MCQs on Insolvency and Bankruptcy Code, 2016 Part -3

Q.1:- After the date of appointment, the IRP shall take control and custody of any asset over which the corporate debtor has ownership rights. Which are the assets over which the IRP can NOT take control and custody :

• assets that may or may not be in possession of the corporate debtor;
• assets over which the corporate debtor has ownership rights which may be located in a foreign country;
• assets owned by a third party in possession of the corporate debtor held under trust or under contractual arrangements including bailment.
• securities including shares held in any subsidiary of the corporate debtor, financial instruments, insurance policies;

Q.2:- From the date of appointment of the interim resolution professional, the financial institutions maintaining accounts of the corporate debtor:

• Shall act as per the instructions given at the time of opening of the account
• Shall act on the instructions of the interim resolution professional.
• Shall act as per the instructions of the Adjudicating Authority
• Shall act as per the resolution passed by the Committee of Creditors

Q.3:- What is the term of the interim resolution professional:

• IRP may continue till the decision of the Adjudicating Authority.
• It shall not exceed sixty days from date of his appointment.
• It shall continue till the date of appointment of the resolution professional
• It shall not exceed ninety days from date of his appointment.

Q.4:- The Adjudicating Authority shall appoint an interim resolution professional from the insolvency commencement date:

• after fourteen days
• within fourteen days
• after seven days
• within seven days

Q.5:- The public announcement of the CIRP shall contain the details of the interim resolution professional who shall be:

• Responsible for receiving claims
• Vested with the management of the corporate debtor
• Both (A) and (B) are correct.
• None of the above.

Q.6:- The authority to declare moratorium vests with:

• The Financial Creditor
• The Adjudicating Authority
• The Committee of Creditors
• The Operation Creditor

Q.7:- Extension of the period of corporate insolvency resolution process under section12 :

• shall not be granted
• shall be granted at the discretion of the NCLT
• shall be granted more than once
• shall not be granted more than once

Q.8:- The corporate insolvency resolution process shall be completed from the date of admission of the application to initiate such process:

• After one hundred and eighty days
• Within a period of ninety days
• After ninety days
• Within a period of one hundred and eighty days

Q.9:- Who may NOT initiate corporate insolvency resolution process:

• Resolution Professional
• A financial creditor,
• An operational creditor
• Corporate debtor itself

Q.10:- A default includes:

• A default in respect of a financial debt to the applicantonly.
• A default in respect of any type of debt (and not limited to financial debt only), owed to the applicant financial creditor.
• A default in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor.
• None of the above.

Q.11:- In how many days the Adjudicating Authority shall, under section7 (2), as certain the existence of a default from the records of an information utility or on the basis of other evidence furnished by the financial creditor under section 7(3):

• within fourteen days of the receipt of the application
• after fourteen days of the receipt of the application
• just after the end fourteen days of the receipt of the application
• on fourteenth days of the receipt of the application

Q.12:- When the CIRP shall commence:

• From the date when the AA rejected the CIRP.
• From the date of admission of the application under sub-section (5) of Section7.
• From the date when the financial creditor submitted CIRP application.
• None of the above.

Q.13:- Which section of the code deals with the initiation of corporate insolvency resolution Process by Financial Creditor:

• Section10
• Section9
• Section8
• Section7

Q.14:- A financial creditor may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred. What is the meaning of default:

• Non-payment of debt when whole or any part or installment of the amount of debt has become due and payable and is not repaid by the debtor or the corporate debtor
• Non-payment of debt when whole or any part or installment of the amount of debt has become due and payable and is repaid by the debtor or the corporate debtor
• Non-payment of debt when whole or any part or installment of the amount of debt has become due and payable and is paid in paid in installments
• Non-payment of debt when whole or any part or installment of the amount of debt has not become due and not repaid by the debtor or the corporate debtor

Q.15:- A financial creditor wish to initiate CIRP. What documents he needs to furnish before the Adjudicating Authority:

• Record of the default recorded with the information utility
• Name of the resolution professional proposed to act as an interim resolution professional.
• Other record or evidence of default as maybe specified.
• All of the above

Q.16:- A financial creditor initiate CIRP and proposed the name of Interim Resolution Professional (IRP), but some disciplinary proceedings are pending against him. Whether Adjudicating Authority(AA) can accept the application filed by the financial creditor:

• Since the financial creditor was not in knowledge of the pending disciplinary proceeding of IRP, the AA may accept CIRP.
• Adjudicating Authority shall, before rejecting the application of CIRP of financial creditor give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority.
• When any disciplinary proceeding is pending against the proposed resolution professional, the (AA) may, by order, reject such application.
• Both (B) and(C) are correct.

Q.17:- The corporate debtor shall, ________of the receipt of the demand notice or copy of the invoice mentioned in sub-section 8 (l) bring to the notice of the operational creditor existence of a dispute, if any, and record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute:

• within a period of fourteen days
• after a period of ten days
• after a period of fourteen days
• within a period of ten days

Q.18:- For initiation of corporate insolvency resolution process, the operational creditor shall, along with the application furnish:

• A copy of the certificate from the financial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt by the corporate debtor
• A copy of the invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor
• An affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt
• All of the above.

Q.19:- The Adjudicating Authority shall, of the receipt of the application for initiation of corporate insolvency resolution process by operational creditor admit or reject he application and communicate such decision to the operational creditor and the corporate debtor:

• after fourteen days
• within fourteen days
• after seven days
• within seven days

Q.20:- Which section of the code deals with the initiation of corporate insolvency resolution process by corporate applicant:

• Section10
• Section7
• Section8
• Section9

Q.21:- The corporate insolvency resolution process shall commence from:

• The date when the demand notice was received by the corporate debtor.
• The date of admission of the application by the Adjudicating Authoriety.
• The date when the demand notice was sent by the operation creditor
• The date when the existence of dispute was raised by the corporate debtor.

Q.22:- Which section of the code deals with the initiation of corporate insolvency resolution process by operational creditor:

• Section 10
• Section 9
• Section 7
• Section 8

Q.23:- A “demand notice” means a notice served by an operational creditor to the corporate debtor demanding _________of the operational debt in respect of which the default has occurred:

• Repayment
• Release
• Payment
• Refund

Q.24:- What recourse is available is to the Operational Creditor, where he do not receive the payment or notice of dispute, after the expiry of the prescribed period:

• The operational creditor may again send reminder to the corporate debtor to make the payment.
• The Operational Creditor may request Insolvency Profession to get the realization of the dues.
• The operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process.
• The Insolvency Professional may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process.

Q.25:- The corporate applicant shall, along with the passed by shareholders of the corporate debtor:

• Extra-ordinay Resolution
• Ordinary Resolution
• Special Resolution
• General Resolution

Q.26:- The following persons shall not been titled to make an application to initiate corporate insolvency resolution process under section 11:

• a corporate debtor having completed corporate insolvency resolution process twelve months preceding the date of making of the application
• a corporate debtor undergoing a corporate insolvency resolution process
• a corporate debtor or a financial creditor who has violated any of the terms of resolution plan which was approved twelve months before the date of making of an application under this Chapter
• any of the above

Q.27:- Which section of the Code deals with the provisions of ‘Moratorium’ :

• Section 13
• Section15
• Section12
• Section 14

Q.28:- The public announcement of the CIRP under the order referred to in section 13 shall contain the date on which the CIRP shall close, which shall be the from the date of the admission of the application under sections7, 9 or section 10, as the case maybe:

• 270days
• 90days
• 180days
• 45days

Q.29:- From the date of appointment of the interim resolution professional, the officers and managers of the corporate debtor shall report:

• To the Committee of Creditors
• To the Adjudicating Authority
• To the Managing Director of the company
• To the Interim Resolution Professional

Q.30:- From the date of appointment of the interim resolution professional, which is proposition is correct:

• the officers and managers of the corporate debtor shall report to the interim resolution professional and provide access to such documents and records of the corporate debtor as maybe required by the interim resolution professional
• the management of the affairs of the corporate debtor shall vest in the interim resolution professional
• the powers of the board of directors or the partners of the corporate debtor, as the case may be, shall stand suspended and be exercised by the interim resolution professional
• all of the above

Q.31:- The Board shall, of the receipt of a reference from the Adjudicating Authority under sub-section (3), recommend then of an insolvency professional to the Adjudicating Authority against whom no disciplinary proceedings are pending:

• within ten days
• within fourteen days
• within seven days
• within fourteen days

Q.32:- The interim resolution professional shall be appointed by within fourteen days from the insolvency commencement date:

• The Financial Creditor
• The Adjudicating Authority
• The Operational Creditor
• The Committee of Creditors

Q.33:- Which is NOT correct? The Adjudicating Authority shall by order declare moratorium for prohibiting the following, namely:

• the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority.
• supply of essential goods or services to the corporate debtor
• any action to fore close, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the SARFAESI.
• transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest there in.

Q.34:- Who is the authority to cause a public announcement of the initiation of CIRP and call for the submission of claims:

• The Operational Creditor
• The Adjudicating Authority
• The Operational Creditor
• The Financial Creditor

Q.35:- The Adjudicating Authority may allow the withdrawal of application admitted under section 7 or section9 or section 10, on an application made:

• By the applicant with the approval of seventy five percent voting share of the committee of creditors.
• By the Interim Resolution Professional
• By the applicant with the approval of ninety percent voting share of the committee of creditors.
• By the applicant with the approval of sixty six percent voting share of the committee of creditors.

Q.36:- In the matter of CIRP filed by the corporate applicant, one of the condition is:

• The resolution passed by atleast three-fourth of the total number of partners of the corporate debtor
• Top ass the special resolution by shareholders of the corporate debtor
• Both the options(A) and (B).
• Either of the options (A) or(B)

Q.37:- Where the application for initiation of CIRP filed by the corporate applicant Is incomplete the Adjudicating Authority shall, before rejecting an application, give a notice to the applicant to rectify the defects in his application from the date of receipt of such notice from the Adjudicating Authority:

• within ten days
• within three days
• within fourteen days
• within seven days

Q.38:- The corporate insolvency resolution process shall commence:

• From the date of admission of the application by the Adjudicating Authority.
• From the date of filing of application for initiation of CIRP before the Adjudicating Authority.
• From the date of appointment of the Interim Resolution Professional.
• From the date of filing of rectification of defect before the Adjudicating Authority.

Q.39:- The resolution professional shall file an application to the Adjudicating Authority to extend the period of the corporate insolvency resolution process beyond one hundred and eighty days, if instructed to do so by a resolution passed at a meeting of the committee of creditors by:

• A vote of seventy-five percent of attendees
• A vote of seventy-five creditors
• A vote of seventy-five percent of total creditors
• A vote of sixty six percent of the voting shares.

Q.40:- Who shall make appointment of an interim resolution professional after admission of the application under section7 or section 9 or section10:

• The Corporate Applicant
• The Financial Creditor
• The Adjudicating Authority.
• The Operational Creditor

Q.41:- Order of dissolution made by the Adjudicating Authority is required to be forwarded from the date of such order, to the authority with which the corporate debtor is registered:

• within twenty days
• within seven days
• within fourteen days
• within ten days

Q.42:- In what circumstances the Adjudicating Authority shall by order replace the resolution professional:

• The Board recommends the replacement of a resolution professional to the Adjudicating Authority for reasons to be recorded in writing.
• If the resolution plan submitted by the resolution professional under section30 was rejected for failure to meet the requirements mentioned in section 30 (2) professional to be appointed as a liquidator
• Any of the alternative of A or B
• Both the conditions mentioned in A and B.

Q.43:- Where the Adjudicating Authority before the expiry of the insolvency resolution process period does not receive a resolution plan or rejects the resolution plan, it shall:

• require such order to be sent to the authority with which the corporate debtor is registered.
• pass an order requiring the corporate debtor to be liquidated in the manner as laid down in this Chapter III.
• issue a public announcement stating that the corporate debtor is in liquidation.
• All of the above.

Q.44:- Following shall not be included in the liquidation estate assets and shall not be used for recovery in the liquidation:

• Tangible assets, whether movable or immovable
• Any asset of the corporate debtor in respect of which a secured creditor has relinquished security interest
• Assets that may or may not be in possession of the corporate debtor including but not limited to encumbered assets
• Assets held in trust for any third party

Q.45:- The order of the Adjudicating Authority under section 45 (1), which deals with avoidance of undervalued transactions, may provide for the following:

• Require any person to pay such sums, in respect of benefits received by such person, to the liquidator or the resolution professional as the case maybe, as the Adjudicating Authority may direct
• Release or discharge (in whole or in part) any security interest granted by the corporate debtor
• Require any property transferred as part of the transaction, to be vested in the corporate debtor
• All of the above.

Q.46:- Can a secured creditor in the liquidation proceedings may:

• Realise its security interest in the manner specified in this section.
• Relinquish its security interest to the liquidation estate and receive proceeds from the sale of assets by the liquidator in the manner specified in section53.
• Any of the alternative of A or B may be opted by such secured creditor.
• None of the above

Q.47:- How the fees to the liquidator shall be paid:

• The fees payable to the liquidator shall be paid by the Adjudicating Authority.
• The fees payable to the liquidator shall be deducted proportionately from the proceeds payable to each class of recipients under section53 (1), and the proceeds to the relevant recipient shall be distributed after such deduction.
• The fees payable to the liquidator shall be paid by the Corporate Debtor.
• The fees payable to the liquidator shall be paid by the directors of such corporate debtor.

Q.48:- What will be the date of dissolution of the corporate debtor, when the liquidator liquidates all the assets of it:

• The corporate debtor shall be dissolved from the date when the last asset of corporate debtor has been liquidated.
• The corporate debtor shall be dissolved from the date of the order of the Adjudicating Authority.
• The corporate debtor stands dissolved from the date when the liquidation order
• The corporate debtor shall be dissolved from the date when the liquidator makes an application to the Adjudicating Authority.

Q.49:- A transaction shall be considered under valued (such transaction has not taken place in the ordinary course of business of the corporate debtor) where the corporate debtor:

• enters into a transaction with a person which involves the transfer of one or more assets by the corporate debtor for a consideration the value of which is significantly less than the value of the consideration provided by the corporate debtor.
• makes a gift to a person
• Either A or B, both are correct.
• None of the above

Q.50:- A creditor may appeal to the Adjudicating Authority against the decision of the liquidator accepting or rejecting the claims of the receipt of such decision:

• Within fourteen days
• Within seven days
• After fourteen days
• After seven days