Insolvency and Bankruptcy Code, 2016: Committee of Creditors

Here are the notes on the committee of creditors (CoC) under the Insolvency and Bankruptcy Code, 2016 (IBC):

Composition of CoC

The CoC is constituted by all the financial creditors of the corporate debtor. The financial creditors are those who have lent money to the corporate debtor and have a security interest over its assets.

The CoC is responsible for overseeing the insolvency resolution process and taking all major decisions related to the corporate debtor.

Meetings of CoC

The CoC must meet at least once in every 15 days during the insolvency resolution process. The meetings of the CoC must be called by the resolution professional.

The CoC can also meet at any other time, if it is decided by a majority of its members.

Decision-making in CoC

The CoC takes all its decisions by a majority vote of its members. Each member has one vote, regardless of the amount of debt owed by them to the corporate debtor.

However, there are certain decisions that require a special majority of 75% of the votes cast. These decisions include:

  • Approving the resolution plan
  • Rejecting the resolution plan
  • Approving the liquidation of the corporate debtor

Duties and Powers of CoC

The CoC has the following duties and powers:

  • Oversee the insolvency resolution process
  • Take all major decisions related to the corporate debtor
  • Approve the resolution plan
  • Reject the resolution plan
  • Approve the liquidation of the corporate debtor
  • Remove the resolution professional
  • Appoint the liquidator

MCQs on CoC

  1. Who constitutes the CoC?
    • All the financial creditors of the corporate debtor.
  2. How often must the CoC meet?
    • At least once in every 15 days during the insolvency resolution process.
  3. How are decisions made in the CoC?
    • By a majority vote of its members.
  4. What are the duties and powers of the CoC?
    • Oversee the insolvency resolution process, take all major decisions related to the corporate debtor, approve the resolution plan, reject the resolution plan, approve the liquidation of the corporate debtor, remove the resolution professional, and appoint the liquidator.