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CS Professional · Corporate Restructuring, Valuation and Insolvency · Pre-Packaged Insolvency Resolution Process

During a PPIRP of Narmada Foods Pvt Ltd, before any plan is approved, the CoC votes to terminate the process and the RP informs the Adjudicating Authority. What is the minimum voting support required for this CoC decision, and who bears the PPIRP costs once termination order is passed under section 54N(1)?

Termination by CoC decision needs approval of not less than sixty-six per cent of the voting shares, and it must happen before the plan is approved. After the termination order, the corporate debtor bears the pre-packaged process costs, if any.

  1. AMajority of voting shares; costs borne by the financial creditors
  2. BNot less than 66% of voting shares; costs borne by the corporate debtorCorrect
  3. CNot less than 75% of voting shares; costs borne by the corporate debtor
  4. DNot less than 66% of voting shares; costs borne by the resolution professional

Explanation

Section 54N(2) requires a CoC decision approved by not less than 66% of voting shares, taken before approval of the plan. Section 54N(3) says that when an order under sub-section (1) is passed, the corporate debtor bears the PPIRP costs, if any. A 75% threshold or costs on the RP or creditors finds no support in the text.

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