"Debt restructuring involves a reduction of debt and an extension of payment terms or change in terms and conditions." Analyze the statement indicating that any resolution plan needs to be consented by the Committee of C

In case of Corporate Insolvency Resolution Process (CIRP), corporate restructuring strategies include organizational restructuring and financial restructuring. Financial restructuring is the process of reorganizing the financial structure, which primarily comprises of equity and debt capital. Financial restructuring is undertaken either to recover from financial distress or as part of company's general financial strategy, such as gaining higher market share, seize emerging market opportunities, risk reduction, better debt management. Debt restructuring is the process of reorganizing the whole debt capital of the company in negotiation with bankers, creditors, vendors. It involves a reduction of debt and an extension of payment terms or change in terms and conditions. Restructuring includes alteration of the repayment period, repayable amount, the amount of instalments, rate of interest, sanction of additional credit facility, enhancement of existing credit limits, compromise settlements etc. One of the best methods for corporate debt restructuring is debt-equity swap where specified shareholders have right to exchange stock for a predetermined amount of debt in the same company. In debt-equity swap, borrowings are exchanged with shares of the company. The resolution plan shall be submitted by a resolution applicant. The Committee of Creditors shall approve a resolution plan by a vote of not less than 66% majority of the financial creditors, after considering its feasibility and viability, and such other requirements as may be specified by the Insolvency and Bankruptcy Board of India. Once the resolution plan is approved by the Committee of Creditors, it is presented to the Adjudicating Authority (NCLT) for its approval. Thus, under the Insolvency and Bankruptcy Code, a resolution plan requires the consent of the Committee of Creditors and thereafter the approval of the Adjudicating Authority (NCLT). As per section 31, the NCLT shall review the resolution plan sanctioned by the Committee of Creditors. If NCLT is satisfied that the resolution plan as approved by the Committee of Creditors meets the requirements, it shall approve the resolution plan. After NCLT approval, the resolution plan shall be binding on the Corporate Debtor and its employees, members, creditors, guarantors and other stakeholders involved in resolution plan. The statement is accurate. Debt restructuring, as a component of a resolution plan under the IBC, indeed involves modifying debt terms. Crucially, for such a plan to be effective and legally binding, it must first receive the consent of the Committee of Creditors (with a specified majority, currently 66%) and subsequently be approved by the National Company Law Tribunal (NCLT). This two-tier approval mechanism ensures that the plan is both commercially viable and legally sound, protecting the interests of all stakeholders.