MCQs on Liquidation Process and CIRP

Under Section 32A, when does the liability of a Corporate Debtor (CD) for an offence committed prior to the commencement of CIRP cease?

• Upon initiation of CIRP

• Upon approval of the resolution plan by AA

• Upon submission of resolution plan by the Resolution Professional (RP)

• Upon rejection of resolution plan by AA

If a resolution plan results in a change in management or control of the CD, which of the following conditions must be met for the CD to not be prosecuted for prior offences?

• The new management must include the former promoters

• The new management must not have abetted or conspired in the offence

• The resolution plan must be rejected by the AA

• The prosecution must have been completed before the CIRP

If the resolution plan is contravened by the CD after approval, who can apply to the AA for liquidation?

• Only the creditors

• Only the Resolution Professional

• Any person whose interests are affected

• Only the financial creditors

What happens if the AA does not receive a resolution plan before the expiry of the insolvency resolution period?

• The CD is automatically liquidated

• The CD's assets are transferred to its creditors

• The AA orders liquidation of the CD

• The CoC is required to extend the resolution period

When a liquidation order is passed, what happens to the officers, employees, and workmen of the CD?

• They retain their employment until the business is sold

• They are discharged unless the liquidator continues the business

• They must be given severance pay before discharge

• They are required to stay until liquidation is completed

Under Section 34, when can the RP be replaced as a liquidator by the AA?

• If the CoC demands replacement

• If the RP fails to submit written consent

• If the Board refuses to appoint the RP

• If the creditors file an appeal against the RP

Under the IBBI (Liquidation Process) Regulations, 2016, the liquidator is required to take custody of which assets?

• Only those assets that are free from encumbrances

• Only tangible assets that can be liquidated

• All assets, property, effects, and actionable claims of the CD

• Only assets held in possession by the CD

How can the liquidator sell the properties of the CD in liquidation?

• Through public auction or private contract

• Only through public auction

• Only through a direct sale to secured creditors

• Only by transferring them to the CoC

What is NOT included in the liquidation estate?

• Assets owned by third parties in CD's possession

• Shares held by CD in subsidiaries

• Encumbered assets under CD's ownership

• Intellectual property rights of the CD

What power does the liquidator have regarding suits and legal proceedings?

• No suits can be filed against the CD after liquidation

• The liquidator can institute or defend suits on behalf of the CD with AA's approval

• The liquidator has no authority over ongoing suits

• The CoC must approve any legal proceedings initiated by the liquidator