Resolution Plan is a proposal submitted by a resolution applicant during the corporate insolvency resolution process that sets out the terms for the restructuring, revival, and continued operation of an insolvent corporate debtor, including the manner and extent of payment to each class of creditors. Under Indian law, it is governed by Section 30 of the Insolvency and Bankruptcy Code, 2016 (IBC), and requires approval by 66% of the voting share of the Committee of Creditors (CoC).
Legal definition
Section 30 of the IBC, 2016 prescribes the framework for resolution plans:
(1) A resolution applicant may submit a resolution plan 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 repayment of other debts of the corporate debtor;
(b) provides for the repayment of the debts of operational creditors in such manner as may be specified by the Board which shall not be less than the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53;
(e) does not contravene any of the provisions of the law for the time being in force;
(f) conforms to such other requirements as may be specified by the Board.
Key requirements:
- CoC approval: A resolution plan must be approved by a vote of not less than 66% of the voting share of the financial creditors in the CoC (Section 30(4)).
- NCLT approval: After CoC approval, the plan is submitted to the NCLT, which may approve it under Section 31 if it satisfies the requirements of Section 30(2).
- Section 29A eligibility: The resolution applicant must not be disqualified under Section 29A — which excludes wilful defaulters, persons with NPA accounts for over one year, undischarged insolvents, and persons convicted of offences punishable with imprisonment of two years or more.
- Binding effect: Once approved by the NCLT under Section 31, the resolution plan is binding on the corporate debtor, its employees, members, creditors, guarantors, and other stakeholders.
How courts have interpreted this term
K. Sashidhar v. Indian Overseas Bank (2019) 12 SCC 150
The Supreme Court held that the decision of the CoC to approve or reject a resolution plan is an exercise of commercial wisdom and is not amenable to judicial review. The NCLT's role is limited to verifying that the plan complies with the mandatory requirements of Section 30(2) and does not contravene any provision of law. The Court cannot substitute its judgment for the commercial decision of the CoC or direct the CoC to approve a plan that it has rejected.
Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta (2020) 8 SCC 531
The Supreme Court held that the CoC has the authority to distribute the amounts payable under a resolution plan differentially among creditors, based on the nature of their security interest. The Court rejected the argument that all financial creditors must be treated equally, holding that secured creditors may receive a higher proportion than unsecured creditors, as long as the plan does not contravene Section 30(2). The Court also clarified that operational creditors must receive at least their liquidation value.
Jaypee Infratech Ltd. Insolvency — Supreme Court (2020)
The Supreme Court monitored the Jaypee Infratech resolution process extensively, directing that the interests of homebuyers (financial creditors) must be protected in the resolution plan. The Court held that the plan must adequately provide for the completion and delivery of apartments to homebuyers, whose claims are both financial and contractual.
Why this matters
The resolution plan is the mechanism through which the IBC achieves its primary objective: the revival of insolvent companies as going concerns. A successful resolution plan preserves the corporate debtor's business, protects employment, maintains the supply chain, and recovers value for creditors — outcomes that liquidation cannot achieve. India's IBC framework has been credited with significantly improving the recovery rate for creditors, from an average of 26 cents per dollar under the pre-IBC regime to approximately 32 cents per dollar under the IBC (as per World Bank data).
For resolution applicants — typically strategic buyers, private equity firms, or competing businesses — submitting a resolution plan requires significant financial commitment and due diligence. The resolution applicant must demonstrate the financial capacity to implement the plan, provide for payment of insolvency resolution costs in priority, protect operational creditor claims at or above liquidation value, and ensure compliance with the entire statutory framework.
For practitioners, the "clean slate" doctrine is the most commercially significant aspect of an approved resolution plan. As held in Ghanashyam Mishra v. Edelweiss ARC (2021) 9 SCC 657, once a resolution plan is approved by the NCLT, all claims against the corporate debtor that are not part of the resolution plan stand extinguished. This gives the resolution applicant a fresh start, free from historical liabilities — making the acquisition commercially viable.
Related terms
Parent process:
Alternative outcome:
Related Companies Act process:
Frequently asked questions
What percentage of CoC approval is required for a resolution plan?
A resolution plan must be approved by a vote of not less than 66% of the voting share of the Committee of Creditors. This threshold was reduced from 75% to 66% by the Insolvency and Bankruptcy Code (Amendment) Act, 2018. Only financial creditors who are members of the CoC have voting rights.
Can the NCLT modify or reject a resolution plan approved by the CoC?
The NCLT's role is limited under Section 31. It can approve or reject the plan based on whether it satisfies the requirements of Section 30(2). The Supreme Court in K. Sashidhar held that the NCLT cannot substitute its commercial judgment for that of the CoC. However, the NCLT can reject a plan that contravenes the law or fails to meet mandatory requirements.
What happens to existing liabilities after a resolution plan is approved?
Under the "clean slate" principle confirmed by the Supreme Court in Ghanashyam Mishra v. Edelweiss ARC (2021), an approved resolution plan extinguishes all claims against the corporate debtor that are not specifically provided for in the plan. This includes claims by government authorities, statutory dues, and contractual liabilities not addressed in the plan.
Can the promoters of the company submit a resolution plan?
Promoters may submit a resolution plan only if they are not disqualified under Section 29A. This section bars wilful defaulters, persons with NPA accounts for over one year, undischarged insolvents, and persons convicted of offences involving imprisonment of two or more years. The bar also extends to persons who are connected to such disqualified individuals.
This entry is part of the Veritect Indian Legal Glossary, a comprehensive reference of Indian legal terminology grounded in statutory text and judicial interpretation.
Last updated: 2026-03-27. Veritect provides this content for informational purposes and does not constitute legal advice.