New RBI Grade B 2025 Notification will come Soon! Enroll Here

    Question

    Under the IBC, which of the following is NOT a condition

    for MSMEs to qualify for insolvency resolution?
    A The MSME must be a registered entity with a valid business license Correct Answer Incorrect Answer
    B The MSME must have defaulted on its debts Correct Answer Incorrect Answer
    C The MSME must have liabilities greater than ₹1 crore Correct Answer Incorrect Answer
    D The MSME must demonstrate a viable business plan for restructuring Correct Answer Incorrect Answer
    E The MSME must have been in continuous operation for at least 5 years Correct Answer Incorrect Answer

    Solution

    Under the IBC, there is no requirement for MSMEs to have been in continuous operation for a specific period. The key criteria for initiating the insolvency process are defaulting on debts and meeting the ₹1 crore default threshold. MSMEs can qualify for resolution or liquidation even if they have been operational for a short period.

    Practice Next