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

A resolution plan for Kaveri Steels Ltd gives details of its schedule, funding and approvals. The resolution professional objects that the plan does not explain why the company defaulted or how the applicant's proposal tackles that cause. Which requirement of Regulation 38(3) is the plan failing to meet?

The plan fails the requirement that it demonstrate it addresses the cause of default. Regulation 38(3)(a) requires the plan to show how it deals with why the corporate debtor defaulted, alongside feasibility, viability, implementation provisions, approvals and applicant capability.

  1. AIt must address the cause of defaultCorrect
  2. BIt must include a beneficial-ownership statement
  3. CIt must provide for pursuing avoidance transactions
  4. DIt must set up a monitoring committee

Explanation

Regulation 38(3)(a) requires the plan to demonstrate that it addresses the cause of default. Beneficial ownership is covered by 38(3A), avoidance transactions by 38(2)(d), and the monitoring committee by 38(4), which the committee only considers setting up.

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