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

In the CIRP of Kaveri Steels Ltd, the operational creditors' aggregate dues are 12% of the total debt. The RP is preparing notices for a CoC meeting. Which statement is correct?

Notice must be given to the operational creditors or their representatives because their aggregate dues of 12% are not less than ten per cent of the debt. Section 24(3)(c) sets this threshold, and the absence of voting rights does not affect the entitlement to notice.

  1. ANotice need not go to operational creditors because they cannot vote
  2. BNotice must go to operational creditors or their representatives, since their aggregate dues are not less than ten per cent of the debtCorrect
  3. CNotice must go to operational creditors only if their dues exceed 25% of the debt
  4. DNotice goes to operational creditors only if the CoC passes a resolution to invite them

Explanation

Section 24(3)(c) requires notice to operational creditors or their representatives if their aggregate dues are not less than ten per cent of the debt. At 12% the condition is met. Lack of voting rights does not remove the notice requirement.

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