Introduction of governance norms for members of CoC

Brief Overview:

To promote efficient and timely decision-making by the Committee of Creditors (“CoC”), the Insolvency and Bankruptcy Board of India (“IBBI”) has introduced the governance norms of the CoC (“CoC Guidelines”). These self-regulating guidelines are designed to empower the CoC and in order to prevent value erosion by reducing procedural delays and improving transparency and coordination in decision-making among CoC members.

Technical Details:

A member of the CoC shall:

1)  Integrity and Objectivity: Uphold integrity, make objective decisions, and share relevant information with the CoC and Insolvency Professional about transactions and claims.

2) Independence and Impartiality: Disclose any conflicts of interest immediately.

3) Professional competence and participation: Stay updated on the Insolvency and Bankruptcy Code, 2016 (“IB Code”), participate actively in CoC meetings, and contribute to decision-making.

4)  Supervision: Support the Insolvency Professional, resolve disputes through dialogue, and minimize litigation.

5) Confidentiality: Maintain the confidentiality of information.

6) Cost Management: Ensure insolvency costs are reasonable and promptly decide on expenses, including the Insolvency Professional’s fees.

7) COC Meetings:

(a) Monitor the Insolvency Professional’s actions.

(b) Decide on late claims and their treatment in the resolution plan.

(c) Participate in valuation methodology discussions.

8) Information Sharing: Provide the Insolvency Professional with financial statements and audit reports and recommend actions to protect the corporate debtor’s interests.

9) Feasibility and Viability of Corporate Debtor:

(a) Review the information memorandum and contribute to marketing strategies.

(b) Ensure all resolution plans are considered by the CoC.

(c) Evaluate the need for a monitoring committee.

For further details, please see:  

Guidelines for COC (ibbi.gov.in)

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