The enforcement of the Insolvency and Bankruptcy Code (hereinafter referred to as “IBC”) has reinforced the resolution of insolvency in a time bound manner and for maximization of the value assets. In furtherance of a more organized resolution process, the Insolvency and Bankruptcy Board (hereinafter referred to as “IBBI”) brought forth the Insolvency Resolution Process for Corporate Persons Regulations, 2016 (hereinafter referred to as the “Regulations”).
Committee of Creditors
With a view to resolve the insolvency proceedings under IBC, the interim resolution professional (operational creditor initiating a corporate insolvency resolution process), shall after collation of all claims received against the corporate debtor and determination of the financial position of the corporate debtor, constitute a committee of creditors. [Section 9 (4) IBC].
In order to represent the financial creditors in a simplified manner, an authorized representative may be appointed to represent their concerns to the committee of creditors for the insolvency resolution under the provisions of Section 21 (6A) (b) of IBC & Regulation 16A (1) of the Regulations as per the IBBI circular dated July 13, 2018 .
Where the corporate debtor has at least 10 financial creditors in a class, the interim resolution professional shall offer a choice of 3 insolvency professionals and a creditor in the class may indicate its choice of an insolvency professional, from amongst them, to act as its authorised representative. The insolvency professional, who is the choice of the highest number of creditors in the class, is appointed as the authorised representative of the creditors of the respective class.
In the case where the approval of resolution plan under [Regulation 39 (3)] is at least 15 days away, the resolution professional shall expeditiously obtain, by electronic means, the choice of the insolvency professional from creditors in a class to act as the authorised representative of the class and proceed further.
The authorised representative collects voting instructions from the respective class of creditors, attends the meetings of the committee of creditors and casts vote in respect of the said class in accordance with the instructions he receives from the creditors.
The IBBI circular reaffirms the faith in the joint effort of the financial creditors of a class, through the face of their authorized representatives, as per IBC principles thereby ensuring speedy insolvency resolution.