1. When was The Insolvency and Bankruptcy Code, 2016 passed by Parliament?
A. 16.05.2016
B. 01.01.2016
C. 31.03.2016
D. 15.08.2016
The Insolvency and Bankruptcy Code, 2016 was passed by the Indian Parliament on 16.05.2016 to consolidate and amend the laws related to insolvency and bankruptcy.
2. What is the primary purpose of The Insolvency and Bankruptcy Code, 2016?
A. To impose penalties on defaulters
B. To consolidate and amend laws relating to reorganization and insolvency resolution of corporate persons, partnership firms, and individuals in a time-bound manner
C. To regulate the banking sector
D. To promote foreign investment in India
The primary purpose of The Insolvency and Bankruptcy Code, 2016 is to consolidate and amend the laws relating to the reorganization and insolvency resolution of corporate persons, partnership firms, and individuals in a time-bound manner.
3. What paradigm shift does The Insolvency and Bankruptcy Code, 2016 propose?
A. From 'Debtor in possession' to 'Creditor in control'
B. From 'Creditor in possession' to 'Debtor in control'
C. From 'Government control' to 'Private control'
D. From 'Court control' to 'Board control'
The Insolvency and Bankruptcy Code, 2016 proposes a paradigm shift from 'Debtor in possession' to 'Creditor in control,' allowing financial creditors to take control in case of default.
4. Who is the adjudicating authority under The Insolvency and Bankruptcy Code, 2016?
A. National Company Law Tribunal (NCLT)
B. Reserve Bank of India (RBI)
C. High Court
D. Ministry of Finance
Under The Insolvency and Bankruptcy Code, 2016, the National Company Law Tribunal (NCLT) is the adjudicating authority for insolvency and bankruptcy cases.
5. What kind of regime does The Insolvency and Bankruptcy Code, 2016 envisage?
A. 'Creditor in control' regime
B. 'Debtor in control' regime
C. 'Government in control' regime
D. 'Court in control' regime
The Insolvency and Bankruptcy Code, 2016 envisages a 'Creditor in control' regime, where financial creditors exercise control in the event of a single default in repayment.
6. Which of the following is a feature of the Corporate Insolvency Resolution Process (CIRP)?
A. Only operational creditors can apply for insolvency
B. The Insolvency Professional (IP) is appointed by the company’s Board of Directors
C. The power of the Board of Directors is suspended once the IP is appointed
D. Creditors’ committee includes related parties
In the Corporate Insolvency Resolution Process (CIRP), any financial or operational creditor(s) can apply for insolvency on default of debt or interest payment. The Insolvency Professional (IP) is appointed by the regulator and approved by the creditors' committee. From the date of the IP's appointment, the power of the Board of Directors is suspended and vested in the IP, who has immunity from criminal prosecution for actions done in good faith. A moratorium period is declared during which no action can be taken against the company or its assets, and a Resolution Plan needs to be prepared and approved by the Committee of Creditors. The committee excludes related parties and decisions are made based on voting shares.
7. Who appoints the Insolvency Professional (IP) in the CIRP?
A. The regulator
B. The company's Board of Directors
C. The creditors' committee
D. The court
The Insolvency Professional (IP) in the Corporate Insolvency Resolution Process (CIRP) is appointed by the regulator and approved by the creditors' committee.
8. What is the primary focus during the moratorium period in CIRP?
A. Liquidation of assets
B. Recovery of debts
C. Running the company on a going concern basis
D. Legal proceedings against the company
During the moratorium period in the Corporate Insolvency Resolution Process (CIRP), the primary focus is on running the company on a going concern basis, preventing any action against the company or its assets.
9. What is the minimum voting share required for the approval of a Resolution Plan in the CIRP?
A. 51%
B. 65%
C. 75%
D. 85%
A Resolution Plan in the Corporate Insolvency Resolution Process (CIRP) requires approval from creditors representing 75% of the total voting share.
10. Which of the following statements about the moratorium period is true?
A. It allows creditors to initiate recovery actions against the company
B. It prevents the company from running its operations
C. It prohibits any action against the company or its assets
D. It is declared for a fixed period of 90 days
During the moratorium period in the Corporate Insolvency Resolution Process (CIRP), no action can be taken against the company or its assets.
11. Who is excluded from the Creditors’ Committee in the CIRP?
A. Operational creditors
B. Financial creditors
C. Related parties
D. Insolvency Professionals
Related parties are excluded from the Creditors' Committee in the Corporate Insolvency Resolution Process (CIRP) to ensure unbiased decision-making.
12. What role does the Insolvency Professional (IP) play during the CIRP?
A. Initiating legal proceedings against the company
B. Managing the company's operations and preparing the Resolution Plan
C. Making decisions regarding the company's liquidation
D. Appointing new Board of Directors
The Insolvency Professional (IP) in the Corporate Insolvency Resolution Process (CIRP) manages the company's operations and prepares the Resolution Plan while ensuring the company runs as a going concern.
13. What triggers the initiation of the Liquidation Process?
A. Failure to approve the Resolution Plan within the specified days
B. Success in the Resolution Plan
C. Voluntary liquidation by a special resolution in a General Meeting
D. Approval of the Resolution Plan
The initiation of the Liquidation Process occurs if the Resolution Plan is not approved within the specified days. Additionally, the debtor can opt for voluntary liquidation through a special resolution in a General Meeting.
14. Who can act as the liquidator in the Liquidation Process?
A. The Insolvency Professional (IP)
B. The company’s Board of Directors
C. A government-appointed official
D. The creditors’ committee
In the Liquidation Process, the Insolvency Professional (IP) may act as the liquidator and exercise all powers of the Board of Directors. The liquidator forms an estate of the assets and handles the distribution of claims.
15. What is the correct order of priority for the distribution of assets in liquidation?
A. Insolvency related costs, secured creditors and workmen dues, employee salaries/dues, financial debts, government dues, remaining debts, equity
B. Secured creditors, insolvency related costs, financial debts, employee salaries/dues, government dues, remaining debts, equity
C. Financial debts, employee salaries/dues, secured creditors, insolvency related costs, government dues, remaining debts, equity
D. Government dues, financial debts, secured creditors, employee salaries/dues, insolvency related costs, remaining debts, equity
The correct order of priority for the distribution of assets in liquidation is: insolvency related costs, secured creditors and workmen dues (up to 24 months), other employee’s salaries/dues (up to 12 months), financial debts (unsecured creditors), government dues (up to 2 years), any remaining debts and dues, and finally equity.
16. What are the powers of the liquidator in the Liquidation Process?
A. To form an estate of the assets and handle creditors' claims
B. To appoint new Board of Directors
C. To initiate legal proceedings against the company
D. To approve the Resolution Plan
The liquidator in the Liquidation Process has the power to form an estate of the assets and consolidate, verify, admit, and determine the value of creditors’ claims.
17. What happens to the power of the Board of Directors during the Liquidation Process?
A. It remains unchanged
B. It is transferred to the liquidator
C. It is exercised by the creditors’ committee
D. It is suspended but can be reinstated
During the Liquidation Process, the power of the Board of Directors is transferred to the liquidator, who takes over the management and disposal of the company’s assets.
18. How are government dues treated in the asset distribution order during liquidation?
A. They are distributed after financial debts
B. They are distributed before financial debts
C. They are the last to be distributed
D. They are paid before secured creditors
Government dues are distributed after financial debts but before any remaining debts and equity in the asset distribution order during liquidation.
19. What type of liquidation allows a debtor to initiate the process voluntarily?
A. Involuntary liquidation
B. Compulsory liquidation
C. Voluntary liquidation
D. Administrative liquidation
Voluntary liquidation allows a debtor to initiate the process by passing a special resolution in a General Meeting.
20. What must the liquidator do with creditors’ claims during the Liquidation Process?
A. Ignore them
B. Consolidate, verify, admit, and determine their value
C. File them as legal suits
D. Transfer them to a separate trustee
The liquidator is responsible for consolidating, verifying, admitting, and determining the value of creditors' claims during the Liquidation Process.
