MCQs on Insolvency and Bankruptcy Code, 2016 part-1

Q.1:- Which was NOT the purpose of enactment of the Insolvency and Bankruptcy Code, 2016:

• To establish an Insolvency and Bankruptcy Board of India, and for matters connected there with or incidental thereto.
• To consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons,
• To promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues
• To boost recovery of then on-performing advances accounts of the banks and financial institutions

Q.2:- The provisions of I&B Code shall NOT apply to:

• Financial Service Providers like Banks,
• Limited Liability Partnership
• Partnership firms
• Individual

Q.3:- The provisons of the Code shall apply to Corporate Person, Individual and Partnership Firm, in relation to their as the case may be:

• Liquidation /Voluntary liquidation
• Bankruptcy
• Insolvency
• All of the above

Q.4:- The Insolvency and Bankruptcy Code, 2016 extends to:

• The whole of India, except the State of Jammu and Kashmir.
• The whole of India, provided that Part III of this Code shall not extend to the State of Jammu and Kashmir.
• Only in the State of Jammu and Kashmir.
• The whole of India.

Q.5:- The Insolvency and Bankruptcy Code (Amendment) Act, 2018 received the assent of the President on the 18th January, 2018 and issued vide Gazette Notification dated 19January,2018. When did this Amended Act come into force:

• 23 November,2017
• 19 January,2018
• 18 January,2018
• 1 January,2018

Q.6:- The provisions of l & B Code shall apply to:

• Any company incorporated under the Companies Act, 1956.
• Any other company governed by any special Act.
• Any company in corporate under the Companies Act, 2013.
• All of the above.

Q.7:- The word “audit or” has been defined under the Code, which means:

• A Cost Accountant certified to practice as such by the Institute of Cost Accountants of India
• A Cost Accountant who is member of the Institute of Cost Accountants of India
• A Chartered Accountant certified to practice as such by the Institute of Chartered Accountants of India
• A Chartered Accountant who is a member of the Institute of Chartered Accountants of India

Q.8:- “dispute” includes a suit or arbitration proceedings relating to:

• the breach of a representation or warranty
• the quality of goods or service
• the existence of the amount of debt
• All of the above

Q.9:- A person to whom financial debt has been legally assigned or transferred to, shall be termed in the Code as:

• Financial creditor
• Financial debtor
• Assignee
• Assignor

Q.10:- The amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards shall be termed as:

• Hire Purchase Agreement
• Financial debt
• Operating lease
• Financial lease

Q.11:- ‘Insolvency commencement’ date means:

• The date when the Adjudicating Authority makes award.
• The date when the Resolution Professional is appointed by the Committee of Creditors.
• The date of admission of an application for initiating corporate insolvency resolution process by the Adjudicating Authority.
• The date when the Adjudicating Authority issues summons to the parties.

Q.12:- “Operational creditor” means:

• a person to whom an operational debt is owed
• a person to whom operational debt
• a person to whom operational debt has been legally assigned
• all of the above

Q.13:- A partner of a limited liability partnership in which the individual is a partner, shall be treated as in relation to an individual:

• Related party
• Managing partner of LLP
• Partner of LLP
• Friend

Q.14:- The share of the voting rights of a single financial creditor in the committee of creditors which is based on the proportion of the financial debt owed to such financial creditor in relation to the financial debt owed by the corporate debtor, is called as:

• Voting Share
• Vote Casting
• Voting Proportion
• Voting Right

Q.15:- Whether “charge” includes a mortgage:

• Charge may include a mortgage subject to the consent of the mortgage
• No charge do not include mortgage
• Yes, charge includes a mortgage
• None of the above

Q.16:- Section 4 of the I & B Code shall apply to matters relating to the insolvency and liquidation of corporate debtors where the minimum amount of the default is:

• One Hundred Lakh Rupees
• Five Lakh Rupees
• Ten Lakh Rupees
• One Lakh Rupees

Q.17:- ‘Initiation date’ means:

• Date on which the Interim Resolution Professional is appointed
• Date on which the Adjudicating Authority accepts the corporate insolvency resolution process
• Date of which the Adjudicating Authority makes award
• Date on which a financial creditor, corporate applicant or operational creditor, as the case maybe, makes an application to the Adjudicating Authority for initiating corporate insolvency resolution process

Q.18:- Corporate applicant means:

• An individual who is in charge of managing the operations and resources of the corporate debtor; or a person who has
• A member or partner of the corporate debtor who is authorized to make an application for the corporate insolvency resolution process under the constitutional document of the corporate debtor;
• Corporate debtor
• All of the above

Q.19:- The word “Property” as mentioned in section 3(27) of the Code do NOT include:

• Every description of contingent interest
• Action able claims
• Every description of property situated outside India
• Good will of the business

Q.20:- Information Memorandum means:

• Memorandum to the Corporate Debtor
• Memorandum of Association
• Memorandum to the Board of Directors
• Memorandum prepared by Resolution Professional

Q.21:- Any amount raised by acceptance under any acceptance credit facility shall be termed as:

• Accomodation bill
• Financial debtor
• Acceptance bill
• Financial debt

Q.22:- “Liquidation commencement date” means:

• the date when the Liquidator is appointed
• the date on which proceedings for liquidation commence in accordance with section 33 or section59,as the case maybe
• the date on which the Adjudicating Authority makes award
• the date on which application made by the Financial or Operational Creditor is accepted by the Adjudicating Authority

Q.23:- Related party”, in relation to a corporate debtor, means a private company in which a director, partner or manager of the corporate debtor is a director and holds along with his relatives:

• more than three percent of its share capital
• more than four percent of its share capital
• more than two per cent of its share capital
• more than one percent of its share capital

Q.24:- “Resolution plan” means:

• a plan approved by the Adjudicating Authority
• a plan proposed by resolution applicant for insolvency resolution of the corporate debtor as a going concern
• a plan accepted by the Committee of Creditors
• a plan proposed by any person for insolvency resolution of the corporate debtor as a going concern.

Q.25:- An insolvency professional appointed to conduct the corporate insolvency resolution process (CIRP) is called as:

• Resolution Professional
• Interim Resolution Professional
• Insolvency Professional
• Both the options (A)and(C) are correct.

Q.26:- A person who is associated with the corporate debtor on account of participation in policy making processes of the corporate debtor, shall be treated as:

• Legal Adviser
• Policy Adviser
• Related Party
• Well wisher of the corporate debtor

Q.27:- A key managerial personnel of the corporate debtor or a relative of a key managerial personnel of the corporate debtor, shall betrated as:

• Relatives
• Related Party
• Connected Party
• Concerned Party

Q.28:- “Operational debt” means:

• a claim in respect of the provision of goods
• a claim in respect of services including employment
• a debt in respect of there payment of dues a rising under any law for the time being inforce and pay able to the Central Government, any State Government or any local authority
• all of the above

Q.29:- Any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing shall be treated as:

• Real Estate Project Financing
• Company deposit
• Financial debt
• Booking of a flat

Q.30:- Insolvency resolution process period” means the period of one hundred and eighty days:

• beginning from the initiation date and ending on one hundred and eightieth day
• beginning from the appointment of the IRP and ending on one hundred and eightieth day
• beginning from the insolvency commencement date and ending on one hundred and eightieth day
• beginning from the appointment of the Committee of Creditors and ending on one hundred and eightieth day

Q.31:- “financial creditor” means:

• Any person to whom a financial debt will be owed
• Any person to whom a financial debt was owed .
• Any person to whom a financial debt was owed but paid to the creditor when demanded
• Any person to whom a financial debt is owed

Q.32:- “Constitutional document”, as defined under the Code in relation to a corporate person, do NOT include among the following:

• Partnership Deed of Partnership Firm
• Articles of association of Company
• Memorandum of association of Company
• Incorporation document of a Limited Liability Partnership

Q.33:- The powers of the Central Government, to by way of notification, the minimum amount of default to Rs. One Lakh to the higher value:

• Which shall not be more than fifty lakh rupees
• Which shall not be more than ten lakh rupees
• Which shall not be more than one crore rupees
• Which shall not be more than seventy five lakh rupees

Q.34:- “secured creditor” means:

• A creditor in favour of whom no security interest has been created
• A creditor in favour of whom security interest will be created.
• A creditor in favour of whom security interest is created
• None of the above

Q.35:- “Corporate person” shall NOT included:

• Any financial service provider
• A company incorporate under the Companies Act, 2013 or any previous Companies Act
• Any other person incorporated with limited liability under any law for the time being
• A limited liability partnership, as per the provisions of the Limited Liability Partnership Act, 2008.

Q.36:- “Claim” means:

• A right to payment
• Right to remedy for breach of contract
• Both(A) and(B) are correct
• None of the above

Q.37:- “Insolvency Professional Agency” means any person registered with the IBBI under as an insolvency professional agency:

• Section210
• Section202
• Section201
• Section102

Q.38:- Which among the following is NOT termed as “Financial Institution” as per the provisions of the Code:

• Non-scheduled bank
• Scheduled bank
• Public financial institution as defined in clause(72) of section 2 of the Companies Act, 2013
• Financial institution as defined in section 45-1of the Reserve Bank of India Act, 1934

Q.39:- Information Utility” means a person who is registered with the Board as an information utility under:

• Section102
• Section210
• Section120
• Section201

Q.40:- Which among the following is NOT termed as “financial sector regulator”:

• TRAI
• PFRA
• IRDA
• SEBI

Q.41:- “workman” shall have the same meaning as assigned to it under:

• Section2(l)(a)(i) of Contract Labour (Regulation and Abolition) Act,1970
• Section2(n) of Workmens Compensation Act, 1923
• Section2(s) of The Industrial Disputes Act, 1947
• None of the above

Q.42:- Adjudicating Authority, for the matters relating to the insolvency and liquidation of corporate debt or means:

• Supreme Court
• High Court
• National Company Law Appellate Tribunal
• National Company Law Tribunal

Q.43:- “Corporate Guarantor” means:

• A Limited Liability Partnership who is the surety in a contract of guarantee to a corporate debtor
• An Individual person who is the surety in a contract of guarantee to a corporate debtor
• A Corporate person who is the surety in a contract of guarantee to a corporate debtor
• A Partnership Firm who is the surety in a contract of guarantee to a corporate debtor

Q.44:- Arbitration proceedings in relation to the existence of the amount to debt amounts to:

• Dispute
• Controversy
• Conflict
• Arguments

Q.45:- “Insolvency resolution process costs” means:

• the fees payable to any person acting as a resolution professional
• any costs incurred by the resolution professional in running the business of the corporate debt or as a going concern;
• the amount of any interim finance and the costs incurred in raising such finance;
• All of the above

Q.46:- “Personal guarantor” means:

• ALL who is the surety in a contract of guarantee to a corporate debtor.
• An individual who is the surety in a contract of guarantee to a corporate debtor.
• A partnership firm who is the surety in a contract of guarantee to a corporate debtor.
• A company who is the surety in a contract of guarantee to a corporate debtor.

Q.47:- Any person on whose advice, directions or instructions, a director of the corporate debt or is accustomed to act, shall be called as:

• Family Friend
• Related Party
• Advisor
• Friend

Q.48:- Related party, in relation to an individual means:

• A public company in which the individual is a director and holds not more than two percent of its paid- up share capital
• A public company in which the individual is a director and holds along with relatives, more than two percent of its paid-up share capital
• A public company in which the individual is a director.
• None of the above

Q.49:- “related party”, in relation to a corporate debtor, means any person in whom the corporate debtor controls of voting rights on account of ownership or a voting agreement:

• more than fifteen percent
• more than five per cent
• more than ten percent
• more than twenty per cent

Q.50:- A person, who individually or jointly with any other person, submits a resolution plan to the resolution professional pursuant to the invitation made under clause(h)of sub-section(2)of section 25 is called as:

• Resoluton Professional
• Resolution applicant
• Insolvency Professional
• Interim Resolution Professional