IBBI issues self-regulatory guidelines for Committee of Creditors (COC)

The Insolvency and Bankruptcy Board of India (“IBBI”) has recently on August 06, 2024, issued self-regulatory guidelines for committee of creditors (“COC”) (“Guidelines”). The Guidelines are introduced with an objective of enabling the COC members to render more effective and timely decisions which shall thereby, reduce value erosion and other procedural delays along with ensuring enhanced transparency and a coordinated approach in the decision making of such COC members.

IBBI has through these Guidelines prescribed the following:

• Objectivity and Integrity: COC members shall undertake their requisite activities in accordance with the provision of the Insolvency and Bankruptcy Code, 2016 (“IBC”) which shall be, including but not limited to, objective and informed decision making, integrity, share all relevant information regarding the transaction, recoveries etc. with the COC/ Insolvency Professional (“IP”).
• Independence and Impartiality: COC members are expected to act independently and without being partial in their conduct. They shall disclose the requisite details with the COC/IP regarding any existing or potential conflict of interest.
• Professional Competence and Participation: COC members shall have requisite knowledge regarding IBC and any amendments made thereto and only such individuals shall be nominated who possess requisite authorisations and sufficient mandates. Such nominated individuals shall actively, constructively and effectively participate in the COC’s decision making process. 
• Cooperation, Supervision, and Timeliness: COC members shall expeditiously appoint an IP and shall thereby, supervise and facilitate the IP in their functioning. COC members shall regularly monitor the activities undertaken by IP
• Confidentiality: COC members shall mandatorily at all times maintain confidentiality of information.
• Costs: COC must ensure that the insolvency resolution cost shall be reasonable along with timely determining the expenses to be incurred by the IP.
• Meetings of the COC: COC members shall ensure the conduct of such COC meetings along with active participation in the value methodology presentations provided by the registered valuers.
• Sharing of Information: To facilitate the process, COC members shall provide the IP with requisite audit information and financial statements.
• Feasibility and Viability of Corporate Debtor: COC members shall evaluate the information memorandum and thereby, contribute to the marketing strategy for the corporate debtor's assets, ensuring that all resolution plans are reviewed and considered appropriately.