Voting by the Committee of creditors - Insolvency Resolution And Liquidation For Corporate Persons - IBC

Voting by the Committee of creditors Individual creditors [ Section 24(5) ] Subject to sections 21(6), (6A) and (6B) , any creditor who is a member of the committee of creditors may appoint an insolvency professional other than the resolution professional to represent such creditor in a meeting of the committee of creditors: Provided that the fees payable to such insolvency professional representing any individual creditor will be borne by such creditor. Voting by the committee of creditor (CoC) [ Section 24 (6), (7) (8) ] Each creditor shall vote in accordance with the voting share assigned to him based on the financial debts owed to such creditor. [ Sub- section (6) ] The resolution professional shall determine the voting share to be assigned to each creditor in the manner specified by the Board. [ Sub- section (7) ] The meetings of the committee of creditors shall be conducted in such manner as may be specified. [ Sub- section (8) ] The CoC as a collective body takes decisions by members voting on a particular item/matter. Each member of the CoC has a voting share in the CoC. Voting share is defined in section 5(28) of the IBC as the share of the voting rights of a single financial creditors in the CoC. It is based on the proportion of the financial debt owed to such financial creditors in relation to the financial debt owed by the creditor debtor. Voting Procedure The voting procedures for the CoC are detailed in regulation 25 of the CIRP Regulations which provides that: The RP shall take a vote of the members present at the meeting on any item listed for voting after discussion. At the conclusion of voting, the RP shall announce the decision on items, along with the names of the members of the CoC who voted for or against, or abstained from voting. The RP shall circulate the minutes of the meeting by electronic means to all members of the CoC and the AR, if any, within 48 hours of the conclusion of the meeting. The RP shall seek a vote of the members who did not vote at the meeting on the matters listed on the electronic voting system (e-voting) in accordance with regulation 26 . Hence, the RP conducting the meeting has to provide an e-voting facility to all such members. E-voting should be kept open for at least 24 hours from circulation of the minutes of the meeting. Regulation 26 deals with e-voting, stating that each member of the CoC will be provided with the means to exercise his vote, either through electronic means or through an electronic voting system that accords with the CIRP Regulations. At the conclusion of a vote, the RP is required to announce the result and make a written record of the summary of the decision taken on a relevant agenda item, along with the names of the members of the CoC who voted for or against the decision, or abstained from voting. Further, the RP shall circulate a copy of the record to all participants by electronic means within 24 hours of the conclusion of voting. For voting by the AR, the CIRP Regulations provide that: The AR shall circulate the minutes of the meeting received from the RP to creditors in a class and announce the voting window at least 24 hours before the window opens for voting instructions and keep the voting window open for at least 12 hours ( regulation 25(6) ). The AR shall cast his vote in respect of each FC or on behalf of all FCs he represents in accordance with the provisions of section 25A(3) and (3A) . Relevant Case Laws Vijay Kumar Jain Vs. Standard Chartered Bank Ors. - SC, dated 31.01.2019 A combined reading of the Code as well as the Regulations leads to the conclusion that members of the erstwhile Board of Directors of the corporate debtor (CD) being vitally interested in resolution plans that may be discussed at meetings of the committee of creditor (CoC), must be given a copy of such plans as part of documents that have to be furnished along with the notice of such meetings. Consolidated Engineering Company Anr. Vs. Golden Jubilee Hotels Pvt. Ltd. [CA (AT) (Ins.) No. 501 of 2018] NCLAT order dt. 12.12.2018 If the claim of operational creditors, on verification is found to be less than 10%, the operational Creditors have no right to claim representation in the meeting of the CoC.