Section 106 of IBC, 2016: Report of Resolution Professional on Repayment Plan
Section 106 of the Insolvency and Bankruptcy Code, 2016 (IBC) governs the resolution professional's report on a debtor's repayment plan, including its filing deadline, assessment of feasibility and legal compliance, and recommendations concerning a meeting of creditors.
Purpose and applicability of Section 106
Section 106 falls within the insolvency resolution process for individuals and partnership firms in Part III of the IBC. Its operative application must be read with the Central Government's commencement notifications. The relevant Part III framework was brought into force for personal guarantors to corporate debtors from 1 December 2019; it should not be assumed that the same process has been generally commenced for every individual or partnership firm.
A repayment plan is the debtor's proposal, prepared in consultation with the resolution professional under Section 105, for restructuring debts or affairs. The resolution professional is the insolvency professional appointed to carry out statutory functions, including examining the plan and reporting to the Adjudicating Authority (the competent tribunal, ordinarily the NCLT for personal guarantors to corporate debtors under Section 60).
Section 106(1): Submission of plan and report within 21 days
Under Section 106(1), the resolution professional shall submit the repayment plan prepared under Section 105, together with the resolution professional's report on that plan, to the Adjudicating Authority within 21 days from the last date of submission of claims under Section 102.
The deadline is calculated from the last date for creditors to submit claims, not from the date on which the plan was first drafted. Section 102 provides for a public notice inviting creditors to submit claims within 21 days of its issue. The two periods perform different functions and should not be confused.
Section 106(2): Matters the report must address
The report must cover three statutory assessments:
- Section 106(2)(a) - Compliance with law: Whether the repayment plan complies with the provisions of any law in force. The professional should consider applicable legal restrictions, obligations and requirements when evaluating the proposed restructuring.
- Section 106(2)(b) - Reasonable prospect of approval and implementation: Whether the plan has a reasonable prospect of being approved by creditors and put into effect. This is an assessment of prospects, not a guarantee of creditor approval or successful implementation.
- Section 106(2)(c) - Need for a creditors' meeting: Whether it is necessary to summon a meeting of creditors to consider the repayment plan.
Proviso to Section 106(2): If the resolution professional recommends that no meeting of creditors is required, the report must state the reasons for that recommendation. The professional cannot simply omit a meeting recommendation without explanation.
Section 106(3): Proposed date, time and place of meeting
Where the resolution professional considers a meeting of creditors necessary, the report must specify the date, time and place at which the meeting should be held. The report therefore provides the Adjudicating Authority with a concrete proposed meeting arrangement, rather than a general statement that a meeting is desirable.
Section 106(4): Timing and convenience of creditors
Section 106(4) sets two requirements for fixing a proposed creditors' meeting:
- Section 106(4)(a): The meeting date must be not less than 14 days and not more than 28 days from the date the report is submitted under Section 106(1).
- Section 106(4)(b): The resolution professional must consider creditors' convenience when choosing the date and venue.
The 14-28 day window applies where the resolution professional proposes that a meeting should be summoned. The subsequent procedural steps are governed by the provisions on summoning and conducting meetings, including Sections 107 onward.
Illustrative timeline under Sections 102 and 106
| Stage | Statutory rule | Relevant section |
|---|---|---|
| Public notice | Adjudicating Authority issues notice within 7 days of admission order, inviting claims within 21 days of notice | Section 102 |
| Submission of repayment plan and report | Within 21 days after the last date for submitting claims | Section 106(1) |
| Meeting, if recommended | Proposed meeting date 14-28 days after submission of report | Section 106(3)-(4) |
These are statutory intervals, not a substitute for checking the actual order, public notice, applicable rules and directions in a particular case.
What happens after the report?
The report assists the Adjudicating Authority in determining whether a meeting of creditors should be called. Section 107 addresses the summoning of the meeting, while Section 108 addresses notice of the meeting. The process for consideration, voting and approval of the repayment plan is dealt with by the subsequent provisions, including Sections 111 and 114. Filing a favourable report under Section 106 does not itself amount to approval of the repayment plan.
Practical checklist for preparing the report
- Confirm the last date for filing claims stated in the Section 102 public notice.
- Obtain and review the repayment plan prepared under Section 105 and the available creditor information.
- Assess legal compliance and explain the basis for the assessment.
- Evaluate whether the proposed repayments and restructuring have a reasonable prospect of approval and implementation.
- State whether a meeting of creditors is necessary; give reasons if recommending that no meeting be called.
- If a meeting is proposed, identify a date within the 14-28 day statutory window, plus the time and place, considering creditors' convenience.
- Submit the plan and report to the Adjudicating Authority within the Section 106(1) deadline.
Frequently asked questions
Who submits the report under Section 106?
The resolution professional submits the debtor's repayment plan and the accompanying report to the Adjudicating Authority.
When must the Section 106 report be filed?
Within 21 days from the last date for submission of creditors' claims under Section 102.
Is a meeting of creditors mandatory in every case?
Section 106 requires the resolution professional to assess whether a meeting is necessary. If recommending no meeting, the report must explain why. The Adjudicating Authority's role and further procedure are governed by the following provisions of the Code.
Does the resolution professional approve the repayment plan?
No. Section 106 requires the professional to assess and report on the plan. Creditor consideration and the Adjudicating Authority's order are dealt with separately under the Code.
Official legal references
- India Code - Insolvency and Bankruptcy Code, 2016 (see Section 106 and related provisions).
- Insolvency and Bankruptcy Board of India - Legal framework.
- IBBI - Rules and subordinate legislation.
For the wider statutory context, read The Insolvency and Bankruptcy Code, 2016 and the connected Section 105 repayment plan.
Editorial note: This article explains the statutory framework for general information. Applicability, current rules, amendments and tribunal directions should be checked against official publications before acting on a particular matter.