Question

Q1. The amended Insolvency and Bankruptcy code prohibits which of the following persons to be a resolution applicant?

1. An undischarged insolvent

2. A willful defaulter

3. Promoter of a company indulged in fraudulent transactions

Select the correct code

• A. (a) Only 2
• B. (b) Only 1 and 2
• C. (c) Only 2 and 3
• D. (d) All of the above

Answer 1

The correct option is D

(d) All of the above

Ineligibility to be a resolution applicant: The amended code inserts a provision prohibiting certain persons from submitting a resolution plan. A person will be ineligible to submit a plan if:

1. he is an undischarged insolvent (individual unable to repay his debt),

2. he is a wilful defaulter,

3. his account has been identified as a non-performing asset for more than a year and he has not repaid the amount before submitting a plan,

4. he has been convicted of an offence punishable with two or more years of imprisonment,

5. he has been disqualified as a director under the Companies Act, 2013,

6. he has been prohibited from trading in securities by SEBI,

7. he is the promoter or in the management of a company which has indulged in undervalued, preferential, or fraudulent transactions,

8. he has given guarantee on a liability of the defaulting company undergoing resolution or liquidation and has not honoured the guarantee,

9. he has indulged in these specified activities abroad, or

10. he is connected to any person mentioned above (including promoters, management, or any person related to them). The Bill exempts scheduled commercial banks, asset reconstruction companies and alternate investment funds if they are connected to any such person