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

The committee of creditors of Raman Engineering Ltd is considering a base plan that impairs some claims but proposes no dilution of promoter shareholding. What must the committee do before approving it?

The committee must record its reasons for approving the plan. Where a plan impairs claims but provides no promoter dilution, the committee may require dilution, but if it approves without it, the reasons must be recorded before approval.

  1. AObtain the Competition Commission's approval
  2. BRecord reasons for its approvalCorrect
  3. CObtain a unanimous vote
  4. DReject the plan since dilution is mandatory

Explanation

Under Section 54K(14), where the plan impairs claims the committee may require promoters to dilute shareholding or control. If the plan has no dilution, the committee shall record reasons for approval before approving it. Dilution is not mandatory, so rejection is not required.

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