Corporate Restructuring, Valuation and Insolvency · Convening and Conduct of Meetings of Committee of Creditors

Constitution and Role of Committee of Creditors under IBC

Updated 11 October 2026 · Fact-checked

The committee of creditors (CoC) is formed by the interim resolution professional after collating claims. It comprises all financial creditors of the corporate debtor, except related parties. Each member votes by voting share based on financial debt owed. Most decisions need at least 51% of the voting share. Operational creditors attend but do not vote.

Understand Constitution and Role of Committee of Creditors

When a corporate insolvency resolution process starts, someone must decide the future of the company. The Code gives this power to the committee of creditors (CoC), not to the resolution professional and not to the debtor's board. The professional runs the process. The CoC takes the key commercial decisions.

The CoC is constituted by the interim resolution professional after he collates all claims against the corporate debtor and determines its financial position (Section 21(1)). It comprises all financial creditors of the corporate debtor (Section 21(2)). Banks, financial institutions and debenture or deposit holders are typical examples. The reason is simple: financial creditors lent money on risk and have the most at stake in a revival or sale.

Some persons are kept out. A financial creditor, or its authorised representative, that is a related party of the corporate debtor has no right of representation, participation or voting. There is a limited exception for a financial creditor regulated by a financial sector regulator, which is a related party solely because of conversion or substitution of debt into equity shares or instruments convertible into equity, or completion of prescribed transactions, before the insolvency commencement date.

Operational creditors (suppliers, service providers, employees) are not CoC members. Section 24 lets them take part in a limited way. Notice of meetings goes to operational creditors, or their representatives, whose aggregate dues are not less than 10% of the debt. One representative of operational creditors, along with the directors or partners, may attend but cannot vote. Their absence does not invalidate the meeting.

Voting follows money. Each creditor votes according to the voting share assigned to it, based on the financial debts owed to it (Section 24(6)). The resolution professional determines the share in the manner specified by the Board (Section 24(7)). Decisions are taken by a vote of not less than 51% of the voting share of the financial creditors, save as otherwise provided in the Code (Section 21(8)). The CoC can also require the resolution professional to furnish financial information at any time, and he must supply it within seven days (Section 21(9) and (10)).

Key rules to remember

Constitution of CoC: CoC = all financial creditors of the corporate debtor (excluding related parties); Formed by the interim resolution professional after collating claims and determining the financial position. Section 21(1) and (2).
Voting share: Voting share of a creditor = financial debt owed to it ÷ total financial debt of all CoC members × 100; Section 24(6) bases voting on financial debts. The resolution professional fixes the share as specified by the Board. The percentage form is the working method for answers.
Decision rule: Decision passed if votes in favour ≥ 51% of the voting share of financial creditors; Section 21(8). Applies save as otherwise provided in the Code, so some decisions need a different majority.
Related party exclusion: Related party financial creditor: no representation, participation or voting; First proviso to Section 21(2). Limited exception for regulated financial creditors in the second proviso.
Dual creditor: Financial creditor to the extent of financial debt; operational creditor to the extent of operational debt; Section 21(4). Only the financial part counts for CoC membership and voting share.
Operational creditor participation: Notice and one representative if aggregate dues ≥ 10% of the debt; no vote; Section 24(3)(c) and 24(4).
Information to CoC: Financial information to be supplied within 7 days of requisition; Section 21(9) and (10).

How to solve Constitution and Role of Committee of Creditors questions

Use this method for any question on who sits in the CoC, who votes and how much.

1Identify the type of each creditor in the facts: financial or operational, and whether any person holds both kinds of debt.
2Check for related-party status. If a financial creditor is a related party of the corporate debtor, exclude it, unless the narrow exception for regulated creditors applies.
3List the CoC members: all remaining financial creditors. Split a dual creditor's claim and take only the financial debt.
4Compute each member's voting share as its financial debt divided by the total financial debt of the members, expressed in percentage.
5Check for special arrangements: a consortium trustee or agent, securities or deposit holders, a large class of creditors needing an authorised representative, or a guardian, executor or administrator.
6Deal with non-members: say who gets notice and may attend (directors, partners, operational creditors with 10% or more of dues) and state they cannot vote.
7Apply the 51% rule to the votes and state the conclusion, citing the section.

Quickest way: Three-filter method for CoC questions

When to use it: Use when a question gives a list of creditors and asks who forms the CoC or whether a resolution passes.

Filter 1: keep only financial debt. Drop operational creditors and the operational part of any dual creditor.
Filter 2: drop related-party financial creditors (check the regulated-creditor exception).
Filter 3: add up the remaining debt, work out percentages, and test the resolution against 51% of the voting share.
Write one line on the attendance but no vote of operational creditors, directors and partners, and cite Sections 21 and 24.

Common mistakes in Constitution and Role of Committee of Creditors

Including operational creditors as CoC members because their dues are large.
Students think a bigger claim gives a seat.
Fix: Membership depends on being a financial creditor. Operational creditors with dues of at least 10% of the debt get notice and one representative may attend, with no vote.
Letting a related-party financial creditor vote.
Students see a bank-like lender and forget the related-party test.
Fix: Always test related-party status. Such a creditor has no right of representation, participation or voting, subject to the narrow proviso.
Calculating voting share on total claims including operational debt.
Students use the whole claims list instead of financial debts only.
Fix: Use only financial debts owed to CoC members, as Section 24(6) says voting share is based on financial debts.
Saying the absence of directors or an operational creditor representative invalidates a meeting.
Confusing notice with quorum-type requirements.
Fix: The proviso to Section 24(4) says such absence does not invalidate the proceedings.
Treating a dual creditor as wholly financial or wholly operational.
Students classify the person, not the debt.
Fix: Split the claim under Section 21(4): financial part gives CoC membership and voting share, operational part is treated as operational debt.
Stating that the resolution professional constitutes the CoC.
Mixing up the interim and resolution professional roles.
Fix: Section 21(1) says the interim resolution professional constitutes it, and Section 24(2) says the resolution professional conducts its meetings.

Worked examples

Example 1

Alpha Components Ltd is in CIRP. Its creditors are: State Bank (financial debt ₹60 crore), Nova Finance Ltd (financial debt ₹25 crore, a related party of Alpha), Kiran Capital (financial debt ₹15 crore) and Metro Steel (operational debt ₹30 crore). Who forms the CoC, and what is each member's voting share?

Show the solution

Metro Steel is an operational creditor. It is not a CoC member.
Nova Finance is a financial creditor but a related party of the corporate debtor. It has no right of representation, participation or voting, and no exception is stated in the facts.
The CoC therefore comprises State Bank and Kiran Capital.
Total financial debt of members = ₹60 crore + ₹15 crore = ₹75 crore.
State Bank share = 60 ÷ 75 × 100 = 80%.
Kiran Capital share = 15 ÷ 75 × 100 = 20%.

Answer: The CoC is State Bank (80%) and Kiran Capital (20%). Nova Finance is excluded as a related party and Metro Steel is excluded as an operational creditor, although it may get notice and send a representative if its dues are at least 10% of the debt.

Example 2

In the CoC of Beta Textiles Ltd, State Bank holds 40% voting share, Punjab Bank 30%, Canara Bank 20% and Kiran Capital 10%. A resolution is supported by Punjab Bank, Canara Bank and Kiran Capital. Does it pass under Section 21(8)? The RP also asks if the absence of the directors affects the meeting.

Show the solution

Votes in favour = 30% + 20% + 10% = 60%.
Section 21(8) requires not less than 51% of the voting share of the financial creditors, save as otherwise provided in the Code.
60% is more than 51%, so the resolution passes, assuming no provision of the Code requires a higher majority for this decision.
Directors may attend under Section 24(4) but cannot vote.
Under the proviso to Section 24(4), the absence of the directors does not invalidate the proceedings.

Answer: The resolution passes with 60% of the voting share, being at least 51%. The absence of directors does not invalidate the meeting.

Exam tips

Open every answer with the section: Section 21 for constitution and the 51% rule, Section 24 for meetings and voting share.
Always show the voting share calculation with total financial debt, even if the question seems to ask only a theory point.
Use the facts: name the creditors, mark each as financial, operational or related party, then conclude.
Remember the 10% operational creditor threshold and the no-vote rule. These are frequent short-note points.
Say 'save as otherwise provided in the Code' when stating the 51% rule, so you do not overstate it.

Practice questions from Convening and Conduct of Meetings of Committee of Creditors

Constitution and Role of Committee of Creditors in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CMA FinalCommittee of Creditors and Resolution Plan

Constitution and Role of Committee of Creditors: frequently asked questions

Who can be a member of the committee of creditors under IBC?

All financial creditors of the corporate debtor form the CoC under Section 21(2). A financial creditor that is a related party of the corporate debtor cannot participate or vote, subject to a narrow exception for certain regulated creditors.

What is the difference between a financial creditor and an operational creditor in the CoC?

Financial creditors are CoC members and vote by voting share based on financial debt. Operational creditors are not members. They may get notice and one representative may attend if their aggregate dues are at least 10% of the debt, but without any vote.

Who constitutes the committee of creditors?

The interim resolution professional constitutes it after collating all claims and determining the corporate debtor's financial position. The resolution professional then conducts its meetings.

How is voting share decided in the CoC?

Each creditor votes according to the voting share assigned to it, based on the financial debts owed to it. The resolution professional determines the share in the manner specified by the Board.

What majority does the CoC need to take decisions?

Save as otherwise provided in the Code, decisions need a vote of not less than 51% of the voting share of the financial creditors. Some decisions carry a different threshold, so check the specific provision.