An IRP (i.e. Insolvency Resolution Plan) for any Certificate of Deposit is an exclusive combination of managerial, financial, legal as well as technical features that would grant a reasonable guarantee of sustainable viability over the period of recovery from both internal as well as external stresses. The IBC (i.e. Insolvency and Bankruptcy Code), 2016, is distinctive as it has integrated this approach as a time-bound exercise, with typical focus on all its stakeholders. As it is next to impossible to standardize the sources that would help not only in the preparation but also the execution of a rewarding resolution plan.

 

Legal Aspects of Compliance

A few notable connected areas of IBC, its Regulations along with other legislation that impinges on this activity are explained in detail below. The Template given below is built keeping in mind the necessities under the related legal framework.

 

Template of an Insolvency Resolution Plan

Details of the Applicant: This must contain any earlier association with the CD, applicant’s Profile, Track record, etc.

 

Executive Summary

In the recovery plan, it is important to provide a summary of the key elements.

 

Material Changes

Since the commencement of proceedings under IBC, it is important to list all material changes, description of legal and financial structures and the organizational framework of the CD.

 

Business Profile

A summary identification of core business lines along with its critical functions is mandatory.

 

Governance Arrangements (Board/Management)

Disclosing the CD’s governance arrangements is important. It must include the following details:

  • How the resolution plan is integrated into the governance structure of the CD
  • The strength of the overall risk management framework and its effectiveness during the Resolution period.

 

Resolution Strategy/Options

Listing and describing the resolution options, inclusive of:

  • Capital and liquidity actions required to maintain or restore the viability and financial position of the CD.
  • Arrangements and measures to conserve or restore the CD’s own funds, and
  • An assessment of the expected timeframe for implementing recovery options

 

It is important to note that while identifying the resolution options for a CD, one must consider a range of severe macroeconomic as well as financial stress scenarios relevant to the CD’s specific conditions.

 

In order to restore its financial position following a significant deterioration, a summary of the overall resolution capacity of the CD and the overall capability of the corporate is needed. This may also include:

  • The risks associated with recovery options
  • An analysis of any material impediments to the effective and timely execution of the recovery plan, and
  • Whether and how material impediments could be overcome – In case the CD has undergone previous loan work-outs or restructurings, please give details with outcomes.