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CS Professional · Corporate Restructuring, Valuation and Insolvency · Liquidation on or after Failing of Resolution Plan

Under liquidation ordered on 1 July 2026, the committee of creditors recommended exploring a compromise under section 230 of the Companies Act, 2013. A proposal approved by the requisite majority of creditors offers them Rs 40 crore, while the liquidation value fixed as on the insolvency commencement date was Rs 46 crore. A proposer is a person ineligible to submit a resolution plan. Which view is correct under the Liquidation Process Regulations as amended up to 22-09-2026?

The liquidator should not file the proposal. Filing requires both creditor approval by the requisite majority and an amount realisable higher than the liquidation value as on the insolvency commencement date; Rs 40 crore is below Rs 46 crore. Also, a person ineligible to submit a resolution plan cannot be a party.

  1. AThe liquidator should not file it, since the amount realisable is not higher than the liquidation value, and an ineligible person cannot be a party to the compromiseCorrect
  2. BThe liquidator must file it because the creditors approved it by the requisite majority
  3. CThe liquidator may file it after the ninety-day period if the Tribunal permits
  4. DThe liquidator may file it, as the ineligible person can join if bearing the costs

Explanation

Regulation 2B requires both requisite creditor approval and that the amount realisable to creditors exceed the liquidation value determined as on the insolvency commencement date. Here Rs 40 crore is below Rs 46 crore, so the second condition fails. Additionally, a person ineligible to submit a resolution plan cannot be a party to the compromise in any manner. Creditor approval alone is insufficient.

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