Corporate Restructuring, Valuation and Insolvency · Pre-Packaged Insolvency Resolution Process

Resolution Plan Approval in Pre-Packaged Insolvency Resolution

Updated 11 October 2026 · Fact-checked

In a pre-pack, the corporate debtor submits a base resolution plan within two days of commencement. The CoC approves a plan by at least 66% of voting shares. The resolution professional files it with the Adjudicating Authority, which approves it within thirty days under section 54L if it meets section 30(2) and can be implemented.

Understand Resolution Plan and Approval by Adjudicating Authority

A pre-packaged insolvency resolution process (pre-pack) lets a corporate debtor work out a rescue plan with its creditors in a faster, more debtor-led way than a normal CIRP. The plan is the centre of the process. This topic is about how that plan is put forward, chosen, approved by creditors and finally approved by the Adjudicating Authority (NCLT).

The starting document is the base resolution plan. The corporate debtor itself submits it to the resolution professional within two days of the pre-packaged insolvency commencement date. The resolution professional presents it to the committee of creditors (CoC). The corporate debtor counts as a resolution applicant, so it may submit the base plan alone or jointly with another person. The CoC may let the debtor revise the base plan before approving it or before inviting other applicants.

What happens next depends on operational creditors. The CoC may approve the base plan for submission to the Adjudicating Authority only if it does not impair any claim owed to operational creditors. A claim is impaired when the plan does not pay the confirmed claims, as per the updated list of claims kept by the resolution professional, in full. If the CoC does not approve the base plan, or if it impairs operational creditors' claims, the resolution professional must invite prospective resolution applicants to submit competing plans.

In the competing route, applicants must meet criteria set by the resolution professional with CoC approval, based on the complexity and scale of the business. The resolution professional gives them the evaluation basis and the section 29 information, and presents only plans that conform to section 30(2). The CoC selects one plan. If it decides, on its own criteria, that the selected plan is significantly better than the base plan, that plan goes forward for approval. Otherwise the selected plan competes with the base plan, and one of them is selected. If the CoC then does not approve the plan selected after competition, the resolution professional must apply for termination of the process.

The Adjudicating Authority then reviews the CoC-approved plan. It must be satisfied that the plan meets section 30(2) and has provisions for effective implementation. It decides within thirty days of receiving the plan. An approved plan has the effect set out in section 31(1), (3) and (4), applied with the necessary changes. Remember the overall clock: the plan must reach the Adjudicating Authority within ninety days, and the process must end within one hundred and twenty days of commencement.

Key rules to remember

Base plan submission: Corporate debtor → resolution professional within 2 days of pre-packaged insolvency commencement date; The resolution professional then presents it to the CoC (section 54K(1)).
CoC approval of base plan: Allowed only if no claim of operational creditors is impaired; Impaired means confirmed claims are not paid in full (Explanation II to section 54K).
Competing plans trigger: CoC does not approve base plan OR base plan impairs operational creditors → RP invites resolution plans; Section 54K(5).
CoC voting threshold: Not less than 66% of voting shares; Considers feasibility, viability, manner of distribution and priority under section 53(1), including secured creditors' security interest (section 54K(13)).
Alternative plan vs base plan: Selected plan 'significantly better' than base plan → goes for approval; otherwise it competes with base plan; Section 54K(10) and (11).
Promoter dilution: If plan impairs claims, CoC may require promoters to dilute shareholding, voting or control rights; If the plan has no dilution, CoC must record reasons before approving (section 54K(14)).
Timelines: Plan to Adjudicating Authority within 90 days; process complete within 120 days; AA order within 30 days of receipt; Sections 54D(1), 54D(2) and 54L(1).
Mandatory rejection: If order under section 54J(2) was passed and plan does not change management or control to a person who was not a promoter or in management → reject, terminate, order liquidation; Section 54L(4). Pre-pack costs become part of liquidation costs.

How to solve Resolution Plan and Approval by Adjudicating Authority questions

Use this order for any case question on plan approval in a pre-pack. It follows the law: provision, facts, conclusion.

1Identify the stage: base plan submission, CoC consideration, competing plans, or Adjudicating Authority review.
2Check the timing: two days for the base plan, ninety days for filing the approved plan, one hundred and twenty days for the whole process.
3Test the base plan for impairment of operational creditors' claims. If confirmed claims are not paid in full, it is impaired and the CoC cannot approve it under section 54K(4).
4If the base plan fails or is not approved, apply the competing route: invitation of plans, evaluation basis, selection, the 'significantly better' test, and competition with the base plan.
5Check the vote: at least 66% of voting shares, after considering feasibility, viability and distribution by section 53(1) priority.
6Check promoter dilution where claims are impaired, and whether reasons were recorded if there is none.
7Apply section 54L: the Adjudicating Authority checks section 30(2) conformity and effective implementation within thirty days, then approves or rejects. Test the section 54L(4) change-of-control rule if relevant.
8State the conclusion with the effect: approval gives the section 31(1), (3), (4) effect; failure leads to termination under section 54N.

Quickest way: Four-gate check

When to use it: Use when you have little time and the question asks whether a plan can be approved or what happens next.

Gate 1, operational creditors: paid in full? If not, go to competing plans.
Gate 2, CoC: 66% of voting shares? If the final plan is not approved, the RP files for termination.
Gate 3, time: filed within 90 days and finished within 120 days?
Gate 4, NCLT: meets section 30(2), implementable, decision within 30 days. Add the section 54L(4) control test where the order under section 54J(2) was passed.

Common mistakes in Resolution Plan and Approval by Adjudicating Authority

Saying the CoC can approve a base plan that pays operational creditors only part of their dues.
Students remember the 66% vote and forget the impairment condition.
Fix: Remember section 54K(4): the base plan can be approved only if it does not impair operational creditors' claims. Partial payment of confirmed claims means impairment.
Writing that the resolution professional submits the base plan.
In a normal CIRP the resolution professional collects plans, so students carry that over.
Fix: In a pre-pack the corporate debtor submits the base plan to the RP within two days; the RP presents it to the CoC.
Mixing up the 90-day, 120-day and 30-day periods.
Three timelines sit in different sections.
Fix: Tie each to its actor: RP files the approved plan within 90 days, the whole process ends in 120 days, the Adjudicating Authority decides within 30 days of receipt.
Ignoring the effective implementation requirement.
Students stop at conformity with section 30(2).
Fix: The proviso to section 54L(1) requires the Adjudicating Authority to be satisfied that the plan has provisions for its effective implementation before approving.
Forgetting what happens if the CoC does not approve the plan selected after competition with the base plan.
Students assume the process simply continues.
Fix: Under the proviso to section 54K(12), the RP files an application for termination, and the Adjudicating Authority acts under section 54N.
Overlooking the change-of-control rule in section 54L(4).
It applies only after an order under section 54J(2), so it is easy to miss.
Fix: Where such an order was passed and the plan leaves management or control with promoters or existing management, the plan must be rejected and liquidation ordered.

Worked examples

Example 1

Meridian Components Pvt Ltd is in a pre-pack. Its base resolution plan offers operational creditors 70% of their confirmed claims. Financial creditors holding 80% of voting shares support the plan. Can the CoC approve the base plan for submission to the Adjudicating Authority? What must the resolution professional do?

Show the solution

Provision: under section 54K(4), the CoC may approve the base plan only if it does not impair claims owed to operational creditors.
Facts: confirmed claims of operational creditors are paid at 70%, not in full. Under Explanation II to section 54K, claims are impaired where full payment of confirmed claims is not provided.
Analysis: the plan impairs operational creditors' claims, so the CoC cannot approve it under sub-section (4), even though 80% exceeds the 66% vote.
Procedure: under section 54K(5)(b), the RP must invite prospective resolution applicants to submit competing plans.
Next stage: applicants must meet criteria set by the RP with CoC approval. The CoC then evaluates plans, selects one, and applies the 'significantly better' test against the base plan.

Answer: No. The base plan impairs operational creditors' claims, so the CoC cannot approve it. The RP must invite competing resolution plans under section 54K(5).

Example 2

In a pre-pack, the CoC approves a plan by a 72% vote and the RP files it with the Adjudicating Authority. The Adjudicating Authority had earlier passed an order under section 54J(2). The plan keeps the existing promoters in control. What is the likely order, and what happens to the process costs?

Show the solution

Provision: section 54L(4) applies where an order under section 54J(2) was passed and the approved plan does not change management or control to a person who was not a promoter or in management or control.
Facts: the order under section 54J(2) was passed, and the promoters remain in control.
Analysis: the section 54L(4) condition is met. The 72% vote does not change this, since the vote only satisfies the CoC threshold.
Order: the Adjudicating Authority shall reject the plan, terminate the pre-pack, and pass a liquidation order as referred to in section 33(1)(b)(i), (ii) and (iii).
Costs: pre-pack process costs, if any, are declared part of the liquidation costs.

Answer: The Adjudicating Authority must reject the plan, terminate the pre-pack and order liquidation. The pre-pack costs form part of the liquidation costs.

Exam tips

Write the section number with each point: 54K for CoC stage, 54L for Adjudicating Authority, 54D for timelines, 54N for termination.
Always state the 66% voting threshold and the factors the CoC must consider: feasibility, viability and distribution by section 53(1) priority.
In case questions, test impairment of operational creditors first, since it decides whether the base plan can stand alone.
Show the three clocks separately: 90 days for filing, 120 days for completion, 30 days for the NCLT order.
End with a clear conclusion on approval, rejection or termination, and the consequence for costs where liquidation follows.

Practice questions from Pre-Packaged Insolvency Resolution Process

Resolution Plan and Approval by Adjudicating Authority: frequently asked questions

What is the difference between a base resolution plan and a resolution plan in a pre-pack?

The base resolution plan is submitted by the corporate debtor itself, alone or jointly with another person, within two days of commencement. A resolution plan in the competing sense is submitted by a prospective resolution applicant invited by the RP. Competing plans are invited when the CoC does not approve the base plan or it impairs operational creditors.

What vote does the CoC need to approve a plan in a pre-pack?

Not less than sixty-six per cent of the voting shares. The CoC must consider feasibility and viability, and the manner of distribution, taking account of the section 53(1) priority order and the security interest of secured creditors.

How long does the NCLT have to approve the plan?

The Adjudicating Authority must decide within thirty days of receiving the plan. It approves if the plan meets section 30(2) and has provisions for effective implementation. Otherwise it may reject the plan and pass an order under section 54N.

What is the effect of an approved plan?

The order of approval has the effect provided in section 31(1), (3) and (4), which apply with the necessary changes to the pre-pack. Study those sub-sections from the topic on approval under section 31 to write the effect fully.