Resolution plan
A plan proposed by a resolution applicant for insolvency resolution of the corporate debtor as a going concern in accordance with Part II of the Insolvency and Bankruptcy Code, 2016 (Section 5(26)).
Explained
Section 5(26) of the Insolvency and Bankruptcy Code, 2016 defines resolution plan as a plan proposed by a resolution applicant for insolvency resolution of the corporate debtor as a going concern in accordance with Part II. A resolution applicant under Section 5(25) is a person who, alone or jointly, submits a plan to the resolution professional in response to the invitation under Section 25(2)(h). Section 29A makes certain persons ineligible, such as undischarged insolvents, wilful defaulters and certain NPA holders, and Section 30(1) requires an affidavit of eligibility with the plan.
Under Section 30(2) the resolution professional must confirm that the plan meets mandatory requirements, including payment of insolvency resolution process costs in priority, payment to operational creditors of not less than the higher of their liquidation value and what they would get if the plan amount were distributed under Section 53(1), and payment to dissenting financial creditors of not less than the lower of the corresponding amounts. Under Section 30(4) the committee of creditors may approve a plan by not less than sixty-six per cent of the voting share of financial creditors, after considering its feasibility and viability and the manner of distribution.
Under Section 31(1) the Adjudicating Authority approves the plan if it meets Section 30(2), and the approved plan binds the corporate debtor, its employees, members, creditors including the Central and State Governments and local authorities, guarantors and other stakeholders. In Ghanashyam Mishra and Sons v. Edelweiss ARC (2021) the Supreme Court held that all claims not in the approved plan stand extinguished. In Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta (2019) it held that feasibility and distribution are matters of the commercial wisdom of the committee, with limited judicial review. In Lalit Kumar Jain v. Union of India (2021) it held that approval of a plan does not by itself discharge a personal guarantor.
Under Section 12 the process must be completed within one hundred and eighty days, extendable once by up to ninety days. The second proviso sets an outer limit of three hundred and thirty days including litigation time, but in Essar Steel the Court struck down the word "mandatorily", so that limit may be exceeded in exceptional cases. Appeals against approval lie only on Section 61(3) grounds.
What the law says
(26) “resolution plan” means a plan proposed by [resolution applicant] for insolvency resolution of the corporate debtor as a going concern in accordance with Part II;
Clauses (25) and (26) define resolution applicant and resolution plan
[A person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person—
(a) is an undischarged insolvent;
(b) is a wilful defaulter in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 (10 of 1949);
Persons not eligible to be resolution applicants
(1) A resolution applicant may submit a resolution plan [along with an affidavit stating that he is eligible under section 29A] to the resolution professional prepared on the basis of the information memorandum.
(2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan—
(a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the [payment] of other debts of the corporate debtor;
Submission, mandatory contents and approval by CoC
(1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, [including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed,] guarantors and other stakeholders involved in the resolution plan.
[Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation.]
[Provided further that the Adjudicating Authority may, on an application made by the resolution professional, with the approval of the committee of creditors, by a vote of not less than sixty-six per cent. of the voting share, in such form and manner, and subject to such conditions as may be specified, first approve the implementation of the resolution plan and thereafter approve the manner of distribution provided therein within a period of thirty days from the date of approval of implementation of such resolution plan.]
Approval by the Adjudicating Authority and binding effect
(1) Subject to sub-section (2), the corporate insolvency resolution process shall be completed within a period of one hundred and eighty days from the date of admission of the application to initiate such process.
(2) The resolution professional shall file an application to the Adjudicating Authority to extend the period of the corporate insolvency resolution process beyond one hundred and eighty days, if instructed to do so by a resolution passed at a meeting of the committee of creditors by a vote of [sixty-six] per cent. of the voting shares.
(3) On receipt of an application under sub-section (2), if the Adjudicating Authority is satisfied that the subject matter of the case is such that corporate insolvency resolution process cannot be completed within one hundred and eighty days, it may by order extend the duration of such process beyond one hundred and eighty days by such further period as it thinks fit, but not exceeding ninety days:
Time limit for the resolution process
(3) An appeal against an order approving a resolution plan under section 31 may be filed on the following grounds, namely:—
(i) the approved resolution plan is in contravention of the provisions of any law for the time being in force;
(ii) there has been material irregularity in exercise of the powers by the resolution professional during the corporate insolvency resolution period;
Grounds of appeal against approval of a plan
For the exam
- Section 5(26) IBC: plan for resolution of the corporate debtor as a going concern.
- Section 29A bars certain persons, such as wilful defaulters, from being resolution applicants.
- Section 30(4): CoC approval needs at least 66 per cent of the financial creditors' voting share.
- Section 31(1): approved plan binds all, including governments and guarantors.
- Ghanashyam Mishra (2021): claims outside the approved plan stand extinguished.
52 questions in the Law Maker question bank use this term. Practise Insolvency and Bankruptcy Code questions
Judgments
- Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. (2021)Once the Adjudicating Authority approves a resolution plan under Section 31 IBC, it binds all creditors including governments, and every claim not in the plan, statutory dues included, stands extinguished; the 2019 amendment is clarificatory.
- Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta (2019)The Court set aside the NCLAT's equal redistribution under Essar Steel's resolution plan, holding that distribution is for the Committee of Creditors' commercial wisdom, and struck down 'mandatorily' in the 330-day limit in Section 12.
- Lalit Kumar Jain v. Union of India (2021)The Central Government's notification of 15 November 2019 bringing the Insolvency and Bankruptcy Code into force for personal guarantors to corporate debtors is valid, and approval of a resolution plan does not by itself discharge a personal guarantor.
Related terms
- Corporate debtorUnder Section 3(8) of the Insolvency and Bankruptcy Code, 2016, a corporate person who owes a debt to any person.
- Financial creditorUnder Section 5(7) of the IBC, any person to whom a financial debt is owed, including a person to whom such debt has been legally assigned or transferred.
- Operational creditorA person to whom an operational debt is owed, including an assignee or transferee of that debt (Section 5(20) of the Insolvency and Bankruptcy Code, 2016).
- Resolution professionalAn insolvency professional appointed to conduct the corporate insolvency resolution process, including an interim resolution professional. Section 5(27) of the IBC, 2016; Section 79(21) gives the meaning for individuals.
- Financial debtA debt, with interest if any, disbursed against the consideration for the time value of money, including the items listed in Section 5(8) of the Insolvency and Bankruptcy Code, 2016.
Further reading
Checked 6 November 2026. Statutory text is quoted from the Bare Acts library, taken from India Code. See the full glossary.