Resolution plan, class voting and the dissenting debenture holder floor
Zenith Infra Ltd entered CIRP on 1 February 2025. Its CoC has Bank A with ₹60 crore, debenture holders with ₹30 crore represented by a trustee, and a foreign fund with ₹10 crore. Operational creditors hold ₹20 crore. The resolution plan proposes: Bank A 40% of its claim; debenture holders 15%; foreign fund 40%; operational creditors 5%. The resolution professional’s liquidation value estimates are: Bank A ₹18 crore; debenture holders ₹6 crore; foreign fund ₹3 crore; operational creditors ₹0.5 crore. At the CoC meeting, Bank A and the foreign fund vote yes. The debenture trustee receives instructions from holders: 55% by value say yes, 45% say no. The plan is declared approved with 86.5% yes votes. The RP is about to send the plan to the Adjudicating Authority.
1. Is the plan compliant with section 30(2)(c) for the dissenting debenture holders? Show the calculation.
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Dissenting debenture debt = 45% × ₹30 crore = ₹13.5 crore. Their proportionate liquidation value = 45% × ₹6 crore = ₹2.7 crore. The plan pays 15% × ₹13.5 crore = ₹2.025 crore. That is below ₹2.7 crore, so the plan violates section 30(2)(c) for the dissenting debenture holders. The comparison must be made creditor-wise or pro rata within the class, not by comparing the class’s total plan payment with the class’s total liquidation value. The Adjudicating Authority should not approve the plan unless the shortfall is cured.
2. Was the trustee entitled to vote 55% yes and 45% no, or should the entire ₹30 crore be treated as one vote?
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The trustee was right to split the vote. Under CIRP Regulation 16A, the authorised representative votes in accordance with the instructions received from creditors in the class. The 55% instructing yes is cast as yes; the 45% instructing no is cast as no. The trustee cannot treat the entire ₹30 crore as a single block. The 45% are dissenting financial creditors for section 30(2)(c) purposes. If some holders gave no instruction, that portion would abstain and would not be counted as yes.
3. Can the CoC’s commercial wisdom cure the shortfall? What is the RP’s duty?
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No. CoC commercial wisdom is respected, but it cannot cure a breach of section 30(2). The RP’s duty is to ensure the plan meets the mandatory requirements, including section 30(2)(c), before submitting it to the Adjudicating Authority. If the plan is approved with the shortfall, the RP should place the defect before the CoC for revision; otherwise the Adjudicating Authority can reject it under section 31. The operational creditor payment of ₹1 crore exceeds their ₹0.5 crore liquidation value, so that part is compliant, but it does not save the debenture shortfall.