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CS Professional · Corporate Restructuring, Valuation and Insolvency · Resolution Strategies

In a pre-packaged process of Kaveri Engineering Ltd, the CoC votes on a base resolution plan. Voting shares are 1,000 units. Financial creditors holding 640 units vote in favour and those holding 360 units vote against. What is the outcome under Section 54K(13)?

The plan is not approved. Section 54K(13) requires not less than sixty-six per cent of the voting shares, and 640 out of 1,000 units is only 64 per cent, which falls short even though it is a majority.

  1. AApproved, since a simple majority of voting shares is enough
  2. BNot approved, since 64 per cent is below the sixty-six per cent thresholdCorrect
  3. CApproved, since more than sixty per cent is enough
  4. DNot approved only if operational creditors object

Explanation

Section 54K(13) requires a vote of not less than sixty-six per cent of the voting shares. 640 of 1,000 is 64 per cent, which is less than 66. A simple majority is not the test, so the plan fails the approval requirement.

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