Developing resolution plan for financial, operational creditors

The insolvency regime in India, governed by the Insolvency and Bankruptcy Code, 2016, is constantly evolving and developing in terms of jurisprudence. However, some provisions require further judicial interpretation or legislative modification.

The code does not regulate the provisions that may be made in a resolution plan for treatment of financial and operational creditors of a corporate debtor. The Bankruptcy Law Reforms Committee observed in its report, in November 2015, that there should be freedom permitted to the market to propose solutions on keeping the entity as a going concern.

Some previous decisions of the National Company Law Appellate Authority (NCLAT) and the Supreme Court have also proceeded on the basis that the Committee of Creditors’ (CoC) decision to approve any resolution plan cannot be interfered with unless it is violative of section 30(2) of the code, which prescribes certain mandatory requirements of a resolution plan.

Shardul S Shroff is executive chairman, and Roma Das is a senior associate at Shardul Amarchand Mangaldas