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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 operational creditor's confirmed claim in full, while financial creditors take a haircut. What is the minimum vote of the committee of creditors needed to approve this base resolution plan for submission to the Adjudicating Authority?

The committee of creditors must approve the base resolution plan by a vote of not less than sixty-six per cent of the voting shares, after considering feasibility, viability and the distribution order of priority. Neither a simple majority nor unanimity is required.

  1. ANot less than fifty-one per cent of the voting shares
  2. BNot less than sixty-six per cent of the voting sharesCorrect
  3. CNot less than seventy-five per cent of the voting shares
  4. DUnanimous approval of all financial creditors

Explanation

Section 54K(13) requires approval of the plan under sub-section (4) or (12) by a vote of not less than sixty-six per cent of the voting shares. Fifty-one per cent was an older, simple-majority style threshold and does not apply here. Seventy-five per cent applies to other matters, not plan approval.

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