Resolution Plan - Check List.

1. Compliances;


Clause of

S. 30(2)

Requirement

(a)

Plan must provide for payment of CIRP cost in priority to repayment of other debts of CD in the manner specified by the Board.

(b)

(i) Plan must provide for repayment of debts of OCs in such manner as may be specified by the Board which shall not be less than the amount payable to them in the event of liquidation u/s 53; or 


(ii) Plan must provide for repayment of debts of OCs in such manner as may be specified by the Board which shall not be not less than amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of section 53, whichever is higher and


(iii) provides for payment of debts of financial creditors who do not vote in favour of the resolution plan, in such manner as may be specified by the

Board.

(c)

Management of the affairs of the Corporate Debtor after approval of the Resolution Plan. 

(d)

Implementation and Supervision

(e)

Plan 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


2. Measures required for implementation of the Resolution Plan in terms of regulation 37 of CIRP Regulations: A resolution plan shall provide for the measures, as may be necessary, for insolvency resolution of the corporate debtor for maximisation of value of its assets, including but not limited to the following:-


Clause of 

Reg. 37

Particulars

(a)

transfer of all or part of the assets of the corporate debtor to one or more persons;

(b)

sale of all or part of the assets whether subject to any security interest or not;

(ba)

restructuring of the corporate debtor, by way of merger, amalgamation and demerger

(c) 

the substantial acquisition of shares of the corporate debtor, or the merger or consolidation of the corporate debtor with one or more persons;

(ca)

cancellation or delisting of any shares of the corporate debtor, if applicable;

(d)

satisfaction or modification of any security interest;

(e)

curing or waiving of any breach of the terms of any debt due from the  corporate debtor; 

(f)

reduction in the amount payable to the creditors;

(g) 

extension of a maturity date or a change in interest rate or other terms of a debt due from the corporate debtor;

(h)

amendment of the constitutional documents of the corporate debtor;

(i)

issuance of securities of the corporate debtor, for cash, property, securities, or in exchange for claims or interests, or other appropriate purpose;

(j)

change in portfolio of goods or services produced or rendered by the corporate debtor; 

(k)

change in technology used by the corporate debtor;

(l)

obtaining necessary approvals from the Central and State Governments and other authorities. 


3. Mandatory contents of Resolution Plan in terms of regulation 38 of CIRP Regulations:


Clause of 

Reg. 38.

Particulars

38(1)

The amount due to the operational creditors under a resolution plan shall be given priority in payment over financial creditors.

38(1A)

A resolution plan shall include a statement as to how it has dealt with the interests of all stakeholders, including financial creditors and operational creditors of the corporate debtor.

38(1B)

A resolution plan shall include a statement giving details if the resolution applicant or any of its related parties has failed to implement or contributed to the failure of implementation of any other resolution plan approved by the Adjudicating Authority at any time in the past.

38(2)

A resolution plan shall provide: 

(a) the term of the plan and its implementation schedule;

(b) the management and control of the business of the corporate debtor during its term; and

(c) adequate means for supervising its implementation.

38(3)

A resolution plan shall demonstrate that–

(a) it addresses the cause of default;

(b) it is feasible and viable;

(c) it has provisions for its effective implementation;

(d) it has provisions for approvals required and the timeline for the same; and

(e) the Resolution Applicant has the capability to implement the resolution plan.


Reference;

1. NCLT Kolkata (2021.05.11) in Bank of India Vs. Aeon Manufacturing Private Limited [IA (IB) No.279/KB/2021 in CP (IB) No. 683/KB/2018] 


Disclaimer: The sole purpose of this blog is to create awareness on the subject and must not be used as a guide for taking or recommending any action or decision. A reader must do his own research and seek professional advice if he intends to take any action or decision in the matters covered in this blog.

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Disclaimer:

The sole purpose of this post is to create awareness on the "IBC - Case Law" and to provide synopsis of the concerned case law, must not be used as a guide for taking or recommending any action or decision. A reader must refer to the full citation of the order & do one's own research and seek professional advice if he intends to take any action or decision in the matters covered in this post.