The Insolvency and Bankruptcy Board of India (IBBI) has issued guidelines for the Committee of Creditors (CoC) to enhance the decision-making process of the CoC members under the Insolvency and Bankruptcy Code (IBC). These self-regulating guidelines, effective immediately, aim to reduce procedural delays and improve transparency and coordination amongst the CoC members. The guidelines stress upon the importance of objectivity and integrity, required to be followed by the members of the CoC members in conducting an insolvency process under the IBC and related regulations. The guidelines also emphasize on the requirement of full disclosure vis a vid any conflict of interest to maintain independence and impartiality. The guidelines require the CoC members to remain updated with the IBC, rules, and regulations. The guidelines urge the CoC members to support the IP in fulfilling their duties, facilitate timely appointment of professionals, and resolve disputes among CoC members amicably. Confidentiality is another key aspect, which the members are required to adhere to at all times.
The guidelines emphasize prudent cost management, requiring CoC members to ensure reasonable insolvency resolution costs and make wise decisions on expenses and fees for the IP and liquidator. The guidelines specify that CoC meetings should be conducted regularly, with members monitoring IP activities, recommending belated claims, participating in valuation presentations, and sharing financial statements, audit reports, and litigation details with the IP. Lastly, the guidelines address the feasibility and viability of the corporate debtor, with CoC members required to review and assess the information memorandum prepared by the IP, contribute to marketing strategies for the corporate debtor’s assets, ensure all resolution plans are considered by the CoC, and consider the need for a monitoring committee for resolution plan implementation.
The CoC guidelines would certainly enhance decision-making by CoC members, curtail procedural delays, and improve transparency. They support timely resolution under the Code, maximizing the value of corporate debtor assets. These meticulously prepared guidelines guide and monitor the CoC’s operations, addressing most identified issues. Even though the guidelines stress maintaining independence and impartiality, the same do not specifically address the inclusion of related party financial creditors. Given the recurrence of this issue, it is imperative to have guidelines addressing it. These gap as mentioned suggests that while the guidelines provide a comprehensive framework for improving the CoC’s functioning, further clarification or additional measures may be needed to ensure complete adherence to fair and transparent practices.