Committee of creditors

What is Committee of Creditors

A committee of creditors is a group of a debtor company’s financial creditors that is constituted during insolvency proceedings to collectively decide how the insolvency resolution or liquidation should proceed, typically by majority voting based on their share of the debt.

India's Insolvency and Bankruptcy Code, 2016 (IBC) introduced a creditor-in-control model for corporate insolvency. When a corporate insolvency resolution process (CIRP) is admitted by the National Company Law Tribunal (NCLT), control of the corporate debtor's management transfers from the promoters to creditors. The IBC requires the Committee of Creditors (CoC) to take key business decisions. A 2025 parliamentary brief explains that after CIRP admission an insolvency professional runs the company, but a committee of financial creditors (FC) takes key business decisions and chooses a resolution plan; if the CoC concludes that revival is impossible, it can decide to liquidate. The IBC (Amendment) Bill, 2025 further emphasises the CoC's influence by enabling it to appoint or remove the liquidator and supervise liquidation.

Official Definition of Committee of Creditors

As defined in Legislation

Insolvency and Bankruptcy Code, 2016

The CoC is defined as a statutory committee constituted during the CIRP under IBC. Section 21 of the Code provides that the interim resolution professional must constitute a CoC after collating claims and determining the corporate debtor's financial position.

Legal provisions related to CoC

'Section 21': It sets out how the CoC is formed and how it functions during the insolvency resolution process. It begins by requiring the IRP to constitute the CoC after collecting all claims submitted by creditors and assessing the corporate debtor’s financial position. The CoC is composed of all financial creditors; however, a financial creditor who is a related party of the corporate debtor—whether directly or through an authorised representative—cannot participate, represent, or vote in CoC meetings. This exclusion does not apply to regulated financial creditors who became related parties solely because their debt was converted into equity or similar instruments before insolvency. Where the corporate debtor has multiple financial creditors, including those in a consortium or under joint lending arrangements, each such creditor is a member of the CoC, and their voting share is proportionate to the financial debt owed to them.

If a person is both a financial creditor and an operational creditor, they are treated as a financial creditor only for the portion of financial debt, with voting rights limited to that portion, and as an operational creditor for the operational debt component. Even if an operational debt is assigned to a financial creditor, the assignee continues to be treated as an operational creditor for that debt.

The section also provides detailed rules for representation. In consortium or syndicated lending structures, where loan documents designate a trustee or agent, financial creditors may authorise such trustee or agent to represent them, represent themselves, appoint an insolvency professional at their own cost, or vote jointly or severally with other financial creditors. For large classes of financial creditors such as bondholders or depositors, an authorised representative—other than the IRP—must be appointed by the Adjudicating Authority before the first CoC meeting. This representative attends meetings and votes according to the individual voting shares of creditors they represent. Their remuneration is governed either by contractual documents or, in certain cases, by IBBI specifications and is treated as part of the insolvency resolution process costs.

Section 21 also empowers the IBBI to specify the manner of voting and calculation of voting share for creditors represented under these provisions. Except where the Code prescribes otherwise, all CoC decisions require approval by creditors holding at least 51% of the voting share. In cases where the corporate debtor has no financial creditors, a CoC-equivalent body will be formed as per regulations to discharge CoC functions. Finally, the CoC has the right to demand any financial information from the Resolution Professional at any stage of the insolvency process, and the Resolution Professional must provide such information within seven days of the request.

Section 22: This section assigns the CoC a central role in deciding who will conduct CIRP. The CoC must hold its first meeting within seven days of being constituted, and it has the power to confirm the IRP as the RP or replace the IRP with another professional. If the CoC decides to continue with the IRP, it communicates this decision to the IRP, the corporate debtor, and the Adjudicating Authority. If the CoC opts to replace the IRP, it must apply to the Adjudicating Authority with the name and written consent of the proposed new RP. The CoC’s decision effectively triggers the appointment process before the Adjudicating Authority and the IBBI, and until the proposed RP is confirmed, the IRP continues to function.

Section 24: This section talks about the meeting of CoC. All the meetings should be conducted by the RP in a manner as specified. Notices must be served to all financial creditors (including authorised representatives of classes of creditors), suspended directors and qualifying operational creditors.

Section 28: Certain actions during the CIRP cannot be undertaken by the RP without the prior approval of the CoC. The statute lists actions that materially impact the financial or structural position of the corporate debtor—such as, including, raising interim finance beyond regulatory limits, creating or modifying security interest, altering the capital structure, undertaking related-party transactions, amending constitutional documents, or transferring assets outside the ordinary course of business. For any of these actions, the RP must obtain prior consent through a vote of not less than 66% of the voting share of the CoC. The provision reinforces that the CoC exercises supervisory and consent-based control over strategic decisions, ensuring that value-eroding or risky actions are not undertaken without creditor oversight. This section embodies the creditor-in-control philosophy and positions the CoC as the guardian of the corporate debtor’s value during CIRP.

Section 30: This section delineates the process by which resolution plans are submitted, examined, and approved. First, the Resolution Professional must verify whether a resolution plan meets the statutory requirements, including eligibility under Section 29A and compliance with the Code. Once a plan meets these threshold criteria, it is placed before the CoC for consideration. The CoC is mandated to examine the feasibility and viability of each plan and exercise its commercial wisdom to determine whether it should be approved. Approval requires an affirmative vote of at least 66% of the voting share. The CoC must ensure that the plan provides for payment of insolvency resolution costs, ensures that operational creditors receive at least their liquidation value, and appropriately balances the interests of all stakeholders. Once approved by the CoC, the resolution plan is submitted to the Adjudicating Authority (NCLT), which conducts only a limited judicial review to verify compliance with Section 30(2). The Supreme Court, particularly in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, has repeatedly emphasized that the CoC’s commercial decision regarding a resolution plan is non-justiciable and insulated from judicial review, underscoring the centrality of the CoC’s business judgment in the insolvency framework.

Section 33: Section 33 sets out the circumstances in which liquidation of the corporate debtor must be ordered. The CoC plays a decisive role, as it may, resolve to liquidate the corporate debtor with a 66% voting share. Such a resolution is binding, and upon receiving it, the Resolution Professional must apply to the Adjudicating Authority for a liquidation order, which the NCLT is obliged to pass. Liquidation is also mandated where the CoC fails to approve a resolution plan within the statutory timelines or where the NCLT rejects a plan for non-compliance with Section 30(2). Through Section 33, the Code grants the CoC the ultimate authority to determine the fate of the corporate debtor. Judicial pronouncements, including K. Sashidhar v. Indian Overseas Bank, have clarified that the CoC’s decision to liquidate falls squarely within its commercial wisdom and is not subject to judicial interference. The section reinforces the principle that creditors, as the primary risk-bearers, are best positioned to decide whether insolvency resolution or liquidation maximizes value.

Insolvency and Bankruptcy Code (Amendment) Act, 2018

Section 25(2)(h) was amended to empower the committee of creditors (CoC) to lay down the criteria for RAs, having regard to the complexity and scale of operations of business of the CD, to keep out frivolous applicants.

Section 30(4) was amended to explicitly oblige the CoC to consider the feasibility and viability of the resolution plan while approving it.

Types of Creditors

Financial Creditors

A financial creditor is defined as any person to whom a financial debt is owed and includes those to whom such debt has been legally assigned or transferred. A financial debt refers to a debt disbursed against the consideration of time value of money- for example, loans, credit facilities, debentures, bonds, or any other transaction with similar commercial effect. Financial creditors play a major role in CIRP as they are the ones to form CoC under Section 21. The apex court in Swiss Ribbons Pvt. Ltd. v. Union of India upheld the distinction between financial and operational creditors, observing that financial creditors are involved in assessing the viability of a debtors, restructuring debt, and monitoring cashflows, making them better equipped to take commercial decisions in insolvency. Financial creditors usually have long-term financing relationships with the debtor.

Operational Creditors

An operational creditor, defined under Section 5(20) of the IBC, is a person to whom an operational debt is owed and includes those to whom such debt has been legally assigned or transferred. An operational debt under Section 5(21) refers to claims arising from the provision of goods or services, including employment dues and statutory dues owed to the government. Unlike financial creditors, operational creditors do not form part of the Committee of Creditors except in limited circumstances (e.g., where no financial creditors exist, under Regulation 16 of the CIRP Regulations, 2016). Operational creditors do not typically assess long-term viability or lending risks of the debtor; instead, they have transactional relationships relating to supply chains, salaries, or statutory obligations.

As defined in Government Reports

Bankruptcy Law Reforms Committee (BLRC) Report (Vol.1), 2015

The report observes that COC is the only correct forum for evaluating possibilities for a defaulting firm, such as liquidation, debt restructuring, or selling the firm as a going concern. The creditors have votes in proportion to the magnitude of debt that they hold. The appropriate disposition of a defaulting firm is deemed a business decision that should be taken by creditors only, strictly avoiding involvement from arms of the government (legislature, executive, or judiciary). This includes evaluating proposals, selling business units, and restructuring debt. During the Insolvency Resolution Process (IRP), which lasts 180 days, the creditors committee analyzes the company, hears rival proposals, and decides the course of action. A revival plan becomes binding on all remaining creditors when it achieves the support of 75% of the creditors. If no revival plan achieves 75% support within 180 days, the firm goes into liquidation. The creditors committee can grant a one-time extension of the 180-day Insolvency Resolution Process (IRP) period for up to 90 days, provided 75% of the committee agrees that the complexity requires more time, with prior approval from the adjudicator. Liquidation can be triggered if the creditors committee quickly decides this is the right path, or if 180 days pass without obtaining the required supermajority in the creditors committee for a revival plan. The CoC can apply to the Adjudicator for the removal of an IP at any time during a live insolvency or bankruptcy resolution case, accompanied by a majority vote.

IBBI Guidelines for CoC, 2024

This document laid down guidelines for CoC. The commercial wisdom of the CoC is the driving force behind the procedures intended to achieve the objective of value maximisation of the distressed assets under the IBC. These self-regulating guidelines were issued to foster more effective and time-bound decision making by the CoC members, with the goal of stemming value erosion through minimisation of procedural delays and enhancement of transparency and coordinated approach. Members must foster informed decision making and share any relevant information (relating to transactions, guarantees, recoveries, claims, etc.) concerning the corporate debtor with the CoC. The CoC should supervise and facilitate the IP in discharging their duties under the Code.

Creditor Led Resolution Approach - Report of the Expert Committee (May 2023)

A key recommendation distinguishing Creditor-Led Resolution Process (CLRP) from CIRP and Pre-packs concerns the CoC's power over the RP: the CoC may remove and replace the RP at its discretion, and the confirmation of the AA is not required for this action. The CoC also plays a critical role in managing the process timeline; for instance, the RP must be instructed by a resolution passed by 66% of the CoC to file an application for extending the fast-track process period beyond 150 days. The CoC is responsible for fixing the RP's fees and other expenses, which then constitute the fast-track process costs. The CoC's role extends to initiating conversion to CIRP or closing the CLRP. If the RP discovers evidence of gross mismanagement, fraud, or non-cooperation by the CD, the CoC is empowered (by a vote of not less than 66% of voting shares) to resolve to convert the CLRP into CIRP, subsequently requiring the RP to apply to the AA for transfer of management. Conversely, the CoC may decide to close the CLRP if no resolution plan is approved, or if the CD regularizes its loan accounts or reaches a settlement. Additionally, the RP's application to the AA for imposing a moratorium must be filed pursuant to the approval of 51% of prescribed unrelated FCs (before CoC constitution) or the CoC itself, and the RP may file applications for avoidance transactions with the approval of the CoC.

Transforming Insolvency Resolution in India (2025)

A framework was proposed for Municipal Insolvency. The functions of the CoC would include:

Composition: A CoC would be formed by the municipality’s creditors.

Municipal Representation: The municipality must be granted a seat in the CoC to evaluate the resolution plan from a technical perspective in cases involving Public Private Partnerships (PPP).

Decision-Making: The Administrator, appointed to manage the insolvent municipality, would iteratively discuss five-year forecasts with the CoC for their inputs in periodic meetings, although the Administrator's decision would be final. Payments to FCs and OCs would be made in installments, as decided by the Administrator in conjunction with the CoC.

As defined in Case Laws

Indian courts have clarified and reinforced the definition and role of the CoC through landmark judgements.

Judicial recognition of CoC's commercial wisdom

K. Sashidhar v. Indian Overseas Bank Ors. (2019)

The Supreme Court (SC) held that the commercial wisdom of the CoC is paramount. As noted in the IBBI study, the court observed that the legislature has consciously provided no ground to challenge the commercial wisdom of individual financial creditors or their collective decision before the adjudicating authority. As a result, the CoC's decision to approve or reject a resolution plan cannot be questioned on merits. The Court emphasised that judicial review is limited to verifying that the CoC’s decision complies with the Code and regulations and that there is no discrimination. This judgment entrenched the doctrine that the CoC’s business decisions are non‑justiciable and cannot be scrutinised by NCLT.

Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta & Ors. (2019)

In this case, the SC reinforced the primacy of the CoC’s commercial wisdom. It held that the CoC must assess the feasibility and viability of resolution plans, including the distribution of funds among different classes of creditors, and that courts have only a limited role—they may send the plan back to the CoC if it does not consider the objectives of keeping the debtor as a going concern, maximising asset value and balancing stakeholder interests. The Court clarified that the CoC does not owe a fiduciary duty to any group but takes a business decision binding on all stakeholders. It further held that differential payments to different classes of creditors are permissible and that equitable treatment does not mean equal payment.

Expansion of CoC Membership and Creditor Classification

Pioneer Urban Land & Infrastructure Ltd. v. Union of India (2019)

This constitutional challenge involved the classification of homebuyers as financial creditors. The Supreme Court upheld the amendment recognising homebuyers’ advances as financial debt and held that homebuyers are financial creditors entitled to initiate insolvency proceedings and to participate in the CoC through authorised representatives. The Court reasoned that homebuyers significantly finance real estate projects and that allowing them representation aligns with the legislative intent. Consequently, in cases involving real estate projects, authorised representatives of homebuyers sit on the CoC and exercise voting rights proportional to their debt.

Safeguards Against CoC Manipulation, Moral Hazard, and Promoter Misconduct

In the matter of Synergies-Dooray Automotive Ltd.

An early instance that influenced policy highlighted the importance of the CoC's integrity when, in the resolution of Synergies Dooray Automotive Limited, a non-related party (MFL) secured a controlling seat (over 75%) in the CoC by being assigned debt from a related party, Castings. This event exposed the moral hazard of promoters regaining control after creditors had taken significant financial haircuts (about 94% in this case). This led to the subsequent insertion of Section 29A, which addresses this moral hazard by prohibiting undesirable persons, regardless of whether they are promoters, from submitting resolution plans to ensure capable and credible parties take control of the CD. In the context of broader application, the CoC structure is also adapted for different insolvency proceedings, such as individual insolvency resolution, where a repayment plan must be approved by 75% of the creditors’ voting share, or proposed coordination mechanisms for managing insolvency among corporate groups.

Appearance in Official Databases

Database A

Annual Report 2017-18 (IBBI)

Although the commercial decisions of the CoC are generally shielded from judicial review, courts have maintained that the CoC must adhere to the principle of balancing stakeholder interests.

Annual Report 2018-19 (IBBI)

By enabling the stakeholders themselves to decide matters instead of accepting a solution worked out by the State, the Code establishes the supremacy of markets. All-round efforts are being made to strengthen the institution of the CoC to match the gravity of its responsibilities. Furthermore, judicial decisions emphasize the supremacy of the CoC's commercial wisdom, holding that it has the discretion to approve or reject a resolution plan, and the AA cannot inquire into the justness of the rejection of a plan by dissenting FCs.

Annual Report 2021-22 (IBBI)

Notably, the Supreme Court has affirmed that after a resolution plan receives CoC approval and is submitted to the AA, the successful resolution applicant cannot withdraw or modify it. The IBBI has emphasized the importance of the CoC through various engagement initiatives, including specific workshops for bank officials, sessions on the Gyandarshan Channel addressing "CoC and lending post IBC", and multiple workshops titled "Committee of Creditors: An Institution of Public Faith" conducted in association with SBI and IBA, often aimed at capacity building for financial creditors.

CIRPs ENDING IN RESOLUTION	Till 31st March 2022	In 2021-22
Total Admitted Claims (Rs. in crore)	760598	209291
Admitted Claims of FCs	684901	195231
Admitted Claims of OCs	75697	14060
Total Realisable Amount (Rs. in crore)	234049	47030
Realisable amount by FCs	225294	46759
Realisable amount by OCs	8755	271
Total Realisable Amount by Claimants as % of Claims Admitted	30.77	22.47
Realisable Amount by FCs as % of their Claims Admitted	32.89	23.95
Realisable Amount by OCs as % of their Claims Admitted	11.57	1.93

CIRPs ENDING IN LIQUIDATION	Till 31st March 2022	In 2021-22
Total Claims: (Rs. in Crore)	795836	145003
Claims of FCs	715005	125232
Claims of OCs	80831	19771

Annual Report 2022-23 (IBBI)

Table: Summary of CIRP, Liquidation and Voluntary Liquidation processes in FY 2022-23

CIRPs ENDING IN RESOLUTION	Till 31st March 2023	In 2022-23
Total Admitted Claims (Rs. in crore)	898906	142543
Admitted Claims of FCs	811055	128265
Admitted Claims of OCs	87851	14278
Total Realisable Amount (Rs. in crore)	286060	51425
Realisable amount by FCs	276924	50286
Realisable amount by OCs	9136	1139
Total Realisable Amount by Claimants as % of Claims Admitted	31.82%	36.07%
Realisable Amount by FCs as % of their Claims Admitted	34.14%	39.21%
Realisable Amount by OCs as % of their Claims Admitted	10.40%	7.97%

CIRPs ENDING IN LIQUIDATION	Till 31st March 2023	In 2022-23
Total Claims: (Rs. in Crore)	920124	124870
Claims of FCs	829911	114869
Claims of OCs	90213	10001

Annual Report 2023-24 (IBBI)

The CoC was the central subject of significant regulatory developments and stakeholder engagement efforts by the IBBI during FY 2023-24. The amendments to the CIRP Regulations bolstered the CoC's oversight and transparency, notably by enabling the CoC to consider the requirement of constituting a Monitoring Committee for the implementation of the resolution plan, and mandating the RP to obtain CoC approval for all CIRP-related costs. Further procedural enhancements require monthly CoC meetings (extendable to quarterly if necessary) and grant the CoC the power to determine the duration of the electronic voting window and decide on the disclosure of the fair value in the information memorandum. In real estate matters, the CoC has the authority to instruct the RP to solicit separate resolution plans for each project, while in liquidation, the liquidator may only file a compromise proposal if the CoC made such a recommendation during the CIRP. The SC) affirmed the commercial wisdom of the CoC by upholding the relinquishment of personal guarantee in a resolution plan, but also ruled that homebuyers cannot be treated as different classes of Financial Creditors within a project's resolution plan. Recognizing its pivotal role, the IBBI organized a dedicated workshop (tenth such workshop) titled “Committee of Creditors: An Institution of Public Faith” to build the capacity of Financial Creditors to ensure the CoC discharges its statutory responsibility with care and diligence.

Table: Summary of CIRP, Liquidation and Voluntary Liquidation processes in FY 2023-24

CIRPs ENDING IN RESOLUTION	Till 31st March 2024	In 2023-24
Total Admitted Claims (Rs. in crore)	1046283	174291
Admitted Claims of FCs	946606	162597
Admitted Claims of OCs	99677	11694
Total Realisable Amount (Rs. in crore)	335901	47653
Realisable amount by FCs	325236	46205
Realisable amount by OCs	10665	1448
Total Realisable Amount by Claimants as % of Claims Admitted	32.10	27.34
Realisable Amount by FCs as % of their Claims Admitted	34.36	28.42
Realisable Amount by OCs as % of their Claims Admitted	10.70	12.38

CIRPs ENDING IN LIQUIDATION	Till 31st March 2024	In 2023-24
Total Claims: (Rs. in Crore)	1100745	141234
Claims of FCs	999743	130367
Claims of OCs	101002	10867

Research that engages with CoC

Promoting common good amidst anti‑common behaviour of stakeholders: Role of Committee of Creditors, Sudhaker Shukla & Kokila Jayaram

This government‑sponsored study discussed the CoC as the statutory institution through which the principle of collective action is operationalised. It notes that the CoC “holds the life of the corporate debtor in its hands” and that satisfaction of dues of non‑CoC creditors depends on it. The paper describes the CoC as a creation of statute (citing Numetal Ltd. v. Satish Kumar Gupta & Anr.) and emphasises that it must act fairly and transparently. It observes that financial creditors are decision‑makers but must represent the interests of all stakeholders, and it highlights statutory voting thresholds (51%, 66%, 90%) for different decisions. The study underscores that the CoC is expected to assess viability, decide on interim finance, and control costs.

A Code of Conduct for Committee of Creditors, B Sriram

This paper examines the appropriateness and fairness of decisions made during CIRP in India, particularly focusing on the CoC as the supreme decision-making body. It discusses the CoC's pivotal role and commercial wisdom, which is largely protected from judicial scrutiny by the Supreme Court of India. The article then analyzes the insolvency resolution processes in international jurisdictions—specifically Singapore, the United Kingdom, and the United States—to compare their approaches, noting that other countries often rely more on independent managers or court oversight. Ultimately, the it advocates for adopting a formal Code of Conduct for the CoC in India to enhance transparency, accountability, and the overall efficacy of the CIRP, thereby maximizing value for all stakeholders.

The Role of Committee of Creditors (CoC) in Shaping Resolutions, Nikhil Rawat

This paper examines the pivotal role of the Committee of Creditors under the Insolvency and Bankruptcy Code, 2016 (India) in driving the corporate insolvency resolution process (CIRP). The paper outlines how the CoC acts as the commercial decision-making body: it evaluates and approves resolution plans, exercises oversight over the resolution professional and debtor’s management, and balances creditor interests with the requirement to salvage viable entities. It also discusses the regulatory and judicial evolution of the CoC’s powers (such as voting thresholds, involvement of operational creditors, and transparency safeguards), and points out challenges including potential conflicts of interest, dominance by large financial creditors, and procedural bottlenecks. Overall, the paper argues that effective functioning of the CoC is crucial for achieving timely, value-maximising outcomes in insolvency proceedings.

NCLT’s Judicial Inference: A Hurdle to the Commercial Wisdom of Committee of Creditors under the IBC, Nipun Ninad Naphade

This article argues that although the IBC was designed to make the Committee of Creditors (CoC) the primary commercial decision-maker in insolvency resolution, frequent substantive interference by the NCLT has diluted this autonomy. The author shows that instead of limiting itself to checking legal and procedural compliance under Section 30(2), the NCLT has in several cases begun examining the commercial merits of resolution plans—effectively second-guessing creditors’ business judgments. This judicial overreach, the paper contends, undermines the IBC’s objective of time-bound, market-driven resolution, creates uncertainty for resolution applicants, slows down the process, and weakens the finality of CoC decisions. It concludes that tribunals must respect the doctrine of commercial wisdom and intervene only where there is illegality, mala fides, or violation of statutory rights.

International Experiences

Under 11 U.S.C. § 1102, the U.S. trustee must appoint a committee of creditors holding unsecured claims promptly after an order for relief in a Chapter 11 case. Additional committees may be appointed if necessary to ensure adequate representation. The committee ordinarily consists of the seven largest unsecured creditors and is tasked with providing information to non‑member creditors and soliciting their comments. Unlike the Indian CoC, the U.S. creditors’ committee generally has an advisory role; the debtor remains in possession and operates under court supervision, and the committee negotiates but cannot unilaterally decide liquidation or plan approval.

Schedule B1 of the Insolvency Act 1986 allows the company’s creditors to establish a creditors’ committee. Paragraph 57 provides that the creditors may establish a committee, which then exercises functions conferred under the Act. The committee may require the administrator to attend meetings and provide information about the exercise of his functions. Unlike India’s CoC, the UK committee advises the administrator; the administrator retains operational control unless replaced.

Directive (EU) 2019/1023 on preventive restructuring frameworks aims to ensure that viable debtors have access to early restructuring and to improve efficiency of insolvency procedures. The Directive seeks to maximise value to creditors by enabling debtors to restructure at an early stage and avoid unnecessary liquidation. It emphasises balancing the rights of all parties, including workers, but does not prescribe a creditor committee with the broad powers seen in India’s CoC. Instead, it encourages Member States to design frameworks in which creditors can negotiate restructuring plans and adopt cross‑class cram‑down mechanisms.

Data Challenges

A major challenge in evaluating the functioning of the CoC is the absence of granular, publicly accessible data, despite the centrality of the CoC to the insolvency mechanism. The IBBI publishes quarterly reports and newsletters but these reports provide only aggregate-level data, without disclosing creditor-wise voting patterns, deliberation records, dissent notes, or the rationale behind CoC decisions to ensure the commercial wisdom of CoC is non-justiciable. CoC operates in a blackbox with minimal transparency. Creditors frequently lack access to complete and timely details of the debtor’s assets, liabilities, and operational status, hindering informed decision-making and fair asset valuation during insolvency proceedings. Many claims are submitted late due to poor outreach, especially among retail creditors and allottees. Disclosures by debtors are often incomplete, with structural gaps in verifying and assembling financial data from multiple sources. Lags in forming the CoC and fragmented data flows prolong the Corporate Insolvency Resolution Process (CIRP), increasing the likelihood of liquidation and undermining creditor recoveries.

Way Ahead

The IBBI’s August 2024 guidelines explicitly emphasize objectivity, integrity, independence, and impartiality for CoC members, aiming to minimize bias and maximize asset value. Recommendations suggest including a more diverse set of experts (such as those with compliance, credit, risk, or legal backgrounds) alongside primary financial creditors. This ensures wider stakeholder interests are reflected and contributes to better-informed decisions.