A resolution plan is a proposed plan to solve the problem of a corporate debtor to pay off debts. A resolution plan must comply with the requirements of the Insolvency and Bankruptcy Code. It needs to be proposed by the resolution applicant and passed by the Committee of Creditors.
PROCEDURE FOR APPROVAL OF RESOLUTION PLAN
- A meeting of committee of creditors is held within 7 days from the constitution of the committee of creditors. By a majority of sixty six percent of votes an interim resolution professional or a resolution professional is appointed.
- The CoC may take the decision to liquidate the corporate debtor any time after the CoC is constituted and before the confirmation of the resolution plan, including at any time before the preparation of the information memorandum.
- The resolution professional shall conduct the entire corporate insolvency resolution process and manage the operations of the corporate debtor during the corporate insolvency resolution process period.
- The resolution professional shall prepare an information memorandum in such form and manner containing such relevant information as may be specified by the Board for formulating a resolution plan.
- Resolution Plan is submitted by the person or persons eligible as Resolution applicant.
- The resolution professional examines each resolution plan received by him to confirm that each resolution plan—
(a) provides for the payment of insolvency resolution process costs.
(b) provides for the repayment of the debts of operational creditors.
(c) provides for the management of the affairs of the Corporate debtor after approval of the resolution plan.
(d) the implementation and supervision of the resolution plan.
(e) does not contravene any of the provisions of the law for the time being in force.
(f) conforms to such other requirements as may be specified by the Board.
- The Resolution Professional presents the resolution plans to the committee of creditors for its approval.
- The committee of creditors may approve the resolution plan by seventy five percent of votes of financial creditors.Has empowered the CoC to commercially consider the manner of distribution proposed in the resolution plan while deciding its feasibility and viability.
- The resolution plan if approved is presented by the resolution professional to the adjudicating authority.
- The Code provides a period of 14 days for the NCLT to ‘ascertain the existence of default‘ and admit or reject a Resolution Application for initiating insolvency proceedings.
- If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors,it approves the resolution plan which will be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan.
- After the order of approval,the moratorium order ceases to have effect. The resolution professional forwards all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database.
- An appeal can be filed within thirty days before the National Company Law Appellate Tribunal. Provided that the National Company Law Appellate Tribunal may allow an appeal to be filed after the expiry of the said period of thirty days if it is satisfied that there was sufficient cause for not filing the appeal but such period shall not exceed fifteen days.
- An appeal against an order approving a resolution plan under section 31 may be filed on the following grounds
- the approved resolution plan is in contravention of the provisions of any law for the time being in force.
- there has been material irregularity in exercise of the powers by the resolution professional during the corporate insolvency resolution period.
- the debts owed to operational creditors of the corporate debtor have not been provided for in the resolution plan in the manner specified by the Board.
- the insolvency resolution process costs have not been provided for repayment in priority to all other debts.
- the resolution plan does not comply with any other criteria specified by the Board.
- The CIRP must mandatorily be completed within an overall timeline of 330 days from the insolvency commencement date (including all or any extensions granted as well as any litigations and related legal proceedings). Additionally, for an ongoing CIRP, in case the 330-day overall timeline has already been breached at the time the Amendment comes into force, the Amendment provides for an additional relaxation of 90 days as a transitionary measure.
Rest for case specific advice, you can contact Top/Best/Expert NCLT Chandigarh Lawyers Advocates practicing in Punjab Haryana Panchkula Mohali who can take up your matters.
This post is written by Soumya Mittal. For more info, dial 99888-17966.