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

In a pre-packaged insolvency resolution process of Kaveri Textiles Ltd, the corporate debtor's base resolution plan pays every financial and operational creditor in full on confirmed claims. The committee of creditors (CoC) wishes to approve it for submission to the Adjudicating Authority. What does the Code require for this approval?

The CoC must approve by a vote of not less than sixty-six per cent. of the voting shares, after considering the plan's feasibility, viability and the manner of distribution under the priority order. A simple majority or unanimity is not the legal requirement.

  1. AA vote of not less than sixty-six per cent. of the voting shares, after considering feasibility, viability and manner of distributionCorrect
  2. BA simple majority of the voting shares present and voting
  3. CUnanimous consent of all financial creditors
  4. DApproval by the operational creditors by a majority of their dues

Explanation

Under section 54K(13), approval of the plan by the CoC needs a vote of not less than sixty-six per cent. of the voting shares, after considering feasibility and viability and the distribution proposed. A simple majority is not enough, and unanimity is not required.

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