Government considering lowering approval threshold for resolution under IBC

The government is considering lowering the approval threshold for resolution plans under the Insolvency and Bankruptcy Code in a move aimed at preventing too many insolvent companies from going into liquidation. At present, more than 75 per cent of creditors have to agree to a resolution plan, implying that just over 26 per cent can reject it and force a company into liquidation. The government feels that liquidation should be the last resort and is considering whether such plans can be approved by a two-thirds majority or even a simple majority.