On 06 August 2024, the Insolvency and Bankruptcy Board of India (IBBI) issued 'Guidelines for Committee of Creditors' (Guidelines) (available here). These Guidelines outline nine considerations for the Committee of Creditors (CoC) to follow when handling insolvency cases. The aim of Guidelines is timely resolution of insolvency of the corporate debtor and its asset value maximization.
These Guidelines are effective from 06 August 2024. As per the Guidelines, the members of the CoC are required to adhere to the following:
- Objectivity and Integrity
- Share relevant information on transactions, guarantees, and claims with the CoC/Insolvency Professional (IP).
- Ensure objectivity in decisions.
- Maintain integrity in all roles.
- Follow the Code and regulations precisely.
- Independence and impartiality
- Immediately disclose to the CoC/ IP of any existing or
potential conflict of interest.
- Immediately disclose to the CoC/ IP of any existing or
potential conflict of interest.
- Professional competence and participation
- Engage actively and constructively in CoC discussions and decision-making.
- Appoint a well-authorized representative with the mandate to actively participate in meetings and secure approvals if needed.
- Stay current with the Code, rules, regulations, and assigned
responsibilities.
- Co-operation, supervision and timelines
- Resolve any inter-se disputes or conflict in opinion between the members through dialogue and co-ordination in relation to the claims or otherwise.
- Ensure expeditious appointment of various professionals within the timelines.
- Supervise and facilitate the IP in discharging his
duties.
- Confidentiality
- Maintain the confidentiality of information at all points in
time.
- Maintain the confidentiality of information at all points in
time.
- Costs
- Immediately fix the liquidator's fee.
- Decide on all expenses of IP including going concern expenses of the Corporate Debtor.
- Take necessary measures to keep the Insolvency Resolution Cost
(IRP Cost) reasonable.
- Meeting of the CoC
- Ensure regular CoC meetings are held.
- Participate in the presentation of valuation methodologies made by the registered valuers.
- Recommend for inclusion of belated claims and their treatment in the resolution plan.
- Monitor activities of the IP and seek rationale of the
decisions taken by him/her.
- Sharing of information
- Request details of all litigation involving the corporate debtor from the IP and suggest actions to protect the corporate debtor's interests.
- Provide the latest financial statements, relevant audit
extracts (stock, transaction, forensic), and other pertinent
information to the IP.
- Feasibility and viability of corporate debtor
- Contribute to the preparation of marketing strategy by IP and may take measures for marketing of the assets of corporate debtor.
- Review and assess the information memorandum prepared by the IP and offer insights.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.