The Committee of Creditors: composition, voting & commercial wisdom
Every major decision in a CIRP — who runs the company, whether it is revived or liquidated, which resolution plan wins — is taken by one body: the Committee of Creditors. Understanding how the CoC is formed, how its votes are counted, and how far courts will defer to it is essential for anyone at the insolvency table.
Who sits on the CoC?
The Interim Resolution Professional constitutes the CoC under Section 21 after verifying claims. Its members are the financial creditors — banks, NBFCs, bondholders, and homebuyers (who vote as a class through an authorised representative). Two important exclusions and caveats:
- Related parties of the corporate debtor that are financial creditors get no representation, participation or voting rights — Parliament's guard against promoters controlling their own insolvency;
- Operational creditors are not CoC members. They attend where their aggregate dues cross 10% of total debt (without voting), and under the 2026 amendments the largest OCs and statutory authorities attend as observers;
- Where a company has no financial creditors, the CoC is formed of the largest operational creditors and a workmen/employee representative.
How voting shares work
Each financial creditor's voting share is its share of the total admitted financial debt. A bank holding ₹60 crore of an admitted ₹100 crore financial debt votes with 60%. Claims admitted later reshape the voting matrix — which is why claim verification battles are fought so hard in the first weeks of a CIRP.
The thresholds that matter
- 51% — routine decisions of the CoC, where the Code does not prescribe a higher bar;
- 66% — the decisions that steer the case: approving the resolution plan, appointing or replacing the RP, approving Section 28 actions (raising interim finance, creating security, changing capital structure), extending the CIRP, and deciding to liquidate;
- 90% — withdrawing the insolvency altogether under Section 12A after admission, typically when the promoter settles.
In K. Sashidhar v. Indian Overseas Bank (2019) and CoC of Essar Steel v. Satish Kumar Gupta (2019), the Supreme Court settled that the CoC's commercial judgment — how much to accept, which plan to prefer, resolution versus liquidation — is non-justiciable. Tribunals review only process: whether the plan meets Section 30(2), whether the CIRP followed the Code. They do not sit in appeal over the CoC's business call. The practical consequence: the CoC meeting, not the courtroom, is where insolvency outcomes are truly decided.
What the CoC does through a CIRP
- First meeting (within 7 days of constitution): confirm or replace the IRP as RP;
- Oversight: approve the RP's key actions under Section 28, monitor going-concern operations and CIRP costs;
- Strategy: settle the evaluation matrix for resolution plans, negotiate with applicants, weigh recovery against fair value and liquidation value;
- The decisive vote: approve a plan (66%), liquidate, or — rarely — withdraw under 12A (90%).
Duties come with the power
The deference courts give the CoC assumes it acts responsibly. IBBI guidelines for CoC members now expect reasoned, recorded decisions, timely participation, and objective evaluation — and the Supreme Court has repeatedly reminded CoCs that commercial wisdom is not a licence for arbitrariness. For lenders, that means voting through informed committees, documenting the rationale, and engaging with the process rather than abstaining into deadlock.
Sitting on a CoC — or presenting to one?
I support financial creditors, RPs and resolution applicants on CoC strategy, evaluation matrices and plan negotiations.
Get in touch
Chartered Accountant, CFA L1 & IBBI-registered Insolvency Professional (IRP/RP/Liquidator). Founding Partner, Vista Solvency LLP — 100+ CIRP, liquidation, personal-guarantor & bankruptcy matters across NCLT benches. Surat · Ahmedabad · Mumbai.
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