Answer By law4u team
The approval of a resolution plan by the National Company Law Tribunal (NCLT) in India is a critical step in the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC). Here is an overview of the process for the approval of a resolution plan: Submission of Resolution Plan: Prospective resolution applicants or bidders submit their resolution plans to the Resolution Professional (RP) within the stipulated time frame, as specified by the NCLT. These plans should outline how they intend to revive the financially distressed corporate debtor and repay the creditors. Verification and Evaluation: The RP, with the assistance of professionals and experts, verifies the resolution plans to ensure they comply with the requirements specified in the IBC and the CIRP regulations. The RP may seek clarifications or additional information from the resolution applicants if necessary. Presentation to Committee of Creditors (CoC): Once the RP has completed its verification and evaluation, the resolution plans are presented to the Committee of Creditors (CoC) for their consideration. The CoC is composed of financial creditors who vote on the acceptance or rejection of the resolution plans. Voting by CoC: The CoC examines the resolution plans and votes on their acceptance. The plans that receive a vote of at least 66% in favor are considered for further consideration. The CoC can also negotiate with the resolution applicant to make changes to the plan, including the terms and conditions. Approval by NCLT: If a resolution plan is approved by the CoC, it is then submitted to the NCLT for final approval. The NCLT reviews the plan to ensure it complies with the provisions of the IBC and that it is in the best interest of all stakeholders, including creditors. Public Announcement: After receiving NCLT approval, a public announcement is made to inform all stakeholders about the approval of the resolution plan. Implementation of the Resolution Plan: Once approved by the NCLT, the resolution plan is implemented by the resolution applicant. This typically involves the takeover of the corporate debtor and the execution of the plan as per the approved terms. The objective is to revive the corporate debtor and repay creditors. Monitoring and Compliance: The NCLT, the RP, and the CoC continue to monitor the implementation of the resolution plan to ensure compliance. The resolution applicant is expected to adhere to the terms and conditions specified in the approved plan. Completion of CIRP: The CIRP is considered completed when the resolution plan has been successfully implemented, and the corporate debtor is on the path to recovery. In cases where the CIRP fails or if no viable resolution plan is approved, the NCLT may order the liquidation of the corporate debtor. It's important to note that the approval of a resolution plan by the NCLT is a critical stage in the insolvency and bankruptcy process, and the NCLT carefully evaluates the plan to ensure that it is in the best interests of all stakeholders. The goal of the CIRP is to maximize the value of assets for creditors while reviving the financially distressed corporate debtor whenever possible.
