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

Resolution Plan under IBC: Meaning and Mandatory Contents

Updated 11 October 2026 · Fact-checked

A resolution plan is a proposal by a resolution applicant to revive a corporate debtor in CIRP. Under Section 30 IBC and Regulation 38 of the CIRP Regulations, it must pay CIRP costs first, give operational and dissenting financial creditors minimum payouts, and provide for management, implementation, supervision and legality.

Understand Resolution Plan: Meaning and Mandatory Contents

A resolution plan is the offer a resolution applicant puts forward to save a corporate debtor during the corporate insolvency resolution process (CIRP). It may deal with payment of debts, change of management, infusion of funds, sale of assets or restructuring of the business. The resolution professional prepares an information memorandum, and applicants build their plans on it.

The Code does not let any plan go to the creditors. The resolution professional (RP) must first examine each plan and confirm that it meets the conditions in Section 30(2). Only plans that pass this check are placed before the committee of creditors (CoC) under Section 30(3). Think of the RP as a gatekeeper and the CoC as the decision maker.

The applicant submits the plan with an affidavit that he is eligible under Section 29A. The Board's regulations add further mandatory contents in Regulation 38. So you must read the two together: the Code gives the core conditions, the Regulations give the detailed content.

The core conditions in Section 30(2) are these: payment of insolvency resolution process costs in priority; minimum payment to operational creditors; minimum payment to dissenting financial creditors; management of the corporate debtor's affairs after approval; implementation and supervision; no contravention of any law; and any other requirement specified by the Board.

The logic is protection. Costs are paid first so the process can run. Operational creditors and dissenting financial creditors get a floor, which is the liquidation value. The plan must be workable and lawful, so it cannot be a paper promise.

Key rules to remember

Section 30(2)(a): IRP costs: Plan must provide for payment of insolvency resolution process costs, in the manner specified by the Board, in priority to payment of other debts; Costs come first, before every other debt.
Section 30(2)(b): operational creditors: Payment to operational creditors ≥ the higher of (i) amount payable on liquidation under Section 53, and (ii) amount payable if the plan's distributable amount were distributed in Section 53(1) order of priority; The law says 'whichever is higher'. Liquidation value alone is not enough.
Section 30(2)(b): dissenting financial creditors: Payment to financial creditors who do not vote in favour ≥ amount payable to them under Section 53(1) on liquidation; Distribution must be fair and equitable (Explanation 1).
Section 30(2)(c)-(f): other conditions: Management of affairs after approval; implementation and supervision; no contravention of law; conformity with Board requirements; Shareholder approvals required under the Companies Act, 2013 or other law for actions under the plan are deemed given.
Regulation 38(1): priority of payment: Operational creditors paid in priority over financial creditors; dissenting financial creditors paid in priority over assenting financial creditors; If payment is in stages, dissenting financial creditors get at least pro rata payment and priority in each stage.
Regulation 38(1A) and (1B): statements: Statement on how interests of all stakeholders are dealt with; statement on any past failure to implement another approved plan by the applicant or related parties; Both are mandatory disclosures.
Regulation 38(2): plan must provide: (a) term and implementation schedule; (b) management and control during term; (c) adequate means of supervision; (d) manner of pursuing avoidance and fraudulent or wrongful trading proceedings and distributing proceeds; Clause (d) does not apply to plans submitted to the Adjudicating Authority on or before the date stated in its proviso.
Regulation 38(3): demonstration: Plan must show it addresses the cause of default, is feasible and viable, has provisions for effective implementation, has provisions for approvals and timeline, and that the applicant can implement it; Five items. Learn them as a list.
Regulation 38(3A): beneficial ownership and Section 32A: Statement of beneficial ownership of natural persons who ultimately own or control the applicant, plus an affidavit on eligibility or otherwise for the benefit of Section 32A; Inserted w.e.f. 23.12.2025.
Regulation 38(4): monitoring committee: CoC shall consider setting up a monitoring committee; it submits quarterly reports to the Adjudicating Authority; If the RP is a member, his monthly fee cannot exceed the monthly fee he received during CIRP.
Section 30(4): CoC approval: Vote of not less than 66% of voting share of financial creditors; CoC considers feasibility, viability and manner of distribution.

How to solve Resolution Plan: Meaning and Mandatory Contents questions

Use this method for any question that asks what a plan must contain or whether a given plan is valid.

1Define a resolution plan in one or two lines: a proposal by a resolution applicant, prepared on the information memorandum, to revive the corporate debtor.
2State who checks it: the RP examines each plan under Section 30(2) and presents only conforming plans to the CoC.
3List the Section 30(2) conditions: CIRP costs in priority, operational creditors, dissenting financial creditors, management, implementation and supervision, legality, Board requirements.
4Add the Regulation 38 contents that fit the facts: priority of payment, stakeholder statement, term and schedule, feasibility, monitoring committee, beneficial ownership.
5Test each fact in the question against these items. Compare any payout figures to the liquidation value and the Section 53(1) distribution.
6Conclude clearly: the plan is compliant, or it is non-compliant and the RP cannot place it before the CoC. Name the defect.
7Close with the next stage if relevant: CoC approval by 66% and submission to the Adjudicating Authority under Section 30(6).

Quickest way: Checklist method: costs, creditors, control, compliance

When to use it: When time is short or the question is a short note on mandatory contents.

Write 'Costs': CIRP costs paid in priority.
Write 'Creditors': operational creditors get the higher of two amounts; dissenting financial creditors get at least the liquidation amount.
Write 'Control': management after approval, implementation, supervision, monitoring committee.
Write 'Compliance': no violation of law, Board requirements, feasibility, cause of default, affidavits.
Add the section references: Section 30(2) and Regulation 38.

Common mistakes in Resolution Plan: Meaning and Mandatory Contents

Saying operational creditors must get only the liquidation value.
Students remember the liquidation floor and forget the second limb.
Fix: Write both limbs and say 'whichever is higher'.
Saying the CoC checks Section 30(2) conformity.
The CoC approves the plan, so students assume it also screens it.
Fix: The RP examines each plan and presents to the CoC only those that conform.
Applying the liquidation floor to all financial creditors.
The word 'financial creditors' is read loosely.
Fix: The floor applies to financial creditors who do not vote in favour of the plan.
Confusing priority under Regulation 38(1) with the Section 53 waterfall.
Both deal with order of payment.
Fix: Section 53 sets the liquidation floor. Regulation 38(1) sets how the plan pays: operational creditors ahead of financial creditors, dissenting ahead of assenting.
Leaving out the affidavits and statements.
Students focus on the payment clauses only.
Fix: Mention the Section 29A affidavit, the stakeholder statement, the past-failure statement and the beneficial ownership and Section 32A affidavit.
Quoting 75% for CoC approval.
Old study notes still carry the earlier figure.
Fix: The text now reads sixty-six per cent of voting share of financial creditors.

Worked examples

Example 1

Sundaram Textiles Ltd is in CIRP. A plan from Kaveri Holdings offers operational creditors ₹8,00,000. On liquidation under Section 53 they would receive ₹6,00,000. If the plan's distributable amount were distributed in Section 53(1) order, they would receive ₹9,50,000. Does the plan satisfy Section 30(2)(b) for operational creditors?

Show the solution

Section 30(2)(b) requires payment to operational creditors of not less than the higher of the two amounts.
Amount (i): liquidation under Section 53 = ₹6,00,000.
Amount (ii): distribution of the plan amount in Section 53(1) order = ₹9,50,000.
The higher is ₹9,50,000.
The plan offers ₹8,00,000, which is less than ₹9,50,000.
So the RP cannot treat the plan as conforming; it must be revised before going to the CoC.

Answer: No. The minimum is ₹9,50,000, the higher of the two amounts. The offer of ₹8,00,000 is short by ₹1,50,000, so the plan does not satisfy Section 30(2)(b).

Example 2

Briefly state what the RP must confirm about a resolution plan before placing it before the committee of creditors, and what the plan must additionally show under Regulation 38(3).

Show the solution

Identify the stage: the RP examines each plan under Section 30(2) and presents only conforming plans under Section 30(3).
List the Section 30(2) items: payment of CIRP costs in priority; operational creditors' payment at the higher of the two amounts; dissenting financial creditors at not less than the liquidation amount under Section 53(1); management of affairs after approval; implementation and supervision; no contravention of law; conformity with Board requirements.
Add Regulation 38(3): the plan must show that it addresses the cause of default, is feasible and viable, has provisions for effective implementation, has provisions for required approvals and their timeline, and that the applicant can implement it.
Conclude: only a plan meeting these conditions goes to the CoC, which may approve it by not less than 66% of the voting share of financial creditors.

Answer: The RP must confirm each Section 30(2) condition. Under Regulation 38(3) the plan must also demonstrate that it addresses the cause of default, is feasible and viable, provides for implementation and approvals with timelines, and that the applicant is capable of implementing it.

Exam tips

Structure answers as provision, analysis, conclusion. Quote Section 30(2) and Regulation 38 by number.
In number questions, compute the liquidation amount and the Section 53(1) amount separately, then pick the higher for operational creditors.
Always name who acts: the applicant submits, the RP examines, the CoC approves, the Adjudicating Authority receives the approved plan.
Use short lists for mandatory contents. Examiners reward complete lists, so include the Regulation 38 items beyond Section 30.
Mention the Section 29A affidavit when the question touches on submission.

Practice questions from Preparation and Approval of Resolution Plan

Resolution Plan: Meaning and Mandatory Contents: frequently asked questions

What is a resolution plan under IBC?

It is a proposal by a resolution applicant, prepared on the basis of the information memorandum, to revive the corporate debtor during CIRP. The RP examines it and presents conforming plans to the committee of creditors. It becomes effective only after approval by the CoC and the Adjudicating Authority.

Which section lists the mandatory contents of a resolution plan?

Section 30(2) of the IBC lists the conditions the RP must confirm. Regulation 38 of the IBBI CIRP Regulations, 2016 adds more mandatory contents, such as priority of payment, term of the plan, feasibility and a monitoring committee.

Who examines whether a plan meets the conditions?

The resolution professional. Under Section 30(2) he examines each plan received. Under Section 30(3) he presents to the CoC only those plans that conform.

Is a monitoring committee compulsory?

Regulation 38(4) says the CoC shall consider setting up a monitoring committee. It is a duty to consider, not a duty to set one up. If formed, it submits quarterly reports to the Adjudicating Authority.