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

A competing resolution plan selected by the committee of creditors of Sagar Steels Ltd is judged significantly better than the base plan on the committee's criteria. Which statement is correct about its approval?

Such a plan may be selected for approval and must then be approved by the committee of creditors by not less than sixty-six per cent of voting shares. Competition with the base plan is needed only if it is not found significantly better.

  1. AIt may be selected for approval and then approved by a vote of not less than sixty-six per cent of voting sharesCorrect
  2. BIt is automatically approved with no vote
  3. CIt must still compete with the base resolution plan before selection
  4. DIt needs approval by all operational creditors

Explanation

Under Section 54K(10), a plan decided to be significantly better than the base plan may be selected for approval under sub-section (12). Section 54K(13) then requires a sixty-six per cent vote. The competition under sub-section (11) applies only when it is not significantly better or not considered.

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