CS Professional · Corporate Restructuring, Valuation and Insolvency · Resolution Strategies
In a pre-packaged process, the CoC of Ganga Polymers Ltd selects a competing resolution plan from prospective resolution applicants under Section 54K(9). The plan is not considered significantly better than the base plan, so it competes with the base plan and one is selected for approval. The CoC then fails to approve the selected plan. What must the resolution professional do?
The resolution professional must file an application for termination of the pre-packaged insolvency resolution process. The proviso to Section 54K(12) requires this where the plan selected through competition under sub-section (11) is not approved by the committee of creditors.
- ASubmit the base plan to the Adjudicating Authority regardless
- BInvite fresh resolution plans for a second round indefinitely
- CFile an application for termination of the pre-packaged insolvency resolution processCorrect
- DConvert the process into liquidation by himself
Explanation
Section 54K(11) provides that a selected plan not meeting the 'significantly better' requirement competes with the base plan, and one is selected for approval under (12). The proviso to 54K(12) says that if the plan selected under (11) is not approved by the CoC, the resolution professional shall file an application for termination of the process. The Code text gives no power to submit an unapproved plan or to liquidate on his own.
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