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

In a pre-packaged process for Lotus Foods Ltd, the plan selected after competing with the base plan under Section 54K(11) fails to get the required committee vote. What follows?

The resolution professional must file an application to terminate the pre-packaged insolvency resolution process. The law gives no deemed approval of the base plan and no fallback to the Adjudicating Authority when the committee does not approve the selected plan.

  1. AThe Adjudicating Authority approves the plan anyway
  2. BThe resolution professional files an application for termination of the pre-packaged insolvency resolution processCorrect
  3. CThe base plan is deemed approved
  4. DThe promoters must dilute their shareholding

Explanation

The proviso to Section 54K(12) says that if the plan selected under sub-section (11) is not approved by the committee, the resolution professional shall apply for termination of the process. No deemed approval of the base plan exists, and dilution is a feasibility consideration, not a consequence of failed voting.

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