the AA.
What can the Adjudicating Authority do if the Resolution Professional refuses to give written consent to act as Liquidator?
It may replace the RP and appoint another liquidator under Section 34(4).
Can the Adjudicating Authority order dissolution automatically if a resolution plan collapses due to applicant default?
No, dissolution is not automatic — the AA must first pass an order for liquidation before any dissolution can take place.
In the liquidation waterfall under Section 53 of IBC, which two categories rank equally in the second priority?
Workmen's dues for 24 months and debts of secured creditors who relinquished security.
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