Insolvency resolution plan approval extends to capital reduction where creditor rights are protected and statutory compliance is certified.

A resolution plan under the insolvency framework may be approved when it is supported by full Committee of Creditors consent, certified by the Resolution Professional as complying with statutory and regulatory requirements, and provides for treatment of secured financial creditors, workmen, operational creditors, and statutory dues. The plan was also treated as capable of including ancillary implementation measures such as reduction of existing equity share capital to zero, provided creditor rights are not prejudiced and the measure forms part of the plan structure. Any remaining concessions or waivers are to be pursued before the competent authorities under applicable law.

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Issues: (i) whether the revised resolution plan satisfied the requirements for approval under the insolvency resolution framework; (ii) whether the proposed reduction of share capital and consequential directions could be approved along with the resolution plan.

Issue (i): whether the revised resolution plan satisfied the requirements for approval under the insolvency resolution framework.

Analysis: The plan had been approved by the Committee of Creditors with 100% voting share. The Resolution Professional certified compliance with the statutory requirements, including the prescribed regulations governing contents, feasibility, and implementation of a resolution plan. The plan provided for payment to secured financial creditors, workmen, operational creditors, and statutory dues, and it was found not to contravene the disqualification provisions applicable to resolution applicants.

Conclusion: The revised resolution plan satisfied the requirements for approval and was approved.

Issue (ii): whether the proposed reduction of share capital and consequential directions could be approved along with the resolution plan.

Analysis: The plan expressly contemplated reduction of the existing equity share capital to zero, without any payout to shareholders and without affecting creditor rights. The reduction was treated as part of the implementation structure of the approved plan, and the Tribunal granted the permission sought, while leaving other concessions and waivers to be pursued before the competent authorities under the applicable law.

Conclusion: The proposed capital reduction and consequential implementation directions were approved.

Final Conclusion: The resolution plan was sanctioned with binding effect on the corporate debtor and stakeholders, the moratorium ceased, and the plan was permitted to proceed with the directed modifications and ancillary implementation steps.

Ratio Decidendi: A resolution plan that is duly approved by the Committee of Creditors and certified to satisfy the statutory requirements under the insolvency code may be approved by the adjudicating authority, including ancillary structural measures such as capital reduction, if they form part of the implemented plan and do not prejudice creditor rights.

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