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Question

Read the following passage and answer the next 4 question (Q11 to Q14):- There is a need to strengthen the insolvency resolution process. The Insolvency and Bankruptcy Board of India (IBBI) must swiftly finalise the code of conduct for the committee of creditors (CoC), mainly in banks. The code is meant to provide clarity on the scope of the responsibilities of the CoC. It adds another layer of oversight, given that banks are already regulated by the RBI and public sector bankers are also under the purview of the Prevention of Corruption Act. The draft norms that cover disclosure of any conflict of interest, not acquiring any assets of the corporate debtor and adhering to bankruptcy code timelines are fine. Robust enforcement must go hand in hand. Source: Economic times

Which of the following statements are true regarding Pre-Packaged Resolution Process?

1. By way of a further amendment to IBC viz., IBC (Amendment) Act, 2021, the Pre-Packaged Insolvency Resolution Process (“PIRP”) has been introduced.

2. The PIRP is applicable ONLY in respect of Micro, Small and Medium Enterprises

3. A Corporate Debtor which has committed a default of at least Rs.20,00,000/- (Rupees Twenty Lakh Only) is eligible to make an application before the Appellate Authority for initiation of PIRP)

4. CIRP (Corporate Insolvency Resolution Process) and PIRP can run simultaneously

A 1, 2 and 4 are correct Correct Answer Incorrect Answer
B 2 and 4 are correct Correct Answer Incorrect Answer
C 1 and 2 are correct Correct Answer Incorrect Answer
D 2 and 3 are correct Correct Answer Incorrect Answer
E All are correct Correct Answer Incorrect Answer

Solution

A Corporate Debtor who has committed a default of at least Rs.10,00,000/- (Rupees Ten Lakh Only) is eligible to make an application before the AA for initiation of PIRP. In a case where there is a default of an amount above Rs.1,00,00,000/- (Rupees One Crore Only), PIRP will not apply. the MSME which is applying for initiation of PIRP should not have undergone PIRP or should not have completed CIRP, during the 3 (three) years preceding the initiation date of PIRP; CIRP and PIRP cannot run simultaneously. Therefore, the MSME should not be undergoing any CIRP

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