MCQs on Case Analysis – CIRP

Q.1:- An appeal was made by the SB I and the Supreme Court held that section 14, which provides for a moratorium for limited period mentioned in Code, on admission of an insolvency petition:

• Would not apply to a personal guarantor of a corporate debtor
• Personal guarantor’s insolvency sections not yet notified.
• Would apply to a personal guarantor of a corporate debtor
• None of the above.

Q.2:- The moratorium declared by the Adjudicating Authority under section 14(1) shall not apply to:

• a surety in a contract of guarantee to a corporate debtor
• such transaction as may be notified by the Central Government in consultation with any financial regulator
• Both A and B are correct.
• None of the above

Q.3:- Whether the claim of corporate debtor that there existed a dispute in relation to breach of Non-Disclosure Agreement amounts to ‘dispute’ within the meaning of Code:

• No, it shall not be treated as dispute
• Simply non-adherence of NDA do amounts to dispute
• Yes, it was to treated as dispute and the operational creditor has informed by the corporate debtor by an e-mail dated 27.12.2016
• None of the above

Q.4:- Whether the company can prefer appeal after the appointment of an insolvency professional to manage company:

• Once an insolvency professional is appointed to manage the company, the erstwhile directors who are no longer in management, cannot maintain an appeal on behalf of the company.
• The directors can make an appeal as persons aggrieved by the impugned order as they are otherwise affected as shareholders of the company.
• The powers of the board of directors of the company have been suspended only and not terminated. They can challenge the impugned order of the adjudicating authority.
• The erstwhile directors of the company can make an appeal.

Q.5:- What is start date of CIRP:

• 16.01.2017
• 07.12.2016
• 17.01.2017
• 23.12.2016

Q.6:- In the given case once the operational creditor has filed an application, the adjudicating authority must:

• Reject the application and communicate that notice of dispute has been received bv the K Ltd
• Just violation of one of the term of NDA do not amounts to dispute
• Accept the application made by the K Ltd
• Ask the K Ltd to rectify the application

Q.7:- Where a corporate insolvency resolution process of a corporate debtor is pending before a National Company Law Tribunal, an application relating to the insolvency resolution of a personal guarantor, of such corporate debtor shall be filed before:

• The relevant sections of Insolvency Resolution of individual have not yet been notified.
• Such National Company Law Tribunal.
• Debt Recovery Tribunal
• None of the above

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

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

Q.9:- After order of moratorium period, which activity shall allowed to continue:

• Transferring off of its assets for the benefit of the company
• The institution of suits against the company
• Execution of decree awarded by a competent court well before the enactment of the IB Code.
• The supply of essential goods or services to the company

Q.10:- The adjudicating authority, when examining an application under section 9 will have to determine:

• Whether there is existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute ?
• Whether there is an 'operational debt' as defined exceeding Rs.l lakh?
• Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid?
• All of the above

Q.11:- The National Company Law Tribunal, held that since under section 31, a Resolution Plan made would bind the personal guarantor as well, and since, after the creditor is proceeded against, the guarantor stands in the shoes of the creditor, section 14 would apply in favour of the personal guarantor as well. The contention of the said Adjudicating Authority was:

• Depends on the facts to facts
• Right
• Cannot say
• Wrong