{"id":21970,"date":"2023-04-20T10:02:35","date_gmt":"2023-04-20T04:32:35","guid":{"rendered":"https:\/\/gstguntur.com\/?p=21970"},"modified":"2023-04-20T10:04:05","modified_gmt":"2023-04-20T04:34:05","slug":"liquidation-on-or-after-failing-of-resolution-plan-cs-professional-study-material","status":"publish","type":"post","link":"https:\/\/gstguntur.com\/liquidation-on-or-after-failing-of-resolution-plan-cs-professional-study-material\/","title":{"rendered":"Liquidation on or after Failing of Resolution Plan – CS Professional Study Material"},"content":{"rendered":"

Chapter 24 Liquidation on or after Failing of Resolution Plan – Corporate Restructuring Insolvency Liquidation & Winding Up Notes<\/a> is designed strictly as per the latest syllabus and exam pattern.<\/p>\n

Liquidation on or after Failing of Resolution Plan – Corporate Restructuring Insolvency Liquidation & Winding Up Study Material<\/h2>\n

Question 1.
\nThe Resolution Professional has reported cases of undervalued transactions during resolution process to the Adjudicating Authority. What orders can be passed by the Adjudicating Authority in this regard? (Dec 2019, 5 marks)
\nAnswer:
\nSection 48 of the Insolvency and Bankruptcy Code, 2016 lists out the orders that may be passed by the Adjudicating Authority setting aside the transaction at undervalue. According to Section 48, the order of the Adjudicating Authority under sub-section (1) of Section 45 of the Code may provide for the following:<\/p>\n

(a) require any property transferred as part of the transaction, to be vested in the corporate debtor;
\n(b) release or discharge (in whole or in part) any security interest granted by the corporate debtor;
\n(c) require any person to pay such sums, in respect of benefits received by such person, to the liquidator or the resolution professional as the case may be, as the Adjudicating Authority may direct; or
\n(d) require the payment of such consideration for the transaction as may be determined by an independent expert.<\/p>\n

\"Liquidation<\/p>\n

Question 2.
\nYou are the liquidator of ABC Ltd. which is currently undergoing liquidation process. As a liquidator, indicate how you will handle the priority of claims for distribution of liquidation proceeds of ABC Ltd. as enumerated in the Insolvency and Bankruptcy Code, 2016. (Dec 2019, 5 marks)
\nAnswer:
\nSection 53 of the Insolvency and Bankruptcy Code, 2016 has significantly altered the priority of claims for distribution of liquidation proceeds of a corporate debtor. The priority of claims as enumerated in the Insolvency and Bankruptcy Code, 2016 provides for payment to unsecured financial creditors before payment towards Government dues.<\/p>\n

Section 53(1) of the Code stipulates that the proceeds from the sale of the liquidation assets shall be distributed in the following order of priority:
\n(a) the insolvency resolution process costs and the liquidation costs paid in full;
\n(b) workmen’s dues for the period of twenty-four months preceding the liquidation commencement date; and debts owed to a secured creditor;
\n(c) wages and any unpaid dues owed to employees other than workmen for the period of twelve months preceding the liquidation commencement date;
\n(d) financial debts owed to unsecured creditors;
\n(e) Government dues and remaining secured creditors (any remaining debt if they enforce their collateral);
\n(f) any remaining debts and dues;
\n(g) preference shareholders, if any; and
\n(h) equity shareholders or partners, as the case may be.<\/p>\n

\"Liquidation<\/p>\n

Question 3.
\nFrom the following details, determine the order of priority payment out of the realization of liquidation estate assets :
\n(i) Financial debts owed to unsecured creditors;
\n(ii) Wages and any unpaid dues owed to employees other than workmen for 24 months preceding the liquidation commencement date,
\n(iii) Liquidator\u2019s remuneration,
\n(iv) Debts owed to a secured creditor who has relinquished the security,
\n(v) Preference shareholders. (Dec 2021, 5 marks)
\nAnswer:
\nAs per Sections 53 of the Insolvency and Bankruptcy Code, 2016, the proceeds from the sale of the liquidation assets shall be distributed in the order of priority and within such period as specified thereunder. Accordingly, in the present question, the Order of priority payment is given as under:<\/p>\n

    \n
  1. Liquidator’s remuneration;<\/li>\n
  2. Debts owed to a secured creditor who has relinquished the security;<\/li>\n
  3. Wages and any unpaid dues owed to employees other than workmen for 24 months preceding the liquidation commencement date;<\/li>\n
  4. Financial debts owed to unsecured creditors;<\/li>\n
  5. Preference shareholders.<\/li>\n<\/ol>\n

    \"Liquidation<\/p>\n

    Question 4.
    \nAs a liquidator of Corporate Debtor, how will you gather information for the purpose of admission & proof of claims and identification of the liquidation estate assets. (Dec 2021, 5 marks)
    \nAnswer:
    \nSection 37(1) of the Insolvency and Bankruptcy Code, 2016 provides that notwithstanding anything contained in any other law for the time being in force, the liquidator shall have the power to access any information systems for the purpose of admission and proof of claims and identification of the liquidation estate assets relating to the corporate debtor from the following sources:<\/p>\n

      \n
    1. an information utility;<\/li>\n
    2. credit information systems regulated under any law for the time being in force;<\/li>\n
    3. any agency of the Central, State or Local Government including any registration authorities;<\/li>\n
    4. information systems for financial and non-financial liabilities regulated under any law for the time being in force;<\/li>\n
    5. information systems for securities and assets posted as security interest regulated under any law for the time being in force;<\/li>\n
    6. any database maintained by the Board; and<\/li>\n
    7. any other source as may be specified by the Board.<\/li>\n<\/ol>\n

      \"Liquidation<\/p>\n

      Question 5.
      \nDuring the course of liquidation the liquidator noticed that some preferential transactions were made with some persons. What do you understand by preferential transactions ? State the orders that may be passed by the Adjudicating Authority in relation to the avoidance of preferential transactions. (June 2022, 5 marks)<\/p>\n

      Question 6.
      \nWhat are the Powers and Duties of Liquidator?
      \nAnswer:<\/p>\n