1. The company administrator shall prepare or cause to be prepared a scheme of revival and rehabilitation of the sick company after considering the draft scheme filed along with the application under section 254.
2. A scheme prepared in relation to any sick company under sub-section (1 ) may provide for any one or more of the following measures, namely:—
a. the financial reconstruction of the sick company;
b. the proper management of the sick company by any change in, or by taking over, the management of such company;
c. the amalgamation of—
i. the sick company with any other company; or
ii. any other company with the sick company;
d. takeover of the sick company by a solvent company;
e. the sale or lease of a part or whole of any asset or business of the sick company;
f. the rationalisation of managerial personnel, supervisory staff and workmen in accordance with law;
g. such other preventive, ameliorative and remedial measures as may be appropriate;
h. repayment or rescheduling or restructuring of the debts or obligations of the sick company to any of its creditors or class of creditors;
i. such incidental, consequential or supplemental measures as may be necessary or expedient in connection with or for the purposes of the measures specified in clauses (a ) to (h ).
Legal Commentary & Landmark Judgments: Section 261
Section 261 historically governed the preparation and contents of schemes of revival and rehabilitation; omitted by the Insolvency and Bankruptcy Code, 2016, its multi-faceted restructuring techniques were superseded by the Resolution Plan mechanism under Section 30 of the IBC.
When drafting a corporate restructuring plan, practitioners handling solvent companies should utilize Section 230 of the Companies Act, while distressed entities must operate under Section 30 of the IBC, ensuring that the plan strictly adheres to the priority waterfall under Section 53 IBC.