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Base Resolution Plan

The document discusses base resolution plans under the pre-packaged insolvency resolution process. It defines a base resolution plan, outlines the approval and rejection process, and discusses fair value and liquidation value determination according to the Insolvency and Bankruptcy Code. It also summarizes some related case laws.

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llm056223
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12 views

Base Resolution Plan

The document discusses base resolution plans under the pre-packaged insolvency resolution process. It defines a base resolution plan, outlines the approval and rejection process, and discusses fair value and liquidation value determination according to the Insolvency and Bankruptcy Code. It also summarizes some related case laws.

Uploaded by

llm056223
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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BASE RESOLUTION

PLAN
&
RESOLUTION PLAN
BASE RESOLUTION PLAN
• Defined under Section 5 Sub-Section 2A 1[(2A) “base resolution plan”
means a resolution plan provided by the corporate debtor under clause (c) of
sub-section (4) of section 54A;]
• A base resolution plan which conforms to the requirements referred to in
section 54K, and such other conditions as may be specified; and
• The corporate debtor shall submit the base resolution plan, referred to in
clause (c) of sub-section (4) of section 54A, to the resolution professional
within two days of the pre-packaged insolvency commencement date, and
the resolution professional shall present it to the committee of creditors.
BASE RESOLUTION
PLAN

A base resolution plan is the


resolution plan prepared by the
Corporate Debtor in conformity with
Section 30 of the Code and presented
in the first instance to its committee
of creditors (“COC”) for consideration
after the PPIRP application is
admitted.
APPROVAL OF
BASE
RESOLUTION
PLAN
The base resolution plan is
presented to the
Lenders/Creditors within 2
days of its formation and
must be approved by 66% of
the COC for it to be approved
and implemented.
REJECTION OF BASE
RESOLUTION PLAN
COC evaluates the plan based on its
commercial feasibility and viability.
Other than the issue of the COC on the
commercial feasibility and viability
criteria of the base resolution plan, if the
base resolution plan impairs any claim
owed by the Corporate Debtor to the
operational creditors it shall be rejected.
CHAPTER X: RESOLUTION
PLAN
FAIR VALUE AND LIQUIDATION VALUE
FAIR VALUE AND
LIQUIDATION VALUE
1. Regulation 2 (hb): “fair value” means the estimated realizable value
of the assets of the corporate debtor, if they were to be exchanged on
the insolvency commencement date between a willing buyer and a
willing seller in an arm’s length transaction, after proper marketing
and where the parties had acted knowledgeably, prudently and
without compulsion.
2. Regulation 2 (k): “liquidation value” means the estimated realizable
value of the assets of the corporate debtor, if the corporate debtor
were to be liquidated on the insolvency commencement date.
FAIR VALUE AND
LIQUIDATION VALUE
Regulation 27: (1) The resolution professional shall, within seven days
of his appointment but not later than forty-seventh day from the
insolvency commencement date, appoint two registered valuers to
determine the fair value and the liquidation value of the corporate
debtor in accordance with regulation 35.
CASE LAWS
Kannan Tiruvengadam RP for EMC Ltd. (NCLT KOLKATA)
• Whether Re-evaluation/ fresh valuation could be done by corporate debtor to determine
the fair vale?
• There is no provision in the code for revaluation, much less if a plan has already been
received and its value was now known to the CoC, as the same would be an
infringement on the commercial wisdom of the CoC and can be regarded only as a
change of frame of reference, without changing anything on the ground situation. Hence
the Adjudicating Authority cannot at this stage could have directed for a fresh valuation
of the assets of the CD. The application was hence disposed and rejected.
CASE LAWS
Indian Bank Vs. Charu Desai Erstwhile RP & Chairman of Monitoring
Committee of GB Global Ltd. & Anr. (NCLAT NEW DELHI)
• Whether the decision of the CoC to obtain a more recent Valuation
Report and reliance on such Valuation Report is contrary to the
provisions of the Code and Regulations framed thereunder?
CASE LAWS
Kotak Mahindra Bank Limited Vs. RP of Universal Buildwell Pvt. Ltd. (NCLAT
New Delhi)
• Whether Liquidation value found by the Registered Valuers can or cannot be
allowed to be changed by CoC?
• The liquidation value arrived by the valuers serves an important factor in the
entire resolution process and cannot be ignored in the resolution process.
• It is true that CoC on any valid reason can take a call to ask for any fresh
valuation due to any relevant circumstances, but the valuation done by the
Registered Valuers and average of liquidation value taken up by the Valuers
serves the specific purpose and cannot be allowed to be disregarded bothe CoC.

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