How Is The Committee Of Creditors (CoC) Constituted?

Answer By law4u team

The Committee of Creditors (CoC) is a vital decision-making body in the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC). It consists exclusively of financial creditors of the corporate debtor and is responsible for approving resolution plans, selecting the Resolution Professional, and overseeing the insolvency proceedings.

Procedure for Constituting the CoC

Appointment of Interim Resolution Professional (IRP)

Once the National Company Law Tribunal (NCLT) admits the insolvency application, it appoints an Interim Resolution Professional (IRP).

Identification and Verification of Financial Creditors

The IRP identifies all financial creditors of the corporate debtor and verifies their claims.

Calling the First Meeting

The IRP calls a meeting of all financial creditors within 30 days of his appointment.

Formation of CoC

At the first meeting, the financial creditors form the Committee of Creditors. Only financial creditors who have verified claims are members.

Determination of Voting Share

Each financial creditor’s voting power is proportional to the amount of their debt in relation to the total debt of all financial creditors.

Eligibility and Members

Only Financial Creditors

Operational creditors and other stakeholders are not members of the CoC.

Financial Creditors Include

Banks, financial institutions, debenture holders, bondholders, homebuyers (in real estate cases), and any other persons to whom financial debt is owed.

Role of the Committee of Creditors

Approve or reject resolution plans proposed for the corporate debtor.
Replace or confirm the Resolution Professional.
Approve key decisions like liquidation, withdrawal of application, or change in the resolution process.
Hold meetings and take decisions with a minimum 66% (two-thirds) majority vote.