Section 5 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 5(26) of the IBC, as amended in 2026, expands the definition of "resolution plan" to expressly include the sale of one or more assets of the corporate debtor. This formalises in statute what previously operated only through IBBI Regulation 36A, giving legal certainty to asset-wise strategies — while distribution continues to follow the CoC-approved mechanism and the section 53 waterfall.
What changed, and why it matters even though the practice existed
Asset-wise resolution was already possible. IBBI Regulation 36A permitted it operationally, and plans of that shape have been approved. What was missing was statutory footing.
A resolution applicant structuring an asset-wise bid under the old position was relying on a regulation to fill out a statutory definition that did not mention the structure at all. That is a defensible position, but it is one that can be challenged — and in a distressed acquisition, a structural challenge is a pricing risk. Formalising it in the statute provides greater legal certainty for resolution applicants pursuing asset-wise strategies.
Where asset-wise plans are useful
- A corporate debtor whose business as a whole has no buyer, but whose individual units or plants do.
- A group of assets that are more valuable separated than combined — different buyers for different lines.
- A situation where a going-concern sale of one division preserves employment and value while the rest is realised.
- Cases where a single acquirer for the whole entity cannot be found within the CIRP timeline.
The inter-creditor concern, and why it does not bite
The obvious objection: if a plan sells specific assets, will secured creditors holding exclusive charges over those assets push for individual recovery rather than enterprise-level resolution?
ICAI's answer is that the concern does not translate into a legal risk under the amended framework, for three reasons:
| Safeguard | Effect |
|---|---|
| 66% CoC approval | Asset-wise plans remain subject to CoC approval by the requisite majority — a single charge-holder cannot drive the structure |
| CoC-approved distribution mechanism | Distribution of proceeds must follow the mechanism the CoC approves |
| Section 53 waterfall | Distribution follows the waterfall, not the exclusive charge position of any individual creditor |
And the point that closes it: no lender can unilaterally enforce recovery from a charged asset outside the approved plan. The charge determines the creditor's class and entitlement within the waterfall; it does not create a private route to the proceeds of the specific asset.
How this interacts with liquidation-stage relinquishment
It is worth holding two rules apart, because they look similar and operate differently:
- In a resolution plan under section 5(26) — proceeds of an asset sale go through the CoC-approved mechanism and the section 53 waterfall. The exclusive charge does not give priority to the specific proceeds.
- In liquidation under section 52 — a secured creditor may elect not to relinquish and realise its security outside the estate, subject now to the 14-day notice, the 66% threshold where security is shared, the cap at security value, and the deduction of CIRP costs under section 52(8).
The distinction is the stage. Resolution is collective; liquidation preserves an individual realisation election, heavily conditioned.
Practical drafting points
- Identify the assets precisely in the plan — section 5(26) speaks of "one or more assets", and the plan must define which.
- Set out the distribution mechanism explicitly, showing how proceeds move through the section 53 waterfall.
- Address the charge-holders' position expressly rather than leaving it to inference; a creditor whose expectation is defeated will litigate the silence.
- Confirm the 66% majority is available before committing to an asset-wise structure.
- Consider whether the remaining assets are to be dealt with in the same plan, a subsequent plan, or liquidation — and say so.
Compliance checklist
- Cite section 5(26) for the asset-wise structure, not Regulation 36A alone.
- Secure 66% CoC approval for the plan as a whole.
- Route distribution through the CoC-approved mechanism and the section 53 waterfall.
- Advise exclusive charge-holders that the charge does not give priority to the specific proceeds.
- Define the assets covered and the treatment of those not covered.
- Keep the section 52 relinquishment analysis separate — it belongs to liquidation, not resolution.
Common mistakes
- Assuming an exclusive charge entitles the creditor to the proceeds of its asset.
- Relying on Regulation 36A alone now that the statute covers it.
- Attempting enforcement outside the approved plan.
- Leaving the residual assets unaddressed in an asset-wise plan.
- Confusing the section 53 waterfall in resolution with the section 52 election in liquidation.