1. The Two Tests Every Resolution Plan Must Pass

A resolution plan “survives” only when it clears two independent tests that the Insolvency and Bankruptcy Code, 2016 (“IBC”) deliberately keeps separate. First, it must secure approval from the Committee of Creditors (“CoC”), a commercial decision taken by voting share based on admitted financial debt. Second, it must withstand statutory scrutiny by the Adjudicating Authority, whose jurisdiction is confined to the limited checks mandated by Section 30(2) and related provisions.

Supreme Court jurisprudence has repeatedly underlined that the CoC is the commercial decision-maker under the Code and that courts and tribunals are not appellate forums over the merits of such commercial decisions.¹²³ That allocation has a practical drafting consequence. A plan that is technically compliant but commercially unpersuasive may fail at voting. A plan that is commercially attractive but legally loose may invite avoidable objections and vulnerabilities at the approval stage. The drafting discipline lies in achieving both, commercial acceptability and compliance-proof structure.

The most common error is to treat Section 30(2) compliance as the entire exercise, and the CoC vote as a postscript. In reality, the plan is a negotiated instrument that must “sell” certainty, timing, enforceability, and execution capability to creditors, while simultaneously reading cleanly against the statutory checklist that the tribunal is permitted to apply.

2. What Tribunals Can Examine, and How to Draft for That Review

The safest approach to judicial scrutiny is to draft as though the Adjudicating Authority will read your plan through a single lens, “Does it satisfy the minimum statutory conditions?” The Supreme Court has made it clear that the tribunal’s review is limited and does not extend to re-evaluating valuation, adequacy of recovery, or the commercial merits of a distribution once the CoC has exercised its commercial judgment within the Code’s framework.²³

This is where many plans fail in avoidable ways. They contain broad compliance assertions but lack the architecture that allows the tribunal to see compliance clearly. A survivable plan should therefore include a short, internal “Section 30(2) Compliance Matrix” that maps each statutory requirement to specific plan clauses and schedules. This is not merely formatting. It reduces interpretive ambiguity and narrows the scope for objections alleging silence or contradiction.

The following are the Section 30(2) themes that most commonly trigger objections, and therefore require disciplined drafting:

First, CIRP costs. The plan must provide for payment of insolvency resolution process costs in priority, with clarity on the amount (or method of determination), timing, and the mechanism for payment.

Second, operational creditors. The treatment must be clearly described, with timelines and distribution logic, and it must not be left to vague statements such as “as per law” unless the plan expressly states what that means in the context of the plan’s distributions.

Third, implementation. The tribunal does not substitute its own commercial view for feasibility and viability, which remain in the CoC’s domain, but the plan must still be structured in implementable terms, with funding mechanics, milestones, monitoring, and supervision in a manner that aligns with the statutory scheme.³

Fourth, “applicable law” compliance. Section 30(2)(e) is frequently misunderstood. It is not satisfied by a blanket sentence that “the plan complies with applicable law.” A defensible plan identifies key approvals, consents, and regulatory steps that are realistically required, assigns responsibility, and provides timeframes and long-stop dates.

Hypothetical: A plan states, “all statutory dues shall be settled as per law,” without specifying whether pre-CIRP claims of statutory authorities are provided for in the plan or extinguished upon approval. After approval, a statutory authority asserts a substantial pre-CIRP claim and the issue becomes litigation about whether the plan truly treated that claim. Clean drafting that clearly states claim treatment and extinguishment principles consistent with Section 31 reduces this risk.⁶

A plan survives judicial scrutiny more easily when it is drafted to leave minimal room for interpretive disputes about what the plan actually does.

3. Drafting for Votes: Creditor Psychology Is Mostly About Certainty

CoC voting is by value, but voting decisions are not driven solely by the arithmetic of headline recovery percentages. In practice, creditors evaluate a plan through the lens of certainty, timing, enforceability, and downside protection. A plan that promises a higher recovery but depends on uncertain events or long-dated contingencies often loses votes to a plan that offers earlier certainty and stronger downside control.

This is consistent with the Supreme Court’s approach. Where the CoC has exercised its commercial wisdom, courts are reluctant to interfere with the commercial terms and structure of the plan.²³ Creditors know this, which means they become more rigorous during the voting stage. They want to approve a plan that is commercially sensible and implementable, not one that is optimistic on paper and fragile in execution.

A survivable plan typically demonstrates three features.

First, early certainty. This does not always require full upfront payment, but it does require a credible early tranche, a defined cash-flow architecture, and enforceable payment mechanics.

Second, limited conditionality. Conditions precedent are not inherently problematic, but they become vote-killers when they are too many, too open-ended, or too dependent on uncertain future events. A strong plan limits conditions to what is genuinely necessary, defines measurable deliverables, and includes a long-stop date after which the plan’s structure is not held hostage to unresolved conditions.

Third, downside clarity. Creditors often vote “no” because they cannot see what happens if things go wrong. A plan survives better when it states, clearly and enforceably, what occurs on delay, funding shortfall, approval refusal, or milestone failure, including triggers, step-in mechanisms, acceleration provisions, or reallocation of resources consistent with the plan.

4. Liquidation Value Is Not a Legal Floor, But It Remains a Strategic Benchmark

A recurring argument in plan challenges is that the plan should match or exceed liquidation value. The Supreme Court has rejected the proposition that a plan must necessarily do so as a matter of law once it has been approved by the CoC.⁴ This is important in drafting, because it reduces the temptation to litigate valuation comparisons inside the plan’s text.

However, liquidation value remains strategically relevant in CoC deliberations and objection management. Creditors use it as a negotiation anchor. Dissenting creditors may cite it as a rhetorical reference point. Plan drafting should therefore address liquidation value indirectly, by presenting a defensible value narrative rather than turning the plan into a valuation brief.

A plan’s value narrative should explain where value comes from, infusion, receivables, monetisation, asset sales, operational revival, how timelines are structured, and what mechanisms exist to protect value if assumptions are delayed. Courts will generally not replace CoC valuation judgments with their own, but ambiguous drafting about value sources and timelines invites avoidable disputes.⁴

5. Distribution That Survives Objections: Equality Is Contextual, Not Mathematical

Many plan challenges are framed as “unequal treatment” among creditors. The Supreme Court’s jurisprudence does not support mathematical equality as a universal requirement. Rather, it recognises that equality under the IBC is contextual, and that differential treatment is permissible so long as it is rational, non-arbitrary, and linked to legitimate insolvency considerations such as security status, priority, and risk.³

The drafting lesson is direct. Differential treatment can be commercially and legally defensible, but only if the plan states the rationale clearly and reflects it in a transparent distribution table. A plan becomes vulnerable when distributions appear ad hoc, unexplained, or inconsistent across clauses and schedules.

A survivable plan therefore does three things when it differentiates payouts.

First, it adopts a clear categorisation framework (secured financial creditors, unsecured financial creditors, operational creditors, government/statutory claims, etc.) and uses that categorisation consistently.

Second, it states the rationale for differentiation in one concise paragraph, tied to insolvency logic rather than vague assertions.

Third, it includes a consolidated “Treatment of Claims” table that is internally consistent with all schedules and implementation clauses.

This approach does not guarantee that objections will not be filed, but it reduces the risk that objections will expose genuine drafting vulnerabilities.

6. Drafting the Hard Edge Correctly: Dissenting Secured Financial Creditors

Dissent is often predictable. A plan that is drafted to survive does not assume unanimity. It drafts pre-emptively for dissenting creditors by stating their minimum entitlements and payment mechanics with precision.

In India Resurgence ARC Pvt. Ltd. v. Amit Metaliks Ltd., the Supreme Court clarified that dissenting secured financial creditors are entitled to the minimum payment mandated under Section 30(2)(b) read with Section 53 and cannot insist on a higher payout merely on the basis of the value of their security.⁵ This principle is frequently invoked when dissenters challenge distributions.

Drafting implication: the plan should contain a dedicated “Dissent Entitlement Schedule” that sets out, for each dissenting or potentially dissenting secured financial creditor, the admitted claim amount, the minimum entitlement methodology applied, the payment timeline, and the explicit statement that total payouts will not exceed admitted claims.

Hypothetical: A secured financial creditor dissents and argues it must receive value equal to the underlying security. If the plan already contains a dissent entitlement schedule applying the minimum entitlement methodology consistent with Section 30(2)(b) read with Section 53, the scope for interpretive dispute narrows and the plan’s survivability increases.⁵

The core idea is to remove ambiguity. Dissent litigation thrives on unclear drafting, not on clear statutory mapping.

7. The Executor Problem: Drafting for Feasibility Without Over-Promising

Creditors vote for the plan, but also for the person who will execute it. Feasibility and viability assessments lie within the CoC’s commercial domain, and courts do not replace creditor judgment with their own.³ This makes the CoC’s execution scrutiny more exacting, not less.

A survivable plan demonstrates execution credibility through mechanics, not marketing language. It should specify the funding sources, equity infusion schedule, debt arrangement outline if applicable, and the sequencing between infusion and disbursement. It should include a monitoring framework, typically an implementation committee, periodic reporting, defined milestones, and triggers for consequences on delay or non-performance.

Avoid broad claims such as “funding is assured” unless supported by documentary evidence that can be produced. A safer and more defensible approach is to draft enforceable “funding mechanics” and “consequence mechanics” that make delays costly and execution measurable.

Execution credibility also improves when timelines are realistic and grounded in the operational reality of the corporate debtor’s business. Overly aggressive timelines may attract votes initially but later become a source of failure or dispute. A plan survives better when it is conservative, measurable, and enforceable.

8. Finality, Clean Slate, and the Discipline of Section 31 Drafting

A core objective of resolution is finality. The Supreme Court in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss ARC Ltd. affirmed that once a resolution plan is approved, it binds stakeholders and all claims stand extinguished except to the extent provided in the plan.⁶ This “clean slate” doctrine is central to investor confidence and post-approval stability.

Drafting implication: claim treatment cannot be casual. A survivable plan treats claims comprehensively and explicitly. It avoids contradictions between extinguishment provisions and vague statements that suggest unresolved liabilities continue “as per law.” If the plan intends to extinguish claims not provided for, it must say so in a manner consistent with Section 31 and the clean slate jurisprudence. If certain claims are preserved, or certain liabilities are to be assumed, that must be expressly stated.

Equally important is caution in drafting any clause that suggests open-ended post-approval modification. Loose “modification” language can undermine finality and invite disputes about whether the plan is truly binding and complete. Where change is contemplated, it should be tied to narrowly defined contingencies and judicial directions, drafted carefully so it does not appear to reopen the plan’s commercial bargain.

Hypothetical: After approval, a statutory authority asserts a pre-CIRP claim that was not provided in the plan. If the plan’s claim treatment and extinguishment language is clear and consistent with the clean slate doctrine, enforcement is significantly easier and the scope for surprise claims is reduced.⁶

9. Practice Tool 1: Survivability Checklist for Resolution Applicants and CoC Members

CoC-facing checklist (vote resilience)

1. Are the timelines clear, staged, and commercially credible?
2. Is early certainty demonstrated through an upfront tranche, escrow, or defined trigger-based payments?
3. Are conditions precedent limited, measurable, and tied to long-stop dates?
4. Is downside risk addressed through consequences, triggers, contingency reserves, or step-in/acceleration mechanics?
5. Is the value narrative realistic and supported by implementable mechanics rather than optimistic assumptions?
6. Are dissent risks anticipated through explicit dissent entitlement schedules?

Judicial-facing checklist (approval resilience)

1. Section 30(2)(a): CIRP costs are provided for in priority with a clear payment mechanism and timeline.
2. Section 30(2)(b): creditor treatment includes statutory minimum protections and is transparent.
3. Section 30(2)(d): implementation and supervision mechanisms are specified.
4. Section 30(2)(e): applicable law compliance is addressed through an approvals/consents schedule and responsibility allocation.
5. Internal consistency: clauses, schedules, and annexures do not contradict each other.

10. Practice Tool 2: Drafting Framework That Reduces Litigation

A survivable plan generally reads better and fails less often when it is structured with disciplined annexures and tables. A recommended structure is:

1. Definitions and interpretation (tight and minimal)
2. Background and objectives (brief, factual)
3. Treatment of claims (master table plus category schedules)
4. Funding and payments (infusion schedule and disbursement mechanics)
5. Conditions precedent (finite list, measurable, long-stop dates)
6. Implementation and monitoring (committee, reporting, triggers, consequences)
7. Governance transition and management control
8. Extinguishment and binding effect (aligned with Section 31 clean slate jurisprudence)
9. Annexures and schedules, including:
   a) Section 30(2) compliance matrix
   b) Approvals/consents schedule
   c) Dissent entitlement schedule
   d) Implementation timeline with milestones
   e) Payment schedules per creditor category

The purpose is not to increase pages. The purpose is to reduce ambiguity. A plan survives because it leaves less room for interpretive litigation.

11. Conclusion

A resolution plan survives when it is drafted as a structured commercial instrument that also performs cleanly against the statutory requirements. Supreme Court jurisprudence makes two propositions central. First, the CoC’s commercial wisdom is decisive and courts do not substitute their own views for creditor judgment on commercial merits.¹²³ Second, once approved, the plan must operate with finality and clean slate effect consistent with Section 31.⁶

The practical drafting skill lies in creating commercial certainty for votes while eliminating compliance ambiguity for approval. Plans fail not only because they are under-funded or commercially unattractive, but also because they are drafted in a way that invites disputes. Drafting for survivability is therefore both a commercial exercise and a compliance exercise, executed together, not sequentially.

Footnotes

1. Swiss Ribbons Pvt. Ltd. v. Union of India, (2019) 4 SCC 17 (Supreme Court of India).
2. K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 (Supreme Court of India).
3. Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531 (Supreme Court of India).
4. Maharashtra Seamless Ltd. v. Padmanabhan Venkatesh, (2020) 11 SCC 467 (Supreme Court of India).
5. India Resurgence ARC Pvt. Ltd. v. Amit Metaliks Ltd., (2021) 7 SCC 657 (Supreme Court of India).
6. Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., (2021) 9 SCC 657 (Supreme Court of India).