13-Nov-2022 06:39 PM
Section 18 also specify the asset that cannot be taken over under the said section the explanation appended to section 18 provides that for the purpose of this section the term asset shall not include the assets of any Indian or foreign subsidiary of a corporate debtor So my question is than any corporate debtor can plan in such a way that he will take heavy loans and also he will transfer assets from this company to it's subsidiary by showing genuine accounting transaction and then after few months he will come for voluntarily to ibc for CIRP.. so is it not a loophole of law or m I understanding in wrong way?
Assets of subsidiary company is not included because subsidiary company has separate legal entity and its asset can not be utilized for paying debts of holding company. Further, if corporate debtor transferred its assets to it's subsidiary by showing genuine accounting transaction they can not go for voluntary liquidation unless directors give declaration that the company has no debt or that company will be able to pay its debts in full from the proceeds of assets to be sold in the voluntary liquidation and the company is not being liquidated to defraud any person. So, voluntary liquidation only happens when company is able to pay its debts.
Answer given by Shubhamm Sir at 01-Dec-2022 05:09 PM