Resolution Plan Evaluation Master

What a compliant resolution plan must contain, and the practical evaluation criteria a CoC applies.

Mandatory content (Section 30(2))

A plan must provide for payment of insolvency resolution process costs in priority, minimum payment to operational creditors (not less than what they would receive in liquidation, or the amount due if higher and payable in priority to financial creditors — the Essar Steel-clarified standard), management of the corporate debtor's affairs post-approval, implementation and supervision arrangements, and compliance with any other law in force (including specified sectoral requirements).

Section 29A eligibility bar

A resolution applicant is disqualified under Section 29A if connected to an undischarged insolvent, a wilful defaulter, a person disqualified as director, a promoter/management of an NPA account beyond specified periods without settlement, among other disqualifications — this bar (introduced 2018) was specifically designed to prevent original promoters who caused the default from regaining control cheaply through the resolution process.

CoC commercial wisdom doctrine

Courts have repeatedly held (Essar Steel, K. Sashidhar) that the CoC's commercial decision on plan approval is not subject to judicial review on merits — NCLT/NCLAT can examine only whether the mandatory Section 30(2) requirements and process compliance are met, not second-guess the CoC's business judgment on value or feasibility.

← Creditor Route Selection Master · IBC–SARFAESI–Company Law Interface Master →