Corporate Restructuring, Valuation and Insolvency · Preparation and Approval of Resolution Plan

Approval of a Resolution Plan by the Committee of Creditors

Updated 11 October 2026 · Fact-checked

The committee of creditors (CoC) approves a resolution plan by a vote of not less than 66% of the voting share of the financial creditors, after considering feasibility, viability and the manner of distribution. The plan must first meet the Section 30(2) tests for operational and dissenting creditors. Then the resolution professional files it with the Adjudicating Authority.

Understand Approval by the Committee of Creditors

A resolution plan is a proposal to revive a corporate debtor. It is not binding until two things happen. First, the committee of creditors approves it. Second, the Adjudicating Authority approves it. This topic covers the first step.

The resolution professional (RP) does not simply hand every plan to the CoC. Under Section 30(2), the RP examines each plan and confirms that it meets the minimum legal conditions. The plan must pay insolvency resolution process costs in priority to other debts. It must pay operational creditors at least the higher of the liquidation value and the amount they would get if the plan money were distributed by the Section 53(1) priority order. It must pay dissenting financial creditors at least what they would get in liquidation under Section 53(1). It must provide for management of the debtor's affairs, and for implementation and supervision. It must not contravene any law. It must meet other requirements specified by the Board. Only plans that pass this check go to the CoC (Section 30(3)).

The CoC then votes. Under Section 30(4), the CoC may approve a plan by a vote of not less than sixty-six per cent of the voting share of the financial creditors. The threshold was earlier seventy-five per cent and was lowered to sixty-six per cent by the 2018 amendment. While voting, the CoC must consider the plan's feasibility and viability, the manner of distribution proposed, and other requirements specified by the Board. The distribution may take into account the Section 53(1) order of priority, including the priority and value of a secured creditor's security interest.

Only financial creditors vote. Operational creditors do not sit as voting members. The resolution applicant may attend the CoC meeting where the plan is considered, but cannot vote unless the applicant is also a financial creditor (Section 30(5)). After approval, the RP submits the plan to the Adjudicating Authority (Section 30(6)).

The decision to approve or reject is the CoC's business judgment, often called its commercial wisdom. The Adjudicating Authority checks legal compliance, not the commercial merits. Courts have repeatedly said this in decided cases, so cite the principle in answers. Name a specific case only if you are sure of it and its holding. Section 30(4) must be read together with Section 30(2): the vote cannot cure a plan that fails the minimum payment conditions.

Key rules to remember

CoC voting threshold (Section 30(4)): Approval needs votes ≥ 66% of the voting share of the financial creditors; Counted on voting share, not on number of creditors. Earlier threshold was 75%.
Operational creditors' minimum (Section 30(2)(b)(i)-(ii)): Payment to operational creditors ≥ higher of (a) liquidation amount under Section 53, (b) amount if plan money were distributed per Section 53(1) priority; The test is the higher of the two amounts, not either one.
Dissenting financial creditors' minimum: Payment to dissenting financial creditors ≥ amount they would get under Section 53(1) in liquidation; Applies to financial creditors who do not vote in favour.
Factors the CoC must consider: Feasibility and viability + manner of distribution (may reflect Section 53(1) priority and security interest) + other Board requirements; Record these in your answer as the basis of the vote.
Who votes: Financial creditors in the CoC vote; the resolution applicant has no vote unless also a financial creditor; Section 30(5) proviso.
Pre-packaged process (Section 54K(13)): Approval of base plan or selected plan needs votes ≥ 66% of the voting shares; Same threshold as Section 30(4), applied in the pre-pack Chapter.

How to solve Approval by the Committee of Creditors questions

Use this order for any question on CoC approval. It follows the provision, analysis, conclusion pattern.

1Identify the stage: is the plan with the RP for examination, or with the CoC for voting? State it.
2Check Section 30(2) compliance first: process costs priority, operational creditors' minimum, dissenting financial creditors' minimum, management, implementation, legality.
3Compute the voting share in favour as a percentage of total voting share of financial creditors. Ignore the number of creditors.
4Compare with the 66% threshold in Section 30(4). State the result clearly.
5Note whether the CoC considered feasibility, viability and manner of distribution, and the priority and value of security interests.
6Address dissenting and operational creditors: show their payment meets the stated minimum.
7Conclude: if approved, the RP submits the plan to the Adjudicating Authority under Section 30(6). Mention commercial wisdom if the dispute is about the merits.

Quickest way: Three-check method for CoC approval questions

When to use it: Use for short-answer or case questions where the facts give voting shares and payment figures.

Check one: Does the plan meet the Section 30(2) payments? If not, the CoC should not be asked to approve it.
Check two: Add the voting shares in favour. Is the total 66% or more of all voting share? Do not count absent or abstaining shares as in favour.
Check three: Are dissenting and operational creditors paid at least their minimum? Then write the conclusion and the filing with the Adjudicating Authority.

Common mistakes in Approval by the Committee of Creditors

Writing that the CoC approves with 75% vote.
The old threshold was 75% and older notes still show it.
Fix: Write 66% of the voting share of financial creditors under Section 30(4), and mention the 2018 change only as a contrast.
Counting creditors by head instead of by voting share.
Students treat the vote like a show of hands.
Fix: Always compute the percentage of voting share. A single large creditor can decide the vote.
Saying operational creditors vote in the CoC.
Confusing who is protected with who votes.
Fix: State that only financial creditors vote. Operational creditors are protected by the minimum payment test in Section 30(2)(b).
Treating the minimum for operational creditors as either of two amounts.
The two limbs are read as alternatives.
Fix: Write that the payment must not be less than the higher of the two amounts.
Assuming a 66% vote makes the plan valid regardless of its terms.
Overstating commercial wisdom.
Fix: Say the CoC's commercial wisdom covers the merits, but the plan must still conform to Section 30(2) and the law.
Letting the resolution applicant vote.
The applicant attends the meeting, so students assume a vote.
Fix: Quote the proviso to Section 30(5): no vote unless the applicant is also a financial creditor.

Worked examples

Example 1

The CoC of Sunrise Textiles Ltd has financial creditors with voting shares: Bank A 40%, Bank B 25%, NBFC C 20%, Fund D 15%. Bank A, Bank B and Fund D vote for a resolution plan. NBFC C votes against. Is the plan approved by the CoC?

Show the solution

Voting share in favour = 40% + 25% + 15% = 80%.
Threshold under Section 30(4) is not less than 66% of the voting share of the financial creditors.
80% is more than 66%, so the threshold is met.
NBFC C dissents. Its protection is that the plan must pay it at least what it would receive under Section 53(1) in liquidation. This must be confirmed by the RP under Section 30(2)(b).

Answer: Yes. The plan has 80% of the voting share, which is at least 66%, so it is approved, provided it meets the Section 30(2) conditions including the minimum payment to dissenting NBFC C. The RP then submits it to the Adjudicating Authority.

Example 2

In the CIRP of Kaveri Steels Ltd, a plan gets votes of 62% of the voting share. The remaining creditors dissent. The resolution applicant, who is not a financial creditor, argues that it should be allowed to vote and that its vote would make up the shortfall. Advise.

Show the solution

The threshold is not less than 66% of the voting share of the financial creditors (Section 30(4)).
62% is less than 66%, so the plan is not approved.
Under the proviso to Section 30(5), the resolution applicant can attend the meeting but cannot vote unless also a financial creditor.
The applicant is not a financial creditor, so it has no vote and cannot make up the shortfall.

Answer: The plan is not approved. The applicant has no voting right, so its argument fails. The CoC may seek a revised plan or other plans, but the 62% vote cannot be treated as approval.

Exam tips

Open with the 66% rule and Section 30(4). Examiners look for the exact threshold and the phrase voting share of financial creditors.
In case questions, do the Section 30(2) check before the vote count. It shows the order of the process.
Always mention the minimum payment to operational creditors and dissenting financial creditors; marks are given for each.
Use the commercial wisdom principle when the question is about challenging the CoC's decision. State it in plain words, and name a case only if you are certain.
If the question mentions pre-packaged insolvency, add that Section 54K(13) also requires 66% of the voting shares.

Practice questions from Preparation and Approval of Resolution Plan

Approval by the Committee of Creditors in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CMA FinalCommittee of Creditors and Resolution Plan

Approval by the Committee of Creditors: frequently asked questions

What is the CoC voting percentage for approving a resolution plan?

Not less than 66% of the voting share of the financial creditors under Section 30(4). The earlier figure of 75% was reduced by the 2018 amendment. The same 66% applies to plan approval in the pre-packaged process under Section 54K(13).

Do operational creditors vote on the resolution plan?

No. Only financial creditors vote in the CoC. Operational creditors are protected because the plan must pay them at least the higher of the liquidation amount and the amount under the Section 53(1) priority order.

What is the CoC's commercial wisdom?

It means the CoC, made up of financial creditors who bear the risk, decides whether a plan is commercially sound. The Adjudicating Authority reviews legal compliance and does not substitute its view on the merits. The plan must still meet Section 30(2).

What must the CoC consider before voting?

It must consider the plan's feasibility and viability, the manner of distribution proposed, which may take into account the Section 53(1) order of priority and the value of security interests, and other requirements specified by the Board.