ABC Ltd., has initiated insolvency proceedings against RS Ltd., for recovery of debt of ₹ 2.86 crore. ABC Ltd. intends to appoint Rahul, one of the employees of its statutory auditors, M/s ASA & Associates, Chartered
CS Executive · Setting up of Business Entities and Closure · PYQS · December 2019
ABC Ltd., has initiated insolvency proceedings against RS Ltd., for recovery of debt of ₹ 2.86 crore. ABC Ltd. intends to appoint Rahul, one of the employees of its statutory auditors, M/s ASA & Associates, Chartered Accountants, as its resolution professional. In the light of the statutory provisions, examine whether Rahul can be appointed as a resolution professional.
Answer & Explanation:
Rahul being one of the employees of statutory auditors of the debtor company is not independent of the debtor and as such his appointment as Resolution Professional is not valid. As per IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, an insolvency professional shall be eligible to be appointed as a resolution professional if he, and all partners and directors of the insolvency professional entity of which he is a partner or director, are independent of the corporate debtor.
Topics: Insolvency and Bankruptcy Code (IBC)
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