Insolvency and Bankruptcy - Law and Practice · Resolution Strategies (Elective 7.5)

Resolution Strategies and Resolution Plan under the IBC

Updated 11 October 2026 · Fact-checked

Resolution strategies are the ways a distressed corporate debtor can be revived: sale of assets, restructuring, merger, takeover, debt modification. A resolution plan puts the chosen strategy in writing. The resolution professional checks it against Section 30(2), the committee of creditors approves it by at least 66% of voting share, and it then goes to the Adjudicating Authority.

Understand Resolution Strategies and Resolution Plan

A company in insolvency can be saved in more than one way. The Code does not force one route. It lets the resolution applicant propose whatever measures maximise the value of the assets. Regulation 37 of the CIRP Regulations lists these measures, and the list is open, because it says "including but not limited to".

Typical strategies in Regulation 37 are: transfer or sale of all or part of the assets, with or without security interest; merger, amalgamation or demerger; substantial acquisition of shares; satisfaction or modification of security interest; waiver of breaches; reduction in the amount payable to creditors; extension of maturity or change in interest rate; amendment of constitutional documents; issue of securities for cash, property or in exchange for claims; change in products or technology; cancellation or delisting of shares; and obtaining government approvals. Sale of individual assets to different successful applicants is also allowed, with the manner of dealing with the remaining assets.

The resolution plan is the document that turns the strategy into binding terms. The resolution applicant prepares it on the basis of the information memorandum and submits it to the resolution professional, with an affidavit that he is eligible under Section 29A (Section 30(1)).

The resolution professional then screens each plan. Only plans that meet the Section 30(2) conditions go to the committee of creditors (CoC). The CoC votes after considering feasibility and viability and the manner of distribution. The approved plan is submitted to the Adjudicating Authority by the resolution professional.

Keep a contrast in mind for the exam. For individuals, Section 105 speaks of a repayment plan, prepared by the debtor with the resolution professional. For a corporate debtor, it is the resolution applicant who prepares the resolution plan.

Key rules to remember

Section 30(2) screening conditions: Plan must: (a) pay CIRP costs in priority; (b) pay operational creditors and dissenting financial creditors at least the liquidation-based minimum; (c) provide for management after approval; (d) provide for implementation and supervision; (e) not contravene any law; (f) meet Board requirements; The resolution professional confirms these before placing the plan before the CoC (Section 30(3)).
Operational creditors' minimum payment: Payment ≥ higher of (i) amount in liquidation under Section 53, and (ii) amount if the plan's distributable amount were paid in Section 53(1) order of priority; Section 30(2)(b). Take the higher of the two, not the lower.
Dissenting financial creditors' minimum: Payment ≥ amount they would get under Section 53(1) in liquidation; Applies to financial creditors who do not vote in favour. Distribution must be fair and equitable (Explanation 1).
CoC approval threshold: Approval by not less than 66% of the voting share of financial creditors; Section 30(4). The CoC considers feasibility, viability and the manner of distribution, which may take into account Section 53(1) priority and the value of security interest.
Resolution applicant at CoC meeting: May attend; no vote unless also a financial creditor; Section 30(5).
Shareholder approvals: If shareholder approval is needed under the Companies Act, 2013 or any other law for implementing the plan, it is deemed given; Explanation to Section 30(2).

How to solve Resolution Strategies and Resolution Plan questions

Use this order for any question on strategies or a resolution plan. It follows provision, analysis, conclusion.

1Identify the stage: preparation, screening by the resolution professional, CoC approval, or submission to the Adjudicating Authority.
2Name the strategy in the facts (sale of assets, merger, share acquisition, debt restructuring, issue of securities) and link it to Regulation 37.
3State the rule: Section 30(1) for submission and affidavit, Section 30(2) for the checklist, Section 30(4) for the vote.
4Apply each Section 30(2) condition to the facts one by one: costs, operational creditors, dissenting financial creditors, management, implementation, legality.
5Do any arithmetic: compare the plan payout with the liquidation value and take the higher figure for operational creditors.
6Check the vote: compute the percentage of voting share, ignoring operational creditors, who do not sit in the CoC vote.
7Conclude clearly: plan compliant or not, who acts next, and what the resolution professional must do.

Quickest way: Section 30(2) checklist in six letters

When to use it: For case questions that ask whether a plan can be put to the CoC or is valid.

Tick (a) to (f) of Section 30(2) in order, writing one line per clause with the fact that satisfies or breaches it.
For clause (b), write both comparison figures and circle the higher.
Check the 66% vote and the Section 29A affidavit.
Write the conclusion in one sentence.

Common mistakes in Resolution Strategies and Resolution Plan

Saying the CoC approves the plan by a simple majority or 75%.
The earlier 75% threshold is still remembered from older notes.
Fix: Write 66% of the voting share of financial creditors, as in Section 30(4).
Giving operational creditors only the liquidation value.
Students read clause (b)(i) and stop.
Fix: Section 30(2)(b) requires the higher of the liquidation amount and the amount under the Section 53(1) priority distribution of the plan amount.
Treating the resolution professional as the approver of the plan.
The RP examines and presents, so the roles blur.
Fix: The RP only confirms compliance under Section 30(2) and presents. The CoC approves. The RP then submits the approved plan to the Adjudicating Authority.
Allowing the resolution applicant to vote at the CoC.
The applicant attends the meeting, so students assume a vote.
Fix: The applicant may attend but cannot vote unless it is also a financial creditor (Section 30(5)).
Listing only merger and sale as strategies.
Students memorise two or three headline options.
Fix: Quote the wider Regulation 37 list, including debt reduction, rescheduling, security issue, demerger and share cancellation, and say the list is not exhaustive.
Mixing up the repayment plan of Section 105 with the corporate resolution plan.
Both use the word plan and appear in the same Code.
Fix: Section 105 is for individuals and prepared by the debtor with the RP. Corporate plans come from resolution applicants under Section 30.

Worked examples

Example 1

Arjun Textiles Ltd is in CIRP. Its resolution plan offers operational creditors ₹8 lakh. In liquidation under Section 53 they would receive ₹5 lakh. If the plan's distributable amount were paid in Section 53(1) priority, they would receive ₹6 lakh. Does the plan satisfy Section 30(2)(b)?

Show the solution

Rule: operational creditors must receive not less than the higher of the liquidation amount and the amount under the Section 53(1) priority distribution of the plan amount.
Figures: liquidation ₹5,00,000; priority distribution ₹6,00,000.
Higher figure: ₹6,00,000.
Compare: the plan offers ₹8,00,000, which is above ₹6,00,000.
Conclusion on this clause: satisfied.

Answer: Yes. The minimum is ₹6,00,000 and the plan offers ₹8,00,000, so Section 30(2)(b) is met for operational creditors. The resolution professional must still check the other clauses.

Example 2

In the CIRP of Sagar Steels Ltd, the financial creditors hold voting shares of 40%, 30%, 20% and 10%. The first two vote for the plan, the third against, and the fourth abstains. The applicant is not a financial creditor. Is the plan approved, and can the applicant vote?

Show the solution

Rule: Section 30(4) requires not less than 66% of the voting share of financial creditors.
Votes in favour: 40% + 30% = 70%.
Compare: 70% is not less than 66%.
Abstention counts as not voting in favour, but the threshold is measured on the total voting share, and 70% already clears it.
On the applicant: Section 30(5) lets it attend but not vote, unless it is also a financial creditor.
Dissenting creditor (20%) must still receive at least its Section 53(1) liquidation entitlement under Section 30(2)(b).

Answer: The plan is approved by the CoC with 70% of the voting share, subject to the plan meeting Section 30(2). The applicant may attend the meeting but cannot vote. The resolution professional then submits the approved plan to the Adjudicating Authority.

Exam tips

Write Section 30(2) clause by clause. Examiners reward a visible checklist applied to the facts.
Always quote 66% and the words voting share of financial creditors.
For strategy questions, name the strategy, cite Regulation 37, and add one line on why it maximises value.
Keep the roles separate: applicant prepares, RP screens, CoC approves, Adjudicating Authority sanctions.
Elective papers are open book, so mark Section 30 and Regulation 37 in your copy for quick reference.

Practice questions from Resolution Strategies (Elective 7.5)

Resolution Strategies and Resolution Plan: frequently asked questions

What are the main resolution strategies under the IBC?

Regulation 37 of the CIRP Regulations lists them, for example sale of assets, merger, amalgamation or demerger, share acquisition, debt reduction or rescheduling, and issue of securities. The list is not exhaustive. The plan may use a mix of these.

What must a resolution plan contain under Section 30?

It must provide for CIRP costs in priority, minimum payments to operational creditors and dissenting financial creditors, management after approval, implementation and supervision, and compliance with law. It must also meet other Board requirements. The applicant submits an affidavit of Section 29A eligibility.

Who approves a resolution plan?

The committee of creditors approves it by not less than 66% of the voting share of financial creditors. The resolution professional only checks compliance and presents the plan. After approval, the RP submits it to the Adjudicating Authority.

Can the resolution applicant vote in the CoC meeting?

No, unless the applicant is also a financial creditor. It may attend the meeting where its plan is considered. This is in Section 30(5).