What is meant by the term 'Hair-Cut'?

The term 'Hair Cut', though commonly used in insolvency matters, has not been defined under the Code or the Regulations. Hair-cut is the amount of sacrifice by the Creditors of reduction the corporate debtor gets over the amount claimed by its creditors i.e., Total amount claimed by the Creditor minus total amount settled to creditors of the Corporate Debtor under the Resolution Plan.