Answer By law4u team
A resolution plan is a strategy proposed by a resolution applicant to revive the corporate debtor during the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC). The process of submitting and approving the resolution plan is critical to the successful restructuring or revival of the insolvent company.
Process for Submitting a Resolution Plan
Eligibility of Resolution Applicants
Any person, including individuals, companies, financial institutions, or consortiums, except those disqualified under Section 29A of the IBC, can submit a resolution plan.
Applicants must be registered insolvency professionals or entities capable of managing the corporate debtor.
Invitation for Resolution Plans
The Resolution Professional (RP) issues a public invitation (request for resolution plans) after constituting the Committee of Creditors (CoC).
The invitation includes guidelines, timelines, and eligibility criteria.
Submission Timeline
Resolution applicants must submit their plans within the prescribed timeline fixed by the RP, typically within 90 days from the commencement of CIRP.
Extensions may be granted by the CoC if necessary.
Contents of the Resolution Plan
- Details of the proposed restructuring or revival.
- Financial restructuring, operational changes, management changes.
- Means of funding the revival.
- Compliance with laws and protection of interests of all stakeholders.
Evaluation by the Committee of Creditors
The CoC evaluates all submitted plans on commercial viability, feasibility, and compliance with regulatory requirements.
CoC may seek expert opinions or due diligence reports.
Approval of the Resolution Plan
The plan must be approved by at least 66% of the voting share of the CoC members.
After approval, the RP files the plan before the National Company Law Tribunal (NCLT) for final approval.
NCLT Sanction
The NCLT reviews the resolution plan to ensure it complies with the IBC and relevant laws.
Upon satisfaction, NCLT sanctions the plan, making it binding on all stakeholders.
Significance
- Ensures a structured and transparent revival process.
- Protects the rights of creditors, employees, and other stakeholders.
- Provides legal certainty post NCLT approval.
Example
A consortium of investors submits a resolution plan proposing to invest ₹200 crores to revive a stressed manufacturing company. The RP invites plans, and the consortium submits their detailed proposal within 75 days. The CoC reviews the plan and approves it with 75% voting share. The RP then files the plan with the NCLT, which sanctions the plan after due consideration.
