After the repeal of the Sick Industrial Companies (Special Provisions) Act, 1985 and the dissolution of…

The Sick Industrial Companies (Special Provisions) Act, 1985 was repealed with effect from 1 December 2016, and the BIFR and its appellate authority (AAIFR) were dissolved. Distressed companies are now revived, including through merger or amalgamation, mainly under the Insolvency and Bankruptcy Code, 2016. The Explanation to section 5(26) of the Code clarifies that a resolution plan may provide for the restructuring of the corporate debtor, including by way of merger, amalgamation and demerger.

The committee of creditors approves a resolution plan under section 30(4) by a vote of not less than 66% of the voting share of the financial creditors, but that approval alone does not make the plan binding. Under section 31(1), the Adjudicating Authority (the National Company Law Tribunal, in the case of companies) approves the plan if it meets the requirements of section 30(2). The approved plan then binds the corporate debtor and its employees, members, creditors, guarantors and other stakeholders.

The BIFR no longer exists. The Insolvency and Bankruptcy Board of India regulates the insolvency process but does not approve resolution plans.