Committee of Creditors (CoC)

The Committee of Creditors (CoC) is the central decision-making organ of the corporate insolvency resolution process (CIRP) established by India's Insolvency and Bankruptcy Code, 2016 (IBC). Its legal basis lies in Section 21 of the Code, which directs the interim resolution professional to constitute the committee after collating claims received from a debtor's creditors. The CoC's composition reflects a deliberate legislative choice: it comprises only financial creditors—lenders such as banks, debenture holders, and home-buyers (the last treated as financial creditors after the 2018 amendment following the Pioneer Urban judgment)—because the framers of the Code, drawing on the Bankruptcy Law Reforms Committee report of 2015, judged that those who advanced money against time value were best placed to assess a debtor's commercial viability. Operational creditors, by contrast, hold no general voting rights, a distinction the Supreme Court upheld in Swiss Ribbons v. Union of India (2019).

Procedurally, the process begins when the National Company Law Tribunal (NCLT) admits an insolvency application and appoints an interim resolution professional (IRP), who issues a public announcement inviting claims. Once claims are verified, the IRP determines each financial creditor's voting share in proportion to the debt owed, and constitutes the CoC under Section 21(6A). The committee holds its first meeting within seven days, where it either confirms the IRP as the resolution professional (RP) or replaces him by a vote. Each subsequent decision—approving interim finance, replacing the RP, extending the CIRP timeline, or ultimately accepting a resolution plan—is taken by a defined voting threshold measured by value of debt, not by headcount of members.

The voting architecture distinguishes routine from consequential decisions. Most matters under Section 28 require approval by creditors holding at least 66 percent of voting share; a smaller set of administrative actions passes at 51 percent. Approval of a resolution plan under Section 30(4) and the decision to liquidate under Section 33 both require the 66 percent supermajority. The threshold was lowered from the original 75 percent by the 2018 amendment to reduce the risk of holdout creditors stalling resolution. Where a single creditor's dissent could block an otherwise viable plan, the Code protects dissenting financial creditors by guaranteeing them at least the liquidation value of their claims under Section 30(2)(b), as recalibrated by later amendments.

Contemporary practice illustrates the CoC's reach. In the resolution of Essar Steel India, the committee of lenders led by State Bank of India and Standard Chartered approved ArcelorMittal's plan, a decision the Supreme Court vindicated in Committee of Creditors of Essar Steel v. Satish Kumar Gupta (November 2019), the judgment that most firmly entrenched the doctrine of the CoC's commercial wisdom. The Bhushan Power & Steel resolution, awarded to JSW Steel, and the protracted Jaypee Infratech process—where home-buyers wielded substantial voting weight—further demonstrated the committee's primacy. The Insolvency and Bankruptcy Board of India (IBBI), the regulator headquartered in New Delhi, has progressively tightened the conduct of CoC meetings, including issuing a 2024 discussion paper toward a code of conduct for committee members.

The CoC must be distinguished from adjacent institutions. It is not the resolution professional, who is an officer obliged to run the company as a going concern and execute the committee's decisions but who holds no vote and cannot override the CoC's commercial judgment. It differs from the adjudicating authority (the NCLT), whose role under Section 31 is confined to confirming that an approved resolution plan complies with the law, not to second-guessing its commercial merits. It also differs from a scheme of arrangement under Section 230 of the Companies Act, 2013, which is a debtor-driven compromise rather than a creditor-controlled resolution. Crucially, the CoC is an instrument of collective, creditor-in-control insolvency, contrasting with the debtor-in-possession model of US Chapter 11.

Several controversies attend the CoC's dominance. Critics argue the doctrine of commercial wisdom, by insulating CoC decisions from judicial review, can shield arbitrary or self-interested votes, particularly where related-party or single-creditor committees act without scrutiny. Operational creditors and smaller stakeholders have complained of inequitable haircuts, and the treatment of home-buyers and other heterogeneous financial creditors has strained the consensus model. The Supreme Court's 2025 ruling unwinding JSW Steel's Bhushan Power acquisition—later subject to review—underscored the tension between finality of CoC decisions and judicial oversight. Proposals for a mandatory code of conduct, mediation, and a creditor-initiated framework reflect ongoing recalibration of the committee's accountability.

For the working practitioner—whether a banking-sector officer, an insolvency professional, a corporate counsel, or a civil-services aspirant studying GS Paper III—the CoC represents the operational heart of India's insolvency reform. Mastery of its constitution, voting thresholds, and the boundary between commercial wisdom and judicial review is indispensable to understanding how nearly every major distressed-asset resolution in India is concluded. The committee's choices determine whether a stressed firm is revived or liquidated, who recovers what, and on what timeline, making it the decisive forum where credit discipline, institutional governance, and the broader objective of resolving non-performing assets converge.