Fraudulent trading: persons knowingly carrying on business to defraud creditors may be ordered to contribute to corporate assets. Section 66(1) allows the Adjudicating Authority, on the resolution professional's application, to require persons who knowingly carried on the corporate debtor's business with intent to defraud creditors to contribute to corporate assets; section 66(2) permits the Authority to order directors or partners to contribute where, before the insolvency commencement date, they knew or ought to have known there was no reasonable prospect of avoiding CIRP and failed to exercise due diligence to minimise creditor loss; section 66(3) prevents applications under section 66(2) for defaults during periods where CIRP initiation is suspended.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Fraudulent trading: persons knowingly carrying on business to defraud creditors may be ordered to contribute to corporate assets.
Section 66(1) allows the Adjudicating Authority, on the resolution professional's application, to require persons who knowingly carried on the corporate debtor's business with intent to defraud creditors to contribute to corporate assets; section 66(2) permits the Authority to order directors or partners to contribute where, before the insolvency commencement date, they knew or ought to have known there was no reasonable prospect of avoiding CIRP and failed to exercise due diligence to minimise creditor loss; section 66(3) prevents applications under section 66(2) for defaults during periods where CIRP initiation is suspended.
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