Quiz on Adjudicating Authority and Transactions

Who may apply to the Adjudicating Authority (AA) for avoidance of preferential transactions under Section 43?

• Only the Liquidator

• Only the Resolution Professional (RP)

• Either the Liquidator or the RP

• Financial Creditor

Which of the following is NOT a relevant time for determining a preferential transaction under Section 43?

• Two years preceding insolvency commencement date for related parties

• One year for unrelated parties

• a and b

• Six months for workmen dues

Which of the following will NOT be considered as a preferential transaction?

• Transfer to a surety against antecedent debt

• Transfer registered with an IU within 30 days and securing new value

• Transfer that improves position of the creditor

• Transfer to a related party without new consideration

Which of these is an accurate order the AA may pass under Section 44?

• Direct CD to make a preferential transfer

• Vest property purchased from sale proceeds back in CD

• Rescind the liquidation

• Appoint a financial expert to value assets

Under Section 45, an undervalued transaction includes:

• Gift made by CD

• Transfer without adequate consideration

• Transaction not in ordinary course of business

• All of the above

Under Section 46, for a transaction with a related party to be treated as undervalued, it must occur within:

• One year before insolvency

• Two years before insolvency

• Three years before insolvency

• Six months prior to liquidation

Who can make an application to AA if RP or Liquidator fails to report an undervalued transaction?

• Financial creditor

• Secured creditor

• Creditor, member, or partner of CD

• Only the Board

Extortionate Credit Transactions under Section 50 can include:

• Transactions for operational debt with exorbitant terms

• Gifts to family

• Transactions outside insolvency period

• All credit transactions with employees

The AA may issue the following order in extortionate transactions EXCEPT:

• Restore the position

• Modify the terms of the credit

• Enforce entire debt irrespective of its nature

• Relinquish security interest to liquidator

Which of the following is FALSE about Section 52 - Position of Secured Creditors?

• They may relinquish security to liquidation estate

• They must inform the Liquidator of the asset interest

• They can retain all proceeds without sharing with liquidator

• They can realise security independently