Committee of Creditors under the IBC

The Committee of Creditors (CoC) is the creditor body that takes the principal commercial decisions when an insolvent company undergoes corporate insolvency resolution. Under the Insolvency and Bankruptcy Code, 2016 (IBC), it assesses whether the company can be rescued through a resolution plan or should proceed towards liquidation.

Composition and voting

Under Section 21, the CoC ordinarily comprises the corporate debtor’s financial creditors, with voting shares based on the financial debt owed to them.

• Related-party financial creditors are generally excluded from participation and voting, subject to statutory exceptions.
• Operational creditors do not ordinarily have CoC voting rights; eligible representatives may attend meetings without voting.
• Unless the Code specifies otherwise, decisions require at least 51% of voting share, rather than a majority counted by the number of creditors.

Principal decisions during resolution

The CoC exercises commercial judgment over competing resolution proposals, considering their feasibility, viability and proposed distribution to creditors.

• Approval of a resolution plan requires at least 66% of voting share under Section 30(4).
• The CoC decides whether to retain the interim resolution professional as resolution professional or appoint another, and may subsequently replace the resolution professional.
• Specified actions by the resolution professional, such as raising interim finance beyond the approved limit, require prior CoC approval.
• The CoC may decide to liquidate the company before approval of a resolution plan; this requires at least 66% of voting share.

Limits and institutional checks

The resolution professional manages the process and examines plans for statutory compliance; the CoC evaluates their commercial merits. A CoC-approved plan requires approval by the National Company Law Tribunal to become binding.

• The CoC cannot override statutory requirements, including minimum payments prescribed for operational creditors.
• Judicial review is limited to statutory grounds and does not ordinarily substitute the tribunal’s commercial assessment for the CoC’s wisdom.