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

In a CIRP, the CoC has three financial creditors owed Rs 60 crore, Rs 30 crore and Rs 10 crore respectively. Under Section 24, how is each creditor's vote determined, and who fixes the share?

Each creditor votes in proportion to the financial debt owed to it, so here 60%, 30% and 10%. The resolution professional determines these voting shares in the manner specified by the Board, not the Adjudicating Authority or the suspended directors.

  1. AEach creditor has one equal vote, fixed by the Adjudicating Authority
  2. BVoting is by the financial debt owed to each creditor, with the share determined by the resolution professional in the manner specified by the BoardCorrect
  3. CVoting is by the number of years of relationship with the company, determined by the CoC chairperson
  4. DVoting is by financial debt, but the share is determined by the suspended Board of Directors

Explanation

Section 24(6) says each creditor votes according to the voting share assigned on the basis of financial debts owed to it. Section 24(7) says the RP determines that share in the manner specified by the Board. Here the shares work out as 60%, 30% and 10%.

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