2.18.42. Insolvency and Bankruptcy Board of India (Pre-packaged Insolvency Resolution Process) Regulations, 2021
For the purposes of consideration of resolution plans,-
(i) “basis for evaluation”, includes the parameters to be applied and the manner of applying such parameters, as approved by the committee, for evaluating a resolution plan to assign a score to the plan, and disclosed in the invitation for resolution plans.
Illustration 1
The committee may identify three parameters, namely, X, Y and Z for evaluation of resolution plans. It may apply these parameters in the form of a formula, namely, 1.5 X + 2 Y + 2.5 Z. Where the values of X, Y and Z are 20, 25, and 30 respectively, the score of the resolution plan is 1.5 (20) + 2 (25) + 2.5 (30) = 155.
Illustration 2
The committee may identify three parameters, namely, X, Y and Z for evaluation of resolution plans. It may apply these parameters in the form of a formula, namely, 1.5 X + 2 Y + 2.5 Z, subject to X being not less than 20. Where the values of X, Y and Z are 20, 25, and 30 respectively, the score of the resolution plan is 1.5 (20) + 2 (25) + 2.5 (30)= 155. It may apply these parameters in the form of a formula, namely, 2 Y + 2.5 Z, subject to X being not less than 20. Where the values of X, Y and Z are 20, 25, and 30 respectively, the score of the resolution plan is 2 (25) + 2.5 (30) = 125. Where the values of X, Y and Z are 15, 40, and 50 respectively, the resolution plan does not meet the minimum value of X and hence this plan will not be evaluated;
(ii) “significantly better” in relation to resolution plan, means that the score of the resolution plan is higher than that of another resolution plan by a certain number or percentage, as approved by the committee and disclosed in the invitation for resolution plans.
Illustration 1
The committee may consider a resolution plan to be significantly better than another resolution plan, if the score of the former is higher than that of the latter by 10. Where resolution plans “A” and “B” have scores of 100 and 110 respectively, “B” is significantly better than “A”. Where resolution plans “A” and “B” have scores of 100 and 108 respectively, “B” is not significantly better than “A”.
Illustration 2
The committee may consider a resolution plan to be significantly better than another resolution plan, if the score of the former is higher than that of the latter by 5 per cent. Where resolution plans “A” and “B” have scores of 100 and 107 respectively, “B” is significantly better than “A”. Where resolution plans “A” and “B” have scores of 100 and 104 respectively, “B” is not significantly better than “A”.
(iii) “tick size” means minimum improvement over another resolution plan in terms of score, as approved by the committee and disclosed in the invitation for resolution plans.
Illustration 1
On the basis for evaluation, resolution plans “A” and “B” have scores of 105 and 108, respectively. Resolution applicant of “A” may wish to improve “A” over “B”. It must improve “A” such that the score of “A” exceeds that of “B” at least by tick size. If tick size is 5, resolution applicant of “A” must improve “A” such that the score of “A” is at least 108 + 5 = 113.
Illustration 2
In the example under Illustration 1, if tick size is 5 per cent., resolution applicant of “A” must improve “A” such that the score of “A” is at least 108 X 1.05 = 113.4.