Section 54K 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 54K is the longest section of the pre-packaged insolvency resolution process. The corporate debtor submits a base resolution plan, the committee of creditors may approve it if it does not impair the claims of operational creditors, and otherwise competing plans are invited. This article explains the section's fifteen sub-sections and two Explanations as per the IBBI consolidated text of the Code amended up to 12 August 2021.
The corporate debtor submits the base resolution plan within two days of the commencement date. The committee of creditors may approve it only if it does not impair any claims owed to operational creditors. If it does not approve it, or the plan impairs those claims, the resolution professional invites competing plans. Approval needs not less than sixty-six per cent. of the voting shares. A competing plan is chosen over the base plan only if it is significantly better.
Section 54K(1) to (3): the base plan and the standard it must meet
Under sub-section (1), "The corporate debtor shall submit the base resolution plan, referred to in clause (c) of sub-section (4) of section 54A, to the resolution professional within two days of the pre-packaged insolvency commencement date, and the resolution professional shall present it to the committee of creditors." The base resolution plan is the plan the corporate debtor must provide to the financial creditors before seeking their approval under section 54A(3); see our post on section 54A.
Sub-section (2) lets the committee give the debtor "an opportunity to revise the base resolution plan prior to its approval under sub-section (4) or invitation of prospective resolution applicants under sub-section (5), as the case may be."
Sub-section (3) says that the resolution plans and the base resolution plan "shall conform to the requirements referred to in sub-sections (1) and (2) of section 30, and the provisions of sub-sections (1), (2) and (5) of section 30 shall, mutatis mutandis apply, to the proceedings under this Chapter." Section 30 is amended by section 18 of the Insolvency and Bankruptcy Code (Amendment) Act, 2026; see our article on section 30 and the post on resolution plan contents and approval.
Anyone who is preparing or reviewing a base plan can ask us for financial and legal due diligence on the numbers and the claims that the plan treats.
Section 54K(4) and (5): approving the base plan or inviting competing plans
"The committee of creditors may approve the base resolution plan for submission to the Adjudicating Authority if it does not impair any claims owed by the corporate debtor to the operational creditors." Where "(a) the committee of creditors does not approve the base resolution plan under sub-section (4); or (b) the base resolution plan impairs any claims owed by the corporate debtor to the operational creditors", the resolution professional "shall invite prospective resolution applicants to submit a resolution plan or plans, to compete with the base resolution plan, in such manner as may be specified."
Explanation II defines when claims are impaired, for sub-sections (4) and (14): "claims shall be considered to be impaired where the resolution plan does not provide for the full payment of the confirmed claims as per the updated list of claims maintained by the resolution professional." The test is full payment of confirmed claims, against the updated list.
Section 54K(6) and (7): the competing applicants
Applicants who respond to the invitation "shall fulfil such criteria as may be laid down by the resolution professional with the approval of the committee of creditors, having regard to the complexity and scale of operations of the business of the corporate debtor and such other conditions as may be specified." The resolution professional must give them the basis for evaluation of plans for sub-section (9), as approved by the committee subject to specified conditions, and the relevant information referred to in section 29, which applies mutatis mutandis. The information memorandum under section 29 is described in our article on section 29.
Section 54K(8) to (12): evaluation and selection
| Sub-section | Rule |
|---|---|
| (8) | the resolution professional presents to the committee, for evaluation, plans which conform to sub-section (2) of section 30 |
| (9) | the committee evaluates the plans and selects one from among them |
| (10) | if, on the basis of criteria laid down by it, the committee decides that the plan selected is "significantly better than the base resolution plan", it may be selected for approval under sub-section (12); the criteria are subject to such conditions as may be specified |
| (11) | if the plan selected under (9) is not considered for approval or does not fulfil sub-section (10), "it shall compete with the base resolution plan" in the manner and on the conditions specified, and one of them is selected for approval under sub-section (12) |
| (12) | the plan selected under (10) or (11) "may be approved by the committee of creditors for submission to the Adjudicating Authority" |
The proviso to sub-section (12) deals with the case where the plan selected under sub-section (11) is not approved: the resolution professional "shall file an application for termination of the pre-packaged insolvency resolution process in such form and manner as may be specified." Termination is covered in our article on section 54N. Sub-section (11) is printed with "subsection (9)" run together in the consolidated text; it is a printing slip and is quoted as printed.
The effect of sub-sections (10) and (11) is that the base plan has a protected position. A competing plan displaces it only if the committee decides, on its criteria, that the competing plan is significantly better. Otherwise the two compete and one is chosen. The text does not define "significantly better" and is silent on any figure.
Section 54K(13): the vote
"The approval of the resolution plan under sub-section (4) or sub-section (12), as the case may be, by the committee of creditors, shall be by a vote of not less than sixty-six per cent. of the voting shares, after considering its feasibility and viability, the manner of distribution proposed, taking into account the order of priority amongst creditors as laid down in sub-section (1) of section 53, including the priority and value of the security interest of a secured creditor and such other requirements as may be specified." The order of priority in section 53 has a live post: the section 53 waterfall.
Section 54K(14): promoter dilution
"While considering the feasibility and viability of a resolution plan, where the resolution plan submitted by the corporate debtor provides for impairment of any claims owed by the corporate debtor, the committee of creditors may require the promoters of the corporate debtor to dilute their shareholding or voting or control rights in the corporate debtor." The proviso says that where the plan "does not provide for such dilution, the committee of creditors shall, prior to the approval of such resolution plan under sub-section (4) or sub-section (12), as the case may be, record reasons for its approval."
Section 54K(15) and Explanation I
"The resolution professional shall submit the resolution plan as approved by the committee of creditors under sub-section (4) or sub-section (12), as the case may be, to the Adjudicating Authority." Explanation I provides that "the corporate debtor being a resolution applicant under clause (25) of section 5, may submit the base resolution plan either individually or jointly with any other person." The Adjudicating Authority's approval is in section 54L; see the next article on sections 54L and 54M.
Example
Harvest Dairy Pvt Ltd submits its base resolution plan two days after the commencement date. The plan pays the financial creditors in part and pays operational creditors in full. The committee votes and approves it by not less than sixty-six per cent. of the voting shares under sub-section (13). Had the plan not paid the operational creditors' confirmed claims in full, it would impair them under Explanation II, the committee could not approve it under sub-section (4), and the resolution professional would invite competing plans. The names are invented.
What the Amendment Act, 2026 does near section 54K
The Amendment Act, 2026 does not amend section 54K. It amends section 30, which sub-section (3) applies, and section 54A, from which the base resolution plan is drawn. The Amendment Act, 2026 comes into force on the date or dates the Central Government notifies; the notification is not in the texts consulted, so check whether those changes have been notified and how they read with section 54K. The Insolvency and Bankruptcy Board of India (Pre-packaged Insolvency Resolution Process) Regulations, 2021 are made under provisions of Chapter III-A of Part II; the copy consulted is amended up to 2 June 2026, and its date does not show that any provision of the Amendment Act, 2026 is in force. The detail is for those regulations and is not taken up here.
Amendments and notifications made after 12 August 2021, other than the Amendment Act, 2026, are not in the texts consulted and should be checked.
Need help with a base resolution plan?
A base plan that impairs operational creditors opens the process to competing plans, and a competing plan has to be significantly better to displace it. Our team can test your plan and the claims behind it through financial and legal due diligence.
Key takeaways
- The corporate debtor submits the base resolution plan within two days of the pre-packaged insolvency commencement date.
- The committee may approve it only if it does not impair operational creditors' claims; impairment means not providing for full payment of the confirmed claims.
- Otherwise the resolution professional invites competing plans, and a selected plan must be significantly better, on the committee's criteria, to be chosen over the base plan.
- Approval needs not less than sixty-six per cent. of the voting shares, after considering feasibility, viability and the section 53 order of priority.
- Where a plan impairs claims, the committee may require promoter dilution, or must record reasons if the plan has none.
Read next
- Sections 54L and 54M: approval by the Adjudicating Authority and appeal
- Sections 54G, 54H and 54-I
- Section 30: submission of the resolution plan
- The PPIRP timeline and the base resolution plan
Disclaimer: Based on the IBBI consolidated text of the Insolvency and Bankruptcy Code, 2016 amended up to 12 August 2021 and on the Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026), which comes into force on the date or dates notified by the Central Government, as consulted on 2 October 2026. It explains the words of the statute only; commencement notifications, other amendments made after 12 August 2021, notified thresholds, the rules and IBBI regulations, and the way tribunals and courts apply these sections should be checked. This article is general information, not legal advice; check the official text before acting.