Daily law MCQ Today
Neha Steel Private Limited is under the corporate insolvency resolution process on a…
Neha Steel Private Limited is under the corporate insolvency resolution process on a bank's application under Section 7. The committee of creditors has been constituted, and the resolution professional has already issued the first invitation for resolution plans. The promoter now offers to pay every creditor in full, and creditors holding 95% of the voting share support withdrawal. Under Section 12A as rewritten in 2026, what is the position?
Show answer and explanation
Answer: B. Withdrawal is not allowed, because no withdrawal is permitted after the first invitation for resolution plans.
Explanation
As rewritten in 2026, Section 12A allows withdrawal only in the window between the constitution of the committee of creditors and the resolution professional's first invitation for resolution plans, and only with 90% of the voting share, on an application made by the resolution professional. Here the first invitation has already gone out, so even 95% support does not help, because bidders have spent time and money and the process cannot be called off at will. The tempting wrong option looks only at the 90% figure and ignores the time window.
- Legal provision:
- Section 12A, Insolvency and Bankruptcy Code, 2016