How to draft a resolution plan under the IBC

Want to be an insolvency professional? Learn who can be a resolution applicant and who is disqualified from being one. How are resolution plans drafted? If you are a budding insolvency professional or a stakeholder of a company, this guide is for you.

Introduction

My friend Ishan called me the other day, fuming— “the resolution plan I was working on for the past 15 days? It got rejected. I spent sleepless nights, and they just rejected it”, he said.

I didn’t even ask why. I knew why. I had seen the plan.

Although it was compliant with the legal and statutory framework, it was not commercially attractive.

His job was on the line here.

I asked him a very simple question instead. “Did you hire financial experts to check if your plan was viable or did you just roll with what legal knowledge you had?”.

He hung up on me.

Well, the answer was pretty obvious.

This is a mistake most lawyers/insolvency professionals commit while dealing with resolution plans. You are dealing with a distressed company and need to sort of save it from liquidation. So, you need financial, legal, and sectoral knowledge to draw up a proper plan.

In this article, I will teach you how to evade the fate and frustration that Ishan faced, and help you draft or simply understand what goes on in a resolution plan.

First things first, let’s get some basics right.

What is a resolution plan?

Let’s take a step back and understand when a resolution plan comes into play.

Imagine that there is a company Aksim Export Pvt. Ltd., which could not pay up its creditors. FIB Bank Ltd. it’s a financial creditor, filed an insolvency application under the Insolvency and Bankruptcy Code (“IBC”), and the process began. We will take Aksim’s example to draft our plan.

Here is a step chart for you to understand the process up until the resolution professional is appointed:

Once the resolution professional is appointed, he invites companies, NBFCs, etc., to express interest in revamping such a company. The interested applicants (called Resolution Applicants) respond with the requisite information and documents to the invitation.

Thereafter, a final list consisting of the compliant resolution applicants is prepared, who are required to submit a resolution plan (as per the provisions of the IBC and the regulations therein) which outlines how they intend to resolve the insolvency, including restructuring debts, infusing capital, or managing the company’s operations.

The IBC defines a resolution plan under section 5(26) as “a plan proposed by the resolution applicant for insolvency resolution of the corporate debtor as a going concern in accordance with Part II”.

I will explain what this means as we proceed.

What is the statutory and regulatory framework for drafting a resolution plan?

First, let us know who can submit a resolution plan:

Any person or entity, whether Indian or foreign;
Companies, whether private, public or listed;
Financial institutions could be a bank, an NBFC or an investment firm;
Eligible individuals, either promoters or investors;
A consortium that is multiple applicants applying jointly.
Asset Reconstruction Companies (ARCs); and
Private equity funds, venture capital firms.

Now, as per section 29A of the IBC, who cannot submit a resolution plan? Or rather, who is not eligible to become a resolution applicant.

Undischarged insolvent

Wilful defaulters
Those with Non-Performing Assets (NPAs) (unless cleared)
Persons convicted of offences stated under the said section
Disqualified directors or banned by SEBI
Those connected to fraudulent or undervalued transactions.

What should a resolution plan include?

Section 30 of the IBC gives an overview of the contents of the resolution plan. The RP must ensure that the resolution plan provides for:

Payment of insolvency process costs in priority over other debts;
Payment of debt to operational creditors which shall not be less than what they would get in liquidation, or what they would get based on distribution in section 53, whichever is higher.
Payment of debts of financial creditors who do not vote in favour of the plan must be at least the amount they would get in liquidation.
Provides for the management of affairs of the corporate debtor once the resolution plan is approved;
Provides for ways in which the plan will be implemented and supervised;
That it is not in contravention of any law in force.
Meets other requirements specified by the Insolvency and Bankruptcy Board of India (“IBBI”).

When a resolution plan includes a covenant that normally needs approval from shareholders under the Companies Act or constitutional document or shareholders’ agreement, will still be considered valid and can be put into effect, even if that approval hasn’t actually been taken.

So it is not just the content the king here.

What is the purpose of undertaking such a lengthy exercise? What are the measures which a resolution applicant needs to take for the revival of a corporate debtor? Let us have a look below.

Regulation 37 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulation, 2016 (“the Regulations”) outlines the measures that a resolution plan may include to facilitate the insolvency resolution of a corporate debtor, aiming for the maximisation of asset value.

So while you prepare a resolution plan, keep the following things in mind.

A resolution plan may provide for the following measures. Parts marked in red are examples of each point.

Transferring or selling all or part of the corporate debtor’s assets to one or more persons.

For instance, in the case of Bhushan Steel, Tata Steel acquired the entire plant and machinery, while non-core land assets were either sold off separately or retained by the resolution applicant.

A resolution applicant may restructure the corporate debtor through merger, amalgamation, or demerger

For example, a resolution applicant may propose merging a sick unit with one of its own subsidiaries to absorb operations, reduce overhead costs and benefit from tax credits.

Substantial acquisition of shares or consolidation with one or more persons

So in the case of Electrosteel Steel, Vedanta acquired a majority stake in the company as part of the resolution plan, leading to fresh equity infusion and a change in control.

Cancellation or delisting of any shares, if applicable

In some cases, especially when public shareholding is negligible or scattered, resolution plans have included delisting from stock exchanges to simplify restructuring.

Satisfaction or modification of any security interest

A secured creditor may agree to release their charge on certain assets in exchange for part payment or may accept modified security (e.g., switching from land to equity).

Curing or waiving breaches of debt terms, reducing amounts payable to creditors, extending maturity dates or changing interest rates or other debt terms

Instead of repaying loans in full, the resolution plan may propose to reduce the total debt payable (this practice is popularly known as “a haircut”), extend the repayment period from 5 to 10 years or reduce interest from 12% to 6%.

Amending the corporate debtor’s constitutional documents

For instance, when the resolution plan is approved and is at the stage of implementation, amend the articles of association by bringing in new governance mechanisms, such as appointing an independent monitoring committee or limiting promoter control.

Issuing securities for cash, property, securities, or in exchange for claims or interests

A resolution applicant may issue equity shares or convertible debentures to operational creditors in lieu of part of their claims, which effectively turns debt into equity.

Changing the portfolio of goods or services produced or rendered, or changing the technology used

For example, a steel company with outdated furnaces might propose a shift to electric arc furnaces, which are also cleaner and more efficient in order to improve long-term viability.

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

In cases relating to telecom or mining, resolution plans often require statutory clearances from DoT, MoEF, or SEBI, for license transfers or changes in ownership.

Selling one or more assets to multiple successful resolution applicants and manner of dealing with the remaining assets accordingly.

In the Videocon group insolvency, different companies expressed interest in acquiring individual business units (e.g., oil, consumer electronics, telecom) instead of acquiring the group as a whole.

These provisions ensure that resolution plans are not only fair and just to all stakeholders but also practical and feasible. This, in turn, facilitates the effective revival of corporate insolvency cases.

You know the rules. Now read out the content.

Now, we move on to regulation 38 of the Regulations, which provides a more detailed framework of a resolution plan by providing its mandatory contents. The said regulation ensures that the resolution plan addresses key aspects like payment to stakeholders, management of affairs and compliance with legal requirements.

A resolution plan must include the following:

Priority payment:

Operational creditors must be paid in priority over the financial creditors;
Financial creditors who had the right to vote but did not vote in favour of the resolution plan shall be paid priority over financial creditors who voted in favour of the plan.

Stakeholder interests:

The plan should include a statement detailing how the interests of all stakeholders, including both financial and operational creditors, are dealt with.

Past implementation failures:

The resolution applicant must include a disclosure statement as to how the resolution applicant or any of its related parties has failed to implement or contribute to the failure of implementation of any other resolution plan approved by the NCLT.

Implementation details:

The plan should provide:

Terms of the plan and its implementation schedule;
Management and control of the corporate debtor’s business during the term of the plan;
Adequate means for supervising the implementation of the plan;
Provides for the manner in which proceedings related to the avoidance of fraudulent/wrongful trading, including the distribution of any proceeds from such proceedings.

Feasibility and viability:

The resolution plan must demonstrate:

The causes of default.
That it is feasible and viable.
It has provisions for its effective implementation.
Outlines approvals and timelines.
The resolution applicant has the capability to implement the plan.

Monitoring Committee

The Committee of Creditors (CoC) may consider establishing a monitoring committee to oversee the implementation of the resolution plan.
This committee can include the resolution professional or any other insolvency professional, as well as representatives from the CoC and the resolution applicant. If the resolution professional is part of this committee, their monthly fee should not exceed what they received during the CIRP.
The monitoring committee is required to submit quarterly reports to the NCLT on the status of the implementation of the plan.

How do you draft a resolution plan?

Saksham Export Pvt. Ltd., an eligible resolution applicant approached Mr. T. Shankaran, the resolution professional appointed in this matter with a resolution plan for Aksim Exports Pvt. Ltd. So let us have a look at the proposed plan.

But before we proceed any further, let us get an overview of the resolution plan.

Part 1 consists of the provisions of the IBC and applicable regulations framed thereunder, relating to resolution plans, their preparation, mandatory contents and their approval.

Part 2 contains the landmark and key verdicts of the Hon’ble NCL, NCLAT and the Hon’ble Supreme Court on the key aspects of resolution plans, i.e., what details are to be included, what are the duties of various stakeholders, their approval process, etc.

Part 3 lays down a model resolution plan (for reference only). This draft resolution plan is a product of the perusal of a couple of other approved plans and is not prepared as per any statute or regulations.

PART 1: COMPLIANCES UNDER IBC

In this part, you need to talk about the provisions which exclusively deal with a resolution plan, the meaning of the resolution plan, its eligibility criteria, the duties of the resolution professional, etc.

Provisions	Scope	Explanation
Section 5(26) of IBC	Definition of a resolution plan	When a resolution applicant proposes a plan for insolvency resolution as a going concern, it is called a resolution plan. Such a plan may provide for restructuring of the corporate debtor, including by way of merger, amalgamation and demerger.
Proviso to Section 14(4) of the IBC	Applicability of moratorium	Once the NCLT approves the resolution plan under the relevant provision, the moratorium shall cease to have effect from the date of such approval.
Section 25(2)(h) of IBC	Duties of the resolution professional	A resolution professional is duty-bound to invite resolution applicants who meet the criteria laid down by him with the approval of COC and such other conditions as may be specified by the Board, to submit a resolution plan. Criteria for submission shall depend upon the complexity and scale of operations of the business of the corporate debtor.
Explanation to section 29(2)(c) of the IBC	Preparation of information memorandum	Relevant information means information to be given to resolution applicants to make a resolution plan.
Section 29A of the IBC	Ineligibility to be a resolution applicant	A person shall not be eligible to submit a resolution plan if he is an undischarged insolvent, wilful defaulter, or is convicted of an offence as stated under the IBC, etc.
Proviso to Section 29A (C) of the IBC	Ineligibility to be a resolution applicant	This section also carves an exception in case of a wilful defaulter, that is, a person may become eligible to submit a resolution plan if such a person makes payment of all overdue amounts with interest thereon and charges relating to nonperforming asset accounts before submission of the resolution plan.
Section 30(1) of the IBC	Submission of resolution plan	A resolution applicant may submit a resolution to the resolution professional along with an affidavit of eligibility under section 29A.
Section 30(2) of the IBC	Contents of the resolution plan	We have already covered this in the section “What is the legal framework for drafting a resolution plan?”
Section 30(3) and 30(4) of the IBC	Approval of the plan	Only the resolution plans which adhere to the criteria and conditions shall be presented to the Committee of Creditors (CoC) for its approval. After considering its feasibility and viability and the manner of proposed distribution, the committee of creditors may approve a resolution plan by a vote of not less than 66% of the voting shares of the financial creditors.
Section 30(5) of the IBC	Meeting of approval	Though the resolution applicant may attend the meeting wherein the resolution plan is considered, he does not have a right to vote on the same except when he is himself a financial creditor. Once approved by the CoC, the resolution professional shall submit the resolution plan to the NCLT.
Section 31 of the IBC	Approval of the plan	If the NCLT is satisfied that the resolution plan as approved by the committee of creditors as per terms of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the resolution plan.
Proviso to section 31(4) of the IBC	Combination in the resolution plan	In case the resolution plan contains a provision for combination as per section 5 of the Competition Act 2002, the resolution applicant shall obtain the approval of the Competition Commission of India under that Act even before the approval of such resolution plan by the CoC.
Section 32 of the IBC	Appeal	Any appeal from an order approving the resolution plan shall be in the manner and on the grounds laid down in section 61(3). Some of the grounds are non-provision for resolution process costs, debts due to the operation debtors, when a resolution plan suffers from material irregularity, etc.
Section 32A(2) of the IBC	Criminal proceedings against the corporate debtor	This provision applies prospectively thus, no action shall be taken against the property of the corporate debtor in relation to an offence committed prior to the commencement of the corporate insolvency resolution process of the corporate debtor.
Section 33 of the IBC	Liquidation	Liquidation proceedings may be initiated in case the resolution plan fails to obtain approval.
Section 61(3) of the IBC	Grounds of appeal against the resolution plan	(i)The approved resolution plan is against any law for the time being in force; (ii) when the resolution professional has exercised material irregularity during the corporate insolvency resolution period; (iii) the debts owed to operational creditors of the corporate debtor have not been provided for in the resolution plan as specified by the IBBI. (iv) the insolvency resolution process costs have not been provided for repayment in priority to all other debts; or (v) The resolution plan does not comply with any other criteria specified by the IBBI.
Section 74(3) of the IBC	Punishment for contravention of the resolution plan	When the corporate debtor, any of its officers or creditors or any person on whom the approved resolution plan is binding contravenes any terms of the resolution plan, they shall be punishable with imprisonment of less than one month but may extend to one year and a fine of not less than one lakh but may extend to one crore or with both.
Relevant provisions under the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“the Regulation”)
Reg. 36A of the Regulation	Invitation for expression of interest	The resolution professional shall publish Form G inviting expressions of interest for interested and eligible prospective resolution applicants to submit resolution plans.
Reg. 38B of the Regulation	Request for resolution plan	The resolution professional shall issue the information memorandum, evaluation criteria and a request for resolution plans within five days of the date of issue of the provisional list of prospective resolution applicants. The request for resolution plans shall give details of each step of the process and the manner and purposes of interaction between the resolution professional and the prospective resolution applicant, along with corresponding timelines.
Reg. 37 of the Regulations	Resolution plan	Kindly refer to the section on “What is the legal framework for drafting a resolution plan?”
Reg. 38 of the Regulations	Mandatory contents of the resolution plan	Kindly refer to the section on “What is the legal framework for drafting a resolution plan?”
Reg. 39 of the Regulations	Approval of the resolution plan	All the complaint resolution plan is first put before the CoC for its approval. Once a decision is made on the approval/rejection, only CoC-approved resolution plans shall be presented before the NCLT for a green signal for its implementation.
Reg. 39(3) of the Regulation	Approval of resolution plan by CoC	The committee shall evaluate the resolution plans strictly as per the evaluation matrix to identify the most suitable and viable resolution plan which may be approved with certain necessary modifications. “Evaluation matrix” means different elements of resolution plan on the basis of which the CoC evaluates resolution plans. The said matrix is prepared by the resolution professional required to be approved by the CoC prior to its issuance to the proposed resolution applicant.
Reg. 39B of the Regulations	Meeting liquidation cost	While approving a resolution plan, the CoC may in consultation with the resolution professional, make the nearest estimate of the liquidation costs.
Reg. 39C of the Regulations	Assessment of sale as a going concern	While approving a resolution plan, the CoC may recommend that the liquidator should ideally explore the option to sell the corporate debtor as a going concern.

PART 2: RULINGS/FINDINGS RELATING TO RESOLUTION PLANS

This table depicts findings/rulings relating to the resolution plan, which clarifies the settled position of law on various aspects of the resolution plan.

Year of the judgment	Case title	Ruling
2019	*Essar Steel India Ltd. vs. Satish Kumar Gupta & Ors.* *[2019] 16 S.C.R. 275*	This judgment deals with the validity of a resolution plan approved by the CoC and it clarifies that the NCLT cannot overrule the decision of the CoC if the plan is in accordance with the IBC.
2019	*Swiss Ribbons Pvt. Ltd. v. Union of India & Ors.* *[2019] 3 S.C.R. 535*	The Supreme Court (“the SC”) upheld the constitutional validity of the IBC, addressing concerns about the process and its impact on various stakeholders, including creditors. The Court highlighted that: – Financial creditors are involved in assessing the viability of the corporate debtor and restructuring the debt, while operational creditors have limited insight into the financial health of the debtor. – The IBC’s objective is to maximize the value of assets, promote entrepreneurship, and balance the interests of all stakeholders. – The role of the RP is administrative, ensuring transparency and efficiency in the resolution process.
2019	Arcelor Mittal India Pvt. Ltd. vs. Satish Kumar Gupta & Ors. [(2019) 2 SCC 1]	The SC held that, initially, both ArcelorMittal and Numetal were ineligible under section 29A but were provided with an opportunity to cure their ineligibility. This judgment highlighted the intent of section 29A to prevent defaulting promoters from regaining control of the company.
2020	Jaypee Infratech Ltd. vs. NBCC (India) Ltd. & Ors. CIVIL APPEAL NO. 3395 OF 2020	While upholding the classification of homebuyers as financial creditors under the IBC, the SC emphasised that the interests of homebuyers should be protected in insolvency proceedings, recognizing their significant financial stakes.
	Klassic Wheels Ltd. and Ors. v. Amit Vijay Karia RP of the Siddhi Raj Housing Projects Pvt. Ltd. and Anr. (NCLT Mumbai Bench)	This judgment clarified that CIRP Regulation 16A (7) does not automatically vest creditors with the right to enhanced claims, including interest, under the IBC regulations.
2018	*Binani Cement Ltd. v. Bank of Baroda*	The SC held that a single financial creditor can also initiate the CIRP
2019	*SREI Infrastructure Finance Ltd. v. Jaypee Infratech Ltd.*	The SC held that the creditors cannot be given then the status of financial creditors in a corporate debtor’s CIRP solely based on third-party securities unless they have directly disbursed funds to the corporate debtor.
2021	Kalpraj Dharamshi v. Kotak Investment Advisors Ltd. (2021) 10 SCC 401	– The CoC has the right to set deadlines and evaluation criteria for a resolution plan. – It was further held that late submission of a resolution plan without good reason can be rejected.
2022	Kalinga Allied Industries India Pvt. Ltd. v. CoC of Bindals Sponnge Industries Ltd. (NCLAT- New Delhi)	It was held that once a resolution plan is approved by the CoC and submitted to the NCLT, it becomes binding and irrevocable between the CoC and the successful resolution applicant unless the plan is in contravention to the provisions of section 30(2) of the IBC.
2024	Nehru Place Hotels and Real Estates Pvt. Ltd. v. Sanjeev Mahajan and Ors. (NCLAT- Principal Bench, New Delhi)	The NCLAT held that once the CoC has decided to approve the resolution plan and reject the settlement proposal, such a decision shall be construed as final and binding. Thereafter, the NCLT’s role is limited to ensuring compliance with the IBC and does not extend to reconsidering settlement proposals.

Of course, you can add more case laws in this part. However, ensure that the ones that you add are landmark and/or most recent.

PART-3: DRAFT RESOLUTION PLAN

A resolution plan, as you will see ahead, contains a ton of sensitive financial information. Thus, speaking not just from a legal point of view but also from the perspective of the financial market, it is vital to keep a document private and confidential. And so this document begins with a disclaimer followed by the date, name and CIN of the corporate debtor. At the commencement of the resolution plan itself, you need to state that this is as per the IBC.

PRIVATE AND CONFIDENTIAL

15th April 2023

RESOLUTION PLAN FOR AKSIM EXPORTS PVT. LTD.

CIN: [Insert CIN of the Corporate Debtor]

(Pursuant to Insolvency and Bankruptcy Code 2016)

After this, you need to give the details of the resolution applicant and resolution professional.

BY RESOLUTION APPLICANT

Saksham Exports Pvt. Ltd.

Submitted to:

T. Shankaran

Resolution Professional

[Insert registration number]

[Put an index of this plan]

After putting the index, we have now arrived at the body of the resolution plan.

Like any other document, even a resolution plan begins with definitions and interpretation clauses.

1. DEFINITIONS AND INTERPRETATIONS

(All the definitions and interpretations can given here)

2. OVERVIEW OF THE CORPORATE DEBTOR AND CORPORATE INSOLVENCY RESOLUTION PROCESS

Most of you would be familiar with a “root of the title” clause in an agreement. Similarly, even here you need to give a “root of the matter” that you need to chronologically state how an application under section 7 or 9 of the IBC came to be filed, when was it filed, when was it submitted, the appointment of IRP/RP, etc.

This resolution plan is submitted by the resolution applicant pursuant to the IBC, for the corporate insolvency resolution of the Company.
The corporate insolvency process involving the Company was initiated pursuant to a petition under section 7 of the IBC by FIB Bank Ltd. as one of the financial creditors for initiation of the Corporate Insolvency Resolution process (CIRP) against the Company which was admitted by the Hon’ble National Law Tribunal (Adjudicating Authority), Mumbai Bench vide its order dated 15th March 2023.
The Hon’ble NCLT appointed T. Shankaran, Insolvency professional, Registration Number: [insert registration number] as the interim resolution professional and subsequently appointed and confirmed as the Resolution professional in the first meeting of CoC held on 25th March 2023.
The Resolution professional made available the Information memorandum to the Resolution applicant.

2.1 General Information about the Company

Now here you need to give a run-through of the company by putting in relevant details about the company such as its CIN, registered office, date of incorporation, date of initiation of CIRP, directors, business activity of the company, etc.

Sr. No.	Item	Particulars
1.	Name of the Company	Aksim Exports Pvt. Ltd.
2.	Registered office of the Company	Insert a full and functional registered office address
3.	Date of incorporation	18/09/1989
4.	Website	Insert a link to a functional website
5.	Date of initiation of CIRP	Give a date on which the application was filed by the financial creditor
6.	Name and contact details of resolution professional	Mr. T. Shankaran, Insolvency Resolution Professional[Give his phone number, business email ID and office address]
7.	Date of submission of resolution plan to the resolution professional	15th April 2023
8.	Directors	Give the latest names of directors of the corporate debtor from the MCA website
9.	Shareholding	Bifurcate authorised, paid up and give top 5 shareholders of the corporate debtor
10.	Industry Segment	In which category does the business of corporate debtor fall? Say it here. Export and import of goods.
11.	Business activity of the company	Preferably put this information from the company’s constitutional documents as that would properly cover all ascpects of the business.

2.2 Details about the past performance of the Company:

To determine creditworthiness and financial capability, give here an overview of the financial performance of the last 3 years of the corporate debtor. You can obtain this information from the balance sheet, profit and loss account and cash flow statement.

If case there are any remarks, a resolution application may state that here.

2.3 Brief background of the CIRP and timelines

You need to briefly state details of an application filed with the NCLT for insolvency resolution process, creditors and corresponding amount, etc.

2.4 Details of lis-pendens

Give details of all the litigations filed by or against the corporate debtor with respect to payment of debts.

For instance, an arbitration proceeding filed by the corporate debtor is pending adjudication before the tribunal. You can disclose it as below:

“In the year 2020, an arbitration proceeding was instituted by Aksim Exports Pvt. Ltd. against XYZ EPC Contractor Pvt. Ltd. to claim damages for deficiency of services due to which the corporate debtor incurred huge financial loss. The matter is at the state of the evidence. The award is likely to be passed in less than 3 months”.

In some cases, if the judgment is passed in favour of the corporate debtor but it is yet to receive the amount, you also need to say when you are expected to receive the full amount.

3. PROJECT BACKGROUND

Give details in a tabular form about the project including the number of people employed. This is mainly to understand the reasons behind corporate debtor’s financial instability.

Sr. No.	Item	Particulars
1.	Details about the project	Briefly describe why the project was set up, estimated expected revenue projection, etc.
2.	Manufacturing facilities and infrastructure available with the company	Give details about the plant and machinery at the site
3.	Number of employees	Include employees even on a contract basis
4.	Plausible reasons for the insolvency of the company	Some of the possible reasons could be heavy debt burden, default in making loan repayment, outdated and poor conduct of operation, etc.

4. DETAILS OF THE RESOLUTION APPLICANT

Just like how we gave the details of the corporate debtor/company in the foregoing section, we also need to provide similar details of the resolution applicant

Sr. No.	Item	Particulars
1.	Name of the resolution Applicant	General key information which needs to be mandatorily and correctly stated. It is prudent to such information from the MCA website as it has the record of most recent filings of a company.
2.	Constitution of the resolution applicant
3.	Address for correspondence of the resolution applicant
4.	PAN No.
5.	Email ID
6.	Phone No.
7.	Date of incorporation
8.	Name of Directors & KMPs
9.	Name of the person (s) who is authorized by the company to submit Resolution Plan and their designation, contact no.
10.	Shareholding	Specifically state the amount of authorised and paid up share capital and top 5 shareholders of the resolution applicant.
11.	Details of the subsidiaries and associate companies
12.	Main business activies and products dealt with	Take this information from the articles of association of the company
13.	List of major customers and suppliers
14.	Details of manufacturing facility
15.	Past performance and financials as per last three audited years	Annexe financial documents here
16.	Relationship if any with the corporate debtor	This has to be disclosed categorically if any.

5. DETAILS OF THE RESOLUTION PLAN

From here on your resolution plan commences. You need to state the most suitable strategy for the revival of the corporate debtor, infusion of funds, asset monetisation, business continuity plan, etc.

On the basis of information memorandum, documents available in the public domain and additional information provided by the resolution professional, I/we hereby submit the following resolution plan:

The resolution plan, as detailed in the following table envisages the following:

The cut-off date is the date up to which the liabilities of the corporate debtor are considered for the purpose of the resolution plan.

The effective date for the implementation of this plan means the date on which the resolution plan is approved by the Adjudicating Authority.

A resolution applicant usually considers certain assumptions while framing the resolution plan, so state the key ones.

Sr. No.	Items	Particulars
	Key strategy proposed in the Resolution Plan	Here you need to state whether you wish to adopt a takeover, merger or sale of assets as a revival mechanism. In case any change is proposed in the operation of the corporate debtor, you need to state changes in technology, product mix etc.
2.	Proposed governance structure including Board of directors, key management, Promoters and members. Adequacy regarding licences, permissions, manpower etc. to operate at the projected level may also be specified	You need to give names of the proposed KMPs and the representatives of the resolution applicant who shall be constitute new management. State which statutory licenses and permits shall be retained and which needs to be reapplied.
3.	Cost of Resolution Plan and Means of Finance Sources of funds that will be used to pay the cost of CIRP, dues to operational creditors& dissenting financial creditors as per provisions of section 30(2)(b) of the IBC, may be provided.	Give a crystallised amount that includes CIRP cost, payment to creditors and working capital needs.
4.	Specify the procedure for payment of dues towards resolution process costs/ financial creditors/ operational creditors/ government dues/disputed claims/dissenting financial creditors etc. along with the details of payment made in relation to actual debts including the sources of funds that will be used to pay the dues.	Basically, here you need to give a set timeline of each event. For instance, operation creditors shall be paid within 30 days from the date of approval or say government dues to be paid in priority over the waterfall mechanism, etc.
5.	Restructuringa) Details of the creditors along with details of such debt and amount of debt.b) The structure and method of payment to each of the creditors.c) Transfer of shares/merger, amalgamation, delisting or other corporate restructuring plansDetails on satisfaction/modification of security interestSale/disposal of assets, if any	List out financial creditors and corresponding outstanding debt along with the tranches and within the period of time the amount will be paid to him. In the case of a haircut, state that as well.
6.	Proposal for operating restructuringoperating restructuring/turnaround strategy that may be adopted by the Company (changes in technology etc.).The benefits of adopting such a strategy for various stakeholders	In case any changes are proposed to be made in operations such as technological upgradation, revamp in production line for better quality control, new products launch, etc.
7.	Financial Projections	State the sales projections in the next 3-5 years, improvement in EBIDTA Margins, etc.
8.	If the resolution plan has any tax implications, the same may beIndicated	This is one of the most critical aspects. Adopt a tax-saving model and state it here.
9.	Details of parties that will infuse the capital	You need to state the amount of capital infused, the time within which the capital will be raised, source and end-use of such capital.
10.	Term of the resolution plan and its implementation schedule	Give a stipulated timeline along with the milestone. For example- Day 0: Plan approval Day 15: Capital infusion Month 1: Creditor repayment starts Month 3–6: Operational restructuring in full swing Year 2: Financial stabilization
11.	Proposal relating to adequate means for supervising its implementation	Talk about an independent monitoring committee that shall be responsible for supervising and giving quarterly reports to the NCLT.
12.	Strategy to deal with transactions covered under section 43, section 45, section 50, section 66, etc.	Here, talk about the forensic audit, continuation of avoidance by application from resolution professional or CoC, etc.
13.	The ability of resolution applicant to turn around distressed companies	Talk about the managerial competence and technical abilities, track record in implementing revival plans, etc.
14.	The standing of Resolution Applicant	State the experience in the sector, external rating, adherence to financial discipline, record of regulatory compliance, whether NPA, including group companies.
15.	Details of dealing with the interest of all stakeholders, including financial creditors and operational creditors, of the Corporate Debtor.	Here state the recovery ratio of the financial creditors and operation creditors, employees and government.
16.	Details whether a resolution Applicant or any of its related parties has failed to implement or contribute to the failure of implementation of any other resolution plan approved by the NCLT at any time in the past.	You can mention “N.A” or give details of previous fiascos, if any.
17.	Specify recovery indicators of the resolution plan, assessment techniques and milestones	Here specify recovery indicators such as IRR-Internal Rate of Return, NPV-Net Present Value of future cash flows, Debt-to-equity and DSCR- Debt Service Coverage Ratio over 3 years. You may also give milestones such as break-even in the 2nd year, debt coverage at 1.5x by 3rd year and Net positive EBITDA within 12 months.

6. ELIGIBILITY DETAILS IN RELATION OF RESOLUTION APPLICANT

Section	Item	Particulars
29(A)(a)	is an undischarged insolvent	Say “No” here or give details if you have done a positive act to remedy such a defect. Do not miss out on annexing an affidavit deposing the fact of eligibility
29(A)(b)	is a willful defaulter in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949
29(A)(c)	at the time of submission of the resolution plan has an account, or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 or the guidelines of a financial sector regulator issued under any other law for the time being in force, and at least a period of one year has elapsed from the date of such classification till the date of commencement of the corporate insolvency resolution process of the corporate debtor: Provided that the person shall be eligible to submit a resolution plan if such person makes payment of all overdue amounts with interest thereon and charges relating to nonperforming asset accounts before submission of the resolution plan. Provided further that nothing in this clause shall apply to a resolution applicant where such applicant is a financial entity and is not a related party to the corporate debtor.
29(A)(d)	d) has been convicted for any offence punishable with imprisonment: (i) for two years or more under any Act specified under the Twelfth Schedule; or (ii) for seven years or more under any other law for the time being in force: Provided that this clause shall not apply to a person after the expiry of a period of two years from the date of his release from imprisonment: Provided further that this clause shall not apply in relation to a connected person referred to in clause (iii) of Explanation I
29A(e)	Is disqualified to act as a director under the Companies Act, 2013
29A(f)	is prohibited by the Securities and Exchange Board of India from trading in securities or accessing the securities markets
29A(g)	has been a promoter or in the management or control of a corporate debtor in which a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place and in respect of which an order has been made by the Adjudicating Authority under this IBC; Provided that this clause shall not apply if a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place prior to the acquisition of the corporate debtor by the resolution applicant pursuant to a resolution plan approved under this IBC or pursuant to a scheme or plan approved by a financial sector regulator or a court, and such resolution applicant has not otherwise contributed to the preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction;
29A(h)	has executed a guarantee in favour of a creditor in respect of a corporate debtor against which an application for insolvency resolution made by such creditor has been admitted under this IBC and such guarantee has been invoked by the creditor and remains unpaid in full or part
29A(i)	is subject to any disability, corresponding to clauses (a) to (h), under any law in a jurisdiction outside of India
29A(j)	has a connected person not eligible under clauses (a) to (i)

Now, who are the connected persons?

a) Persons who are promoters or in the management or control of the resolution applicant;

b) The persons who will be promoters or in management or control of the business of the company during the implementation of the resolution plan;

c) Holding company, subsidiary company, associate company and related party of the persons referred to it in terms (a) and (b).

7. DETAILS AS PER REGULATION 38 OF THE REGULATIONS

Sr. No.	ITEM	REFERENCES
a)	It addresses the cause of default	State reasons for default, including limitations on working capital, outdated operational processes, and poor financial management.
b)	It is feasible and viable	Give detailed financial projections that is prepared on the basis of industry benchmarks and the viability is assessed through forecasted sales, EBIDTA, etc.
c)	It has provisions for its effective implementation	The resolution plan provides a an implementation schedule with well-defined milestones, and responsibilities.
d)	It has provisions for approvals required and the timeline for the same	State all the required statutory approvals, including environmental, industrial and sector-specific licenses and permits.
e)	The resolution applicant has the capability to implement the resolution plan	Demonstate financial capability, industry experience, and managerial competence of the resolution applicant. You may also mention past experience and instances where a stressed entity was successfully revived.

8. ELIGIBILITY NORMS AS PROPOSED IN THE EVALUATION MATRIX

Sr. No.	ITEM	PARTICULARS
1.	Condition No. 1	It is usually on the lines that the resolution applicant must have a minimum net worth of say Rs. 80 crore as on the most recent audited financial statement. This gives assurance of financial strength and ability to infuse capital for revival.
2.	Condition No. 2	The resolution applicant should have prior experience of at least say 20 years in the export services.

9. APPROVALS/WAIVERS/ SPECIFIC ORDERS BY/FROM NCLT

The resolution applicant seeks for the following approvals/waivers/specific orders from the Hon’ble NCLT:

Request approval from NCLT for: You may approach the NCLT for the following approvals transfer of management and control of the corporate debtor, approval for allotment and issuance of shares, any restructuring, amalgamation, etc.
Request waiver of liabilities from NCLT: You may approach the NCLT to waive or extinguish all past liabilities, claims, demands, penalties, etc.
Request for specific relief/protection from Hon’ble NCLT: You may seek protection from any action under existing contracts, agreements, obligations, etc arising before the insolvency commencement date, for recognising implementation of the resolution plan and grant approvals, licenses, etc.

INDICATIVE TIMELINE OF EVENTS FOR IMPLEMENTATION OF PROPOSED RESOLUTION PLAN:

Here you need to lay out key action points of the resolution plan along with implementing the schedule and milestones that may be highlighted in the resolution plan. For instance you may give a table as mentioned below:

Sr. No.	Activity / Milestone	Timeline (from the date of approval by NCLT)
1.	Approval of Resolution Plan	0
2.	Constitution of the Monitoring and Implementation Committee	0 + 7 days
3.	Execution of key agreements such as share purchase and business transfer agreements, etc.	T + 15 days
4.	Infusion of upfront capital/equity contribution by the resolution applicant	T + 20 days
5.	Repayment of dues to the operational creditors	T + 30 days
6.	Repayment/restructuring of financial creditor dues as per the plan terms	T + 30–60 days
7.	Transfer of management and control of the corporate debtor to the resolution applicant	T + 30 days
8.	Revival of export orders and renegotiation with the buyers	T + 45 days
9.	Re-establishing trade credit lines and LCs with banks	T + 45–60 days
10.	Renewal/reactivation of statutory licenses (RCMC, IEC, DGFT, etc.)	T + 15–45 days
11.	Vendor re-engagement and restarting of manufacturing/sourcing for export	T + 60 days
12.	Restoration of logistics tie-ups, port and customs arrangements	T + 75 days
13.	Application for and receipt of regulatory approvals	T + 90 days
14.	Full operational ramp-up for export activities	T + 120–150 days
15.	Completion of all statutory and operational restructuring	T + 180 days

PERFORMANCE SECURITY

What if the resolution applicant fails to commit delay in implementation of the plan? Or, in the worst-case scenario, a resolution applicant backs out after approval? Or the applicant a frivolous one? Sounds like a financial creditor’s nightmare, right?

How can you deter such a practice or misdemeanour? Let us have a look below.

“Performance Security” means the security of such nature, value, duration and source, as may be specified in the request for resolution plans with the approval of the committee, having regard to the nature of the resolution plan and business of the corporate debtor.

The resolution applicant is required to provide a performance security within the time specified therein in case its resolution plan is approved and such performance security shall stand forfeited if the resolution applicant fails to implement or contributes to the failure of implementation of that plan in accordance with the terms of the plan and its implementation schedule.

Accordingly, the resolution plan should specify a performance security as specified with the approval of Coc, time within which it shall be provided.

Other terms and conditions

These clauses may be called “ancillary”; however, they constitute a backbone of your resolution plan.

Governing Law

The Company and the new management shall abide and be governed by the laws of India, giving effect to the Adjudicating Authority order approving the resolution plan and any agreements, documents and instruments executed in connection with the resolution plan.

This clause lays down a list of stakeholders who shall be bound and also makes a declaration to the effect that the resolution plan is not in contravention of any law.

Binding effect

This resolution plan once approved by the CoC and then by the NCLT, along with such conditions as may be stipulated by the NCLT, shall be binding on the company, all holders of claims, creditors, members, promoter and all other parties in interest and each of their respective successors and assigns in accordance with sections 31(1) and 238 of the IBC. The resolution plan does not contravene any of the provisions of the law for the time being in force. All requisite approvals and requirements of law required to give effect to the resolution plan shall be undertaken by the resolution applicant.

So, for instance, in case there is an amendment to a law which renders a particular provision/clause of the resolution plan ineffective or redundant or unlawful. Does this render the entire resolution plan ineffective?

Let us see below how the aforesaid query is addressed.

Severability and right to modify

In the event it is determined that any provisions of the resolution plan is unenforceable either on its face or as applied to any claims or transactions and/or in the event any provision of the resolution plan becomes invalid for reasons other than by breach of any party, the new management of the Company may apply to Adjudicating Authority for appropriate modifications of such provisions of the resolution plan, to satisfaction of the Adjudicating Authority, and such invalidity and/or unenforceability of the provision of the resolution plan shall not render the whole resolution plan ineffective, unless otherwise directed by the Adjudicating Authority by order.

In case any such modification is required in the resolution plan after the receipt of Adjudicating authority approval, to comply with any laws currently in force or to apply for certain approvals as required under the resolution plan or for any requirements, not jeopardising the rights of the creditors under the current plan, the new management of the company can do so only after approval of National Company law Appellate Tribunal (NCLAT).

Another question that may arise is whether the rights of a creditor can be assigned under a resolution plan. Then it is a yes, just like every other agreement.

Assignment of Interest

Any creditor may assign its rights under this resolution plan, subject to the transferee unconditionally agreeing to the bound by the terms of this resolution plan.

During my stint as a transaction and litigation lawyer, something I kept constantly listening to was, “see the exit clause” or “check for termination clause”. In my humble opinion, I think even in the case of a resolution plan, it is equally important.

Let us see what happens when the resolution plan falls flat.

Consequences of revocation

In the event the resolution plan fails, the existing facilities of the creditors, the rights and remedies of the creditors under their respective existing financing documents including all securities and guarantees shall continue as if they had not been waived, amended, modified, released, superseded or replaced by the resolution plan and the creditors shall be entitled to enforce such rights and remedies under the existing financing documents, as if the same had not been waived and/or modified pursuant to this resolution plan and the other relevant documents executed thereof. In the event of failure of resolution plan any amount paid to the financial creditor will be adjusted towards the outstanding dues of the company.

Provided, however, that the obligations of the company under the resolution plan shall continue to be binding on the company and its co-obligators and the creditors shall be entitled to exercise all the rights and remedies conferred on them pursuant to this resolution plan.

For the sake of confirming understanding and intent, demonstrating compliance, and protecting confidentiality, it is crucial to give a declaration.

Declaration

We hereby declare that we have read and understood all terms and conditions relating to the formulation of the resolution plan and hereby express our interest in the submission of the resolution plan for the said company. We further declare that the resolution plan is not in contravention of provisions of the Applicable Law and conforms to other requirements as may be specified by the IBBI.

We also hereby declare that any confidential information of the Company that has come to our knowledge or might come to our knowledge during the insolvency resolution process shall not be disclosed.

We hereby agree to invest the funds as proposed in the resolution plan. We understand that the resolution professional and/or the CoC have the further right to renegotiate the terms of this resolution plan and the decision of the resolution professional and/or the CoC in the selection of the successful resolution applicant shall be final and binding on us. We acknowledge that the resolution plan submitted is irrevocable and once the resolution plan is received and accepted, it shall not be transferable/ assignable.

We undertake to provide the resolution professional, the CoC and the CoC’s advisor with any further information as may be requested by them.

In case any of the provisions of this resolution plan are in contradiction to the request for the resolution plan and evaluation matrix issued by the Resolution Professional, then the terms of this resolution plan shall prevail.

Yours faithfully

Saksham Exports Pvt. Ltd.

Place: Mumbai

Date: 15th April 2023

Final thoughts

When you commence drafting a resolution plan, you will realise that it requires a harmony of financial expertise, strategic thinking, and stakeholder awareness. Here are some key takeaways to bear in mind:

Always do your due diligence comprehensively: Your plan must be built on accurate information about the company’s financial and market position, and operational challenges. This is a significant step because a well-done due diligence establishes credibility and provides the foundation for realistic revival strategies.

Your focus should be viability, not merely debt restructuring: A successful resolution plan demonstrates how the business will become operationally sustainable, besides addressing financial distress.

At the end of the day, this is more financial than legal, so quantify and justify every proposal by supporting it with financial projections and market analysis.

Be thoughtful towards all stakeholders’ interests: So while financial creditors have voting power, a plan must address the interests of all operational creditors, employees, and other stakeholders.

Acknowledge potential challenges and risks, and present contingency measures which exhibit thoroughness and build confidence in your plan.

Give clear timelines.

Ensure that the plan is statutorily and regulatory compliant because non-compliance can lead to rejection regardless of economic merit.

Remember that an approved plan is a binding document, so write with clarity and precision, leaving no room for misinterpretation about obligations, timelines, or outcomes.

The most effective resolution plans, while satisfying all the requirements, tell a compelling story of business transformation. When drafting your application for approval, focus not just on meeting minimum standards but on crafting a document that inspires confidence in the proposed path forward.

As you may have gathered that this article has given a whole lot of information about a resolution plan. What is pending here is the topic of inviting the expression of interest for the resolution plan, its approval and FAQs, which will be covered in the upcoming article, so stay tuned.

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