IBC Section 106: Report of resolution professional on repayment plan

Section 106 of Insolvency and Bankruptcy Code, 2016: Report of resolution professional on repayment plan

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

(1) The resolution professional shall submit the repayment plan under section 105 along with his report on such plan to the Adjudicating Authority within a period of twenty-one days from the last date of submission of claims under section 102.

(2) The report referred in sub-section (1) shall include that-

(a) the repayment plan is in compliance with the provisions of any law for the time being in force;

(b) the repayment plan has a reasonable prospect of being approved and implemented; and

(c) there is a necessity of summoning a meeting of the creditors, if required, to consider the repayment plan:

Provided that where the resolution professional recommends that a meeting of the creditors is not required to be summoned, reasons for the same shall be provided.

(3) The report referred to in sub-section (2) shall also specify the date on which, and the time and place at which, the meeting should be held if he is of the opinion that a meeting of the creditors should be summoned.

(4) For the purposes of sub-section (3).

(a) the date on which the meeting is to be held shall be not less than fourteen days and not more than twenty eight days from the date of submission of report under sub-section (1);

(b) the resolution professional shall consider the convenience of creditors in fixing the date and venue of the meeting of the creditors.

Legal Commentary & Landmark Judgments: Section 106

Section 106 defines the statutory duty of the Resolution Professional to submit a comprehensive report on the repayment plan to the Adjudicating Authority within twenty-one days of the list of creditors.

21-Day Submission Limit: The resolution professional shall submit the repayment plan along with his report on the plan to the Adjudicating Authority within twenty-one days from the date of the list of creditors under Section 104.
Report Assessments: The report must state whether: (a) The plan has a reasonable prospect of being approved and implemented; (b) A meeting of creditors should be summoned; (c) The date, time, and venue for the meeting.
Notice to Creditors: A copy of the report and repayment plan shall be served on all creditors listed under Section 104.

Key Landmark Precedents:

Dilip B. Jiwrajka v. Union of India (2024) 5 SCC 436: The Supreme Court noted that the RP's report under Section 106 provides the critical viability assessment guiding creditors on whether to convene a meeting to vote on the plan.
Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: Affirmed that the RP's professional evaluation under Section 106 protects creditors from unfeasible or illusory restructuring proposals.

Courtroom Practice & Strategic Litigation Guidance:

The RP must examine the repayment plan objectively under Section 106. If the plan demonstrates clear financial backing and exceeds liquidation value, recommend calling a meeting of creditors under Section 106(2)(a).