Regulations 38. Mandatory contents of the resolution plan.—

⁷³[(1) The amount payable under a resolution plan –

• (a) to the operational creditors shall be paid in priority over financial creditors; and
• (b) to the financial creditors, who have a right to vote under sub-section (2) of section 21; and did not vote in favour of the resolution plan, shall be paid in priority over financial creditors who voted in favour of the plan.]

⁷⁴[(1A) A resolution plan shall include a statement as to how it has dealt with the interests of all stakeholders, including financial creditors and operational creditors, of the corporate debtor.]

⁷⁵[(IB) A resolution plan shall include a statement giving details if the resolution applicant or any of its related parties has failed to implement or contributed to the failure of implementation of any other resolution plan approved by the Adjudicating Authority at any time in the past.]

(2) A resolution plan shall provide:

• (a) the term of the plan and its implementation schedule;
• (b) the management and control of the business of the corporate debtor during its term; and
• (c) adequate means for supervising its implementation.

⁷⁶[(3) A resolution plan shall demonstrate that –

• (a) it addresses the cause of default;
• (b) it is feasible and viable;
• (c) it has provisions for its effective implementation;
• (d) it has provisions for approvals required and the timeline for the same; and
• (e) the resolution applicant has the capability to implement the resolution plan.]

⁷³ Substituted by Notification No. IBBI/2019-20/GN/REG052, dated 27th November, 2019 (w.e.f. 28.11.2019). Before substitution, sub- regulation (1) stood as under:-

“(1) The amount due to the operational creditors under a resolution plan shall be given priority in payment over financial creditors.”

⁷⁴ Inserted by Notification No. IBBI/2017-18/ GN/ REG018, dated 5th October, 2017 (w.e.f. 5-10-2017).

⁷⁵ Inserted by Notification No. IBBI/2019-20/ GN/ REG040, dated 24th January, 2019 (w.e.f. 24-01-2019).

⁷⁶ Substituted by Notification No. IBBI/2018-19/GN/REG031, dated 3rd July, 2018 (w.e.f. 04-07-2018). Sub – regulation (3) of Regulation 38 before substitution stood as –

“A resolution plan shall contain details of the resolution applicant and other connected persons to enable the committee to assess the credibility of such applicant and other connected persons to take a prudent decision while considering the resolution plan for its approval.

Explanation : For the purposes of this sub-regulation,-

• (i) ‘details’ shall include the following in respect of the resolution applicant and other connected person, namely:-
  • (a) identity;
  • (b) conviction for any offence , if any, during the preceding five years;
  • (c) criminal proceedings pending, if any;
  • (d) disqualification, if any, under Companies Act, 2013, to act as a director;
  • (e) identification as a willful defaulter, if any, by any bank or financial institution or consortium thereof in accordance with the guidelines of the Reserve Bank of India;
  • (f) debarment, if any, from accessing to, or trading in, securities markets under any order or directions of the Securities and Exchange Board of India,; and
  • (g) transactions, if any, with the corporate debtor in the preceding two years.
• (ii) the expression ‘connected persons’ means-
  • (a) persons who are promoters or in the management or control of the resolution applicant;
  • (b) persons who will be promoters or in management or control of the business the corporate debtor during the implementation of the resolution plan;
  • (c) holding company, subsidiary company, associate company and related party of the persons referred to in items (a) and (b).”