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MCQs on Insolvency and Bankruptcy Code, 2016 Part -2

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Q.1:- Insolvency Professional” means:

  • A person enrolled with an Insolvency Professional Agency as its member and registered with the IBBI as an Insolvency Professional.
  • A person who has passed the Insolvency Exam conducted by the IBBI.
  • A persons who is CA/CS/CMA and has passed the Insolvency Exam conducted by the IBBI and is a member of their respective Institutes.
  • Both(B) and (C) are correct.
Check Answer

Correct Option: A

Q.2:- Corporate insolvency resolution process can be initiated by:

  • NCLT
  • Resolution Professional
  • A financial creditor
  • Interim Resolution Professional
Check Answer

Correct Option: C

Q.3:- The Adjudicating Authority shall, before rejecting the application under section 7(5)(b), give a notice to the applicant to rectify the defect in his application_______ of receipt of such notice from the Adjudicating Authority:

  • after fourteen days
  • within fourteen days
  • within seven days
  • after seven days
Check Answer

Correct Option: C

Q.4:- An operational creditor initiating a corporate insolvency resolution process under section 9, may propose:

  • An Insolvency Professional to act as an Resolution Professional.
  • An Insolvency Professional to act as an Interim Resolution Professional.
  • A Resolution Professional to act as an Resolution Professional.
  • A Resolution Professional to act as an Interim Resolution Professional.
Check Answer

Correct Option: D

Q.5:- A corporate applicant may file an application for initiating corporate insolvency resolution process with the Adjudicating Authority, where:

  • The corporate debtor has committed a default.
  • The corporate debtor’s net worth has been wiped off.
  • The corporate debtor has not commited any default.
  • The corporate debtor is incurring losses for the past three years.
Check Answer

Correct Option: A

Q.6:- After submission of the application for initiation of CIRP by the corporate applicant, the Adjudicating Authority shall, of the receipt of the application, by an order either accept or reject the application:

  • within a period of ten days
  • within a period of fourteen days
  • within a period of twenty one days
  • within a period of seven days
Check Answer

Correct Option: B

Q.7:- The following persons shall not be entitled to make an application to initiate CIRP who has violated any of the terms of resolution plan which was approved twelve months before the date of making of an application:

  • A corporate debtor
  • A financial creditor
  • An operational creditor
  • Either of the options(A)or(B) is correct
Check Answer

Correct Option: D

Q.8:- If the Adjudicating Authority is satisfied that the subject matter of the case is such that corporate insolvency resolution process cannot be completed within one hundred and eighty days, it may by order extend the duration of such process beyond one hundred and eighty days by such further period as it thinks fit, but not exceeding

  • Forty-five days
  • One hundred eighty days
  • Ninety days
  • Fourteen days
Check Answer

Correct Option: C

Q.9:- The moratorium period shall come to an end:

  • Where the Adjudicating Authority passes an order for liquidation of corporate debtor.
  • Where Adjudicating Authority approves the resolution plan.
  • Either (A) or (B).
  • None of the above
Check Answer

Correct Option: C

Q.10:- Where the application for corporate insolvency resolution process is made by an operational creditor and no proposal for an interim resolution professional is made, then who will appoint the interim resolution professional (IRP):

  • The Committee of Creditors will appoint the IRP
  • The Adjudicating Authority shall make a reference to the Board for the recommendation of an insolvency professional who may act as an interim resolution professional
  • The Adjudicating Authority will appoint the IRP
  • None of the above.
Check Answer

Correct Option: B

Q.11:- From which date the management of the affairs of the corporate debtor shall vest in the interim resolution professional:

  • The date when the appointment of the interim resolution professional was made by the Adjudicating Authority.
  • The date when the first meeting of the Committee of Creditors was convened.
  • The date when the Committee of Creditors was formed.
  • The date when the interim resolution professional accepted the appointment.
Check Answer

Correct Option: A

Q.12:- The committee of creditors, may, in the first meeting, by a majority vote of not less than sixty six percent of the voting share of the financial creditors:

  • resolve to appoint the interim resolution professional as a resolution professional
  • either resolve to appoint the interim resolution professional as a resolution professional or to replace the interim resolution professional by another resolution professional
  • resolve to appoint another resolution professional
  • None of the above
Check Answer

Correct Option: B

Q.13:- Where the committee of creditors (CoC) resolve store place the interim resolution professional, to whom the CoC shall address the application for the appointment of the proposed resolution professional:

  • The proposed Resolution Professional
  • The Interim Resolution Professional
  • The Corporate Debtor
  • The Adjudicating Authority
Check Answer

Correct Option: D

Q.14:- The resolution professional shall, among others, shall also give notice of each meeting of the Committee of Creditors to:

  • Operational creditors or their representatives if the amount of their aggregate dues is more than ten percent of the debt.
  • Operational creditors or their representatives if the amount of their aggregate dues is less than ten percent of the debt.
  • Operational creditors or their representatives if the amount of their aggregate dues is not less than ten percent of the debt.
  • Operational creditors or their representatives if the amount of their aggregate dues is equal to ten per cent of the debt
Check Answer

Correct Option: C

Q.15:- Which one is NOT the right / duty of authorized representative of financial creditors:

  • To act against the interest of the financial creditor he represents.
  • To circulate the agenda and minutes of the meeting of the committee of creditors to the financial creditor he represents.
  • Right to participate and vote in meetings of the committee of creditors on behalf of the financial creditor he represents.
  • None of the above.
Check Answer

Correct Option: A

Q.16:- The committee of creditors may, at a meeting, by a vote of _________of voting shares, resolve to replace the resolution professional appointed under section 22 with another resolution professional:

  • Seventy five percent
  • Fifty percent
  • Ninety per cent
  • Sixty-six per cent
Check Answer

Correct Option: D

Q.17:- The Adjudicating Authority, after admission of the application under section 7 or section 9 or section 10, shall, by an order declare a moratorium and cause a public announcement of the initiation of corporate insolvency resolution process. When such public announcement be given:

  • It shall be made immediately before the Constitution of Committee of Creditors.
  • It shall be made immediately before the appointment of the interim resolution professional
  • It shall be made immediately after the Constitution of Committee of Creditors.
  • It shall be made immediately after the appointment of the interim resolution professional
Check Answer

Correct Option: D

Q.18:- The order of moratorium under section 13 shall cease from which date:

  • The date when the Adjudicating Authority passes an order for liquidation of corporate debtor under section 33
  • The date when the Adjudicating Authority approves he resolution plan under of section 31(1)
  • Either (A) or (B), as the case may be
  • Moratorium cannot be ceased.
Check Answer

Correct Option: C

Q.19:- Where any personnel of the corporate debtor, its promoter or any other person required to assist or cooperate with the interim resolution professional does not assist or cooperate, then what remedy is available with IRP:

  • The interim resolution professional may make an application to the Board for necessary directions
  • The interim resolution professional may make an application to the High Court for necessary directions.
  • The interim resolution professional may make an application to the Adjudicating Authority for necessary directions.
  • The interim resolution professional may make an application to the Registrar of Companies for necessary directions.
Check Answer

Correct Option: D

Q.20:- The committee of creditors shall comprise of:

  • All financial as well as operational creditors of the corporate debtor.
  • All financial creditors of the corporate debtor.
  • All unpaid employees and workers of the corporate debtors.
  • All operational creditors of the corporate debtor.
Check Answer

Correct Option: B

Q.21:- Who is to conduct corporate insolvency resolution process:

  • Adjudicating Authority
  • IBBI
  • Resolution professional
  • Committee of Creditors
Check Answer

Correct Option: C

Q.22:- Who can attend and vote in the Committee of Creditors:

  • Resolution Professional
  • Financial Creditor
  • Interim Resolution Professional
  • Operational Creditor
Check Answer

Correct Option: B

Q.23:- Which one is the duty of the Resolution Professional:

  • take immediate custody and control of all the assets of the corporate debtor
  • raise interim finances
  • appoint accountants, legal or other professionals
  • All of the above
Check Answer

Correct Option: D

Q.24:- Whether a Resolution Professional can be changed by the Committee of Creditors:

  • The Adjudicating Authority shall forward the name of the proposed resolution professional to the Board for its confirmation and a resolution professional shall be appointed in the same manner as laid down in section16.
  • Yes, the committee of creditors may, at a meeting, by a vote of seventy five percent of voting shares, propose to replace the resolution professional appointed under section 22 with another resolution professional.
  • The committee of creditors shall forward the name of the insolvency professional proposed by them to the Adjudicating Authority.
  • All of the above.
Check Answer

Correct Option: D

Q.25:- A person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person:

  • Has been convicted for any offence punishable with imprisonment for two Years or more
  • Is an un discharged insolvent;
  • Is a willful defaulter in accordance with the guidelines of the Reserve Bank of India Issued under the Banking Regulation Act, 1949;
  • All the options are correct.
Check Answer

Correct Option: D

Q.26:- The resolution applicant shall, pursuant to the resolution plan approved obtain the necessary approval required under any law for the time being in force from the date of approval of the resolution plan by the Adjudicating Authority or within such period as provided for in such law, whichever is later:

  • within a period of nine months
  • within a period of three months
  • within a period of one year
  • within a period of six months
Check Answer

Correct Option: C

Q.27:- What is the meaning of ‘connected person’ as provided under section 29A:

  • the holding company, subsidiary company, associate company or related party of a person referred to in options A and B above
  • any person who is the promoter or in the management or control of the resolution applicant
  • any person who shall be the promoter or in management or control of the business of the corporate debtor during the implementation of the resolution plan
  • All the options are correct.
Check Answer

Correct Option: D

Q.28:- The resolution professional, during the corporate insolvency resolution process, shall not take any of the following actions without the prior approval of the committee of creditors namely:

  • Create any security interest over the assets of the corporate debtor
  • Raise any interim finance in excess of the amount as maybe decided by the committee of creditors in their meeting
  • Delegate its authority to any other person
  • All of the above
Check Answer

Correct Option: D

Q.29:- Who will bear the fee payable to the insolvency professional (other than the resolution professional appointed by the Committed of Creditors) appointed by one of a creditor to represent himself:

  • The Corporate Debtor
  • The creditor, who appointed such insolvency professional
  • The Adjudicating Authority
  • The Committee of Creditors
Check Answer

Correct Option: B

Q.30:- The resolution professional shall give notice of each meeting of the committee of creditors to:

  • members of the suspended Board of Directors or the partners of the corporate persons, as the case may be;
  • members of Committee of creditors;
  • operational creditors or their representatives if the amount of their aggregate dues is not less than ten percent of the debt.
  • All of the above
Check Answer

Correct Option: D

Q.31:- The Adjudicating Authority shall forward the name of the proposed resolution professional proposed under clause (b) of sub-section (3) of section 22 to for its confirmation and shall make such appointment after confirmation by the Board:

  • The Corporate Debtor
  • No need to seek confirmation from anyone, the Adjudicating Authority is competent enough.
  • The Committee of Creditors
  • The Board (IBBI)
Check Answer

Correct Option: D

Q.32:- Where a financial creditor is a related party to the corporate debtor, such financial creditor:

  • Shall not have any right of representation, participation or voting in a meeting of the committee of creditors.
  • May have the right of representation, participation or voting in a meeting of the committee of creditors, provided other creditors do not object
  • Shall have the right of representation, participation or voting in a meeting of the committee of creditors.
  • None of the above.
Check Answer

Correct Option: A

Q.33:- The first meeting of the committee of creditors shall be held of the constitution of the committee of creditors:

  • within twenty one days
  • within fourteen days
  • within ten days
  • within seven days
Check Answer

Correct Option: D

Q.34:- The interim resolution professional shall make every endeavour to protect and preserve the value of the property of the corporate debtor and manage the operations of the corporate debtor as:

  • A unit which is winding up its business
  • A going concern
  • A unit which is going to be merged
  • A unit going under liquidation
Check Answer

Correct Option: B

Q.35:- Who shall be responsible for complying with the requirements under any law for the time being in force on behalf of the corporate debtor, after initiation of the CIRP :

  • The Chief Executive Officer
  • The Committee of Creditors
  • The Interim Resolution Professional
  • The Suspended Board of Directors
Check Answer

Correct Option: C

Q.36:- From the date of appointment of the interim resolution professional, the powers of the board of directors shall:

  • Stand expired and be exercised by the interim resolution professional.
  • Stand suspended and be exercised by the interim resolution professional.
  • No effect on powers of the board of directors.
  • Stand terminated and be exercised by the interim resolution professional.
Check Answer

Correct Option: B

Q.37:- The interim resolution professional shall take control and custody of any asset over which the corporate debtor has ownership rights, including the assets:

  • Located in a foreign country
  • Assets subject to the determination of ownership by a court or authority
  • Intangible Assets
  • All of the above
Check Answer

Correct Option: D

Q.38:- Where the committee of creditors resolves to continue the interim resolution professional as resolution professional, it shall communicate its decision to:

  • The Adjudicating Authority
  • The interim resolution professional
  • The corporate debtor
  • To all the concerned mentioned at (A), (B) and (C) above.
Check Answer

Correct Option: D

Q.39:- The members of the Committee of Creditors may meet:

  • by such electronic means as may be specified
  • in person
  • Only B is correct
  • Either A or B
Check Answer

Correct Option: D

Q.40:- How the determination of voting share of each of the creditor is decided:

  • The Adjudicating Authority shall determine the voting share to be assigned to each creditor in the manner specified by the Board.
  • The resolution professional shall determine the voting share to be assigned to each creditor in the manner specified by the Adjudicating Authority.
  • The resolution professional shall determine the voting share to be assigned to each creditor in the manner specified by the Board.
  • The interim resolution professional shall determine the voting share to be assigned to each creditor in the manner specified by the Board.
Check Answer

Correct Option: C

Q.41:- Where any action under section 28 (1) is taken by the resolution professional without seeking the approval of the committee of creditors, then what recourse is available before the Committee of Creditors:

  • Report the actions of the resolution professional to the Insolvency Professional Agency
  • Report the actions of the resolution professional to the Adjudicating Authority
  • Report the actions of the resolution professional to the Information Utility for taking necessary actions.
  • Report the actions of the resolution professional to the Board for taking necessary actions.
Check Answer

Correct Option: D

Q.42:- Who shall prepare the Information Memorandum:

  • Resolution Professional
  • Interim Resolution Professional
  • Adjudicating Authority
  • Committee of Creditors
Check Answer

Correct Option: A

Q.43:- Who is the ultimate authority to approve the resolution plan:

  • Resolution Professional
  • Adjudicating Authority
  • If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors meets the requirements of section 30 (2), it shall by order approve the resolution.
  • Committee of Creditors
Check Answer

Correct Option: C

Q.44:- The expression “connected person” does not include:

  • an asset reconstruction company registered with the Reserve Bank of India under section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
  • a scheduled bank
  • an Alternate Investment Fund registered with the Securities and Exchange Board of India.”.
  • All the options are correct.
Check Answer

Correct Option: D

Q.45:- Where any action under section 28 (1) is taken by the resolution professional without seeking the approval of the committee of creditors in the manner as required in this section, such action shall be:

  • Valid
  • Illegal
  • Voidable at the option of the Committee of Creditors
  • Void
Check Answer

Correct Option: D

Q.46:- The filing of an avoidance application under clause (/) of sub-section (2) of section 25 by the resolution professional:

  • Shall not affect the proceedings of the corporate insolvency resolution process.
  • Shall affect the whole of proceedings of the corporate insolvency resolution process.
  • Shall affect the proceedings of the corporate insolvency resolution process.
  • Shall affect the proceedings of the corporate insolvency resolution process substantially
Check Answer

Correct Option: A

Q.47:- All meetings of the Committee of Creditors shall be conducted by

  • The Interim Resolution Professional
  • Adjudicating Authority
  • The resolution professional
  • Either A or C
Check Answer

Correct Option: C

Q.48:- If any financial creditor does not give prior instructions through physical or electronic means, the authorized representative shall :

  • May cast his vote which he deems fit that it may be in the interest of financial creditor.
  • Abstain from voting on behalf of such creditor.
  • May cast his vote as per his choice.
  • May cast his vote by consulting the IRP/RP.
Check Answer

Correct Option: B

Q.49:- Who shall constitute the Committee of Creditors:

  • High Court
  • Interim Resolution Professional
  • Adjudicating Authority
  • Insolvency and Bankruptcy Board of India
Check Answer

Correct Option: B

Q.50:- The interim resolution professional shall have the authority:

  • to enter into contracts on behalf of the corporate debtor or to amend or modify the contracts or transactions which were entered into before the commencement of corporate insolvency resolution process.
  • to raise interim finance provided that no security interest shall be created over any encumbered property of the corporate debtor without the prior consent of the creditors whose debt is secured over such encumbered property.
  • to appoint accountants, legal or other professionals as may be necessary.
  • all of the above.
Check Answer

Correct Option: D