Section 31 of Insolvency and Bankruptcy Code, 2016 (IBC): Approval of resolution plan

The Insolvency and Bankruptcy Code, 2016

Part-II Insolvency Resolution and Liquidation for Corporate Persons

Chapter-II Corporate Insolvency Resolution Process

Section 31: Approval of resolution plan.

*31. (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 approve3 the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, 1[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.

2[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.]

(2) Where the Adjudicating Authority is satisfied that the resolution plan does not confirm to the requirements referred to in sub-section (1), it may, by an order, reject the resolution plan.

(3) After the order of approval under sub-section (1),—

(a) the moratorium order passed by the Adjudicating Authority under section 14 shall cease to have effect; and

(b) the resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database.

2[(4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later.

Provided that where the resolution plan contains a provision for combination, as referred to in section 5 of the Competition Act, 2002, the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors.]


Reference

*Effective from 01.12.2016.

1. Ins. by the IBC (Amendment) Act, 2019, w.e.f. 16.08.2019[S.O. 2953(E)].

2. Ins. by the IBC (Second Amendment) Act, 2018, w.e.f. 06.06.2018.

3. Public shareholding in a listed company falls below as specified limit: Vide Notification GSR-675(E) dated 24.07.2018, the Central Government amended the Rule 19A of Securities Contracts (Regulation) Rules, 1957 that where the public shareholding in a listed company falls below 25%, as a result of implementation of the resolution plan approved under section 31 of the of the Code, such company shall bring the public shareholding to 25% within a maximum period of 3 years from the date of such fall and if the public shareholding falls below 10%, the same shall be increased to at least 10%, within a maximum period of 12 months from the date of such fall, in the manner specified by the SEBI.

Further, vide Notification No. G.S.R. 423(E) dated 18.06.2021, provided that every listed company shall maintain public shareholding of at least 5% as a result of implementation of the resolution plan approved under section 31 of the Code.

4. Clarification regarding approval of resolution plans under section  30 and 31, vide GC-IBC/01/2017 dt. 25.10.2017.

2 comments

Leave a Reply

Your email address will not be published.

App

Install
×