IBC Section 111: Approval of repayment plan by creditors

Section 111 of Insolvency and Bankruptcy Code, 2016: Approval of repayment plan by creditors

Official Bare Act Text

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

The repayment plan or any modification to the repayment plan shall be approved by a majority of more than three-fourth in value of the creditors present in person or by proxy and voting on the resolution in a meeting of the creditors.

Legal Commentary & Landmark Judgments: Section 111

Section 111 establishes the high statutory voting threshold required for the approval of a repayment plan, mandating approval by a majority of more than three-fourths in value of creditors voting.

75% Super-Majority Standard: The repayment plan or any modification to the plan shall be approved by a majority of more than three-fourths (75%) in value of the creditors present in person or by proxy and voting.
Calculation on Voting Creditors: The 75% threshold is calculated on the value of debts of creditors who actually participate and cast votes, not on the total debt roster.
Democratic Legitimacy: Ensures that a restructuring plan carries overwhelming creditor endorsement before receiving judicial sanction.

Key Landmark Precedents:

Dilip B. Jiwrajka v. Union of India (2024) 5 SCC 436: The Supreme Court held that the 75% voting requirement under Section 111 reflects the commercial supremacy of creditors in individual debt restructuring, ensuring robust consensus.
Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta (2020) 8 SCC 531: Affirmed that super-majority creditor approvals bind dissenting minority creditors.

Courtroom Practice & Strategic Litigation Guidance:

Calculate voting percentages under Section 111 meticulously: sum the admitted claim value of all creditors voting in favor and divide by the total value of creditors who cast valid votes. If the ratio exceeds 75.01%, the plan is lawfully approved.