Key Components of a Resolution Plan under IBC
A Resolution Plan is a crucial document in the Corporate Insolvency Resolution Process (CIRP) under India's Insolvency and Bankruptcy Code (IBC). It outlines how a distressed company can be revived and its debts managed. This plan is proposed by resolution applicants and, upon approval by the Committee of Creditors (CoC) and the Adjudicating Authority (NCLT), becomes binding on all stakeholders.
Core Elements of a Resolution Plan
A comprehensive resolution plan typically includes several key components that address the financial, operational, and legal aspects of the distressed entity. These components are designed to ensure the viability of the business and the equitable distribution of value among creditors.
Financial Aspects
This section details how the financial obligations of the corporate debtor will be met. It includes proposals for debt restructuring, infusion of new capital, and the manner of payment to financial creditors.
Operational Aspects
This part focuses on the revival and continuation of the business operations of the corporate debtor. It addresses how the company will be managed and its business activities will be carried out post-resolution.
Payment to Operational Creditors and Workmen
The plan must also address the claims of operational creditors and workmen, ensuring they receive a fair share as per the IBC provisions.
Other Key Provisions
Beyond financial and operational aspects, a resolution plan may include other critical elements for successful revival.
To rescue the corporate debtor as a going concern.
A resolution plan is not just about paying debts; it's about creating a sustainable future for the business.
Approval Process
The journey of a resolution plan from proposal to implementation involves critical approval stages. Understanding this process is vital for all stakeholders.
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The resolution plan must first be approved by at least 75% of the voting share of the Committee of Creditors (CoC). Following CoC approval, it is submitted to the Adjudicating Authority (NCLT) for final sanction. The NCLT's approval makes the plan binding on all parties involved.
Significance of a Well-Drafted Plan
A meticulously crafted resolution plan is the bedrock of a successful CIRP. It balances the interests of various stakeholders and provides a clear path towards business revival, thereby preserving value and contributing to economic recovery.
Learning Resources
The official, consolidated text of the Insolvency and Bankruptcy Code, 2016, providing the legal framework for resolution plans.
Access to various regulations framed by IBBI, including those pertaining to the submission and approval of resolution plans.
A repository of NCLT orders and judgments, offering insights into how resolution plans are reviewed and approved in practice.
A comprehensive overview of the IBC, explaining its objectives, processes, and key stakeholders, including resolution plans.
A practical guide detailing the components, preparation, and approval process of resolution plans under the IBC.
Explains significant amendments to the IBC, which often impact the formulation and approval of resolution plans.
An in-depth analysis of the IBC, covering its evolution, structure, and the critical role of resolution plans.
A video explaining the Corporate Insolvency Resolution Process, including the stages of resolution plan formulation and approval.
This video discusses the responsibilities of Resolution Professionals, who play a pivotal role in guiding the resolution plan process.
A general overview of the IBC, its history, objectives, and key provisions, including the concept of resolution plans.