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

In the CIRP of Sundaram Infra Ltd, the CoC consists wholly of financial creditors. Creditors other than scheduled banks or public financial institutions together hold 70 per cent of the voting share. Under the CIRP Regulations, what must the resolution professional do?

The resolution professional must invite the five largest unrelated operational creditors, including the three largest statutory-dues authorities, to attend as observers without voting rights, and record their observations in the minutes. This applies because non-bank, non-public-financial-institution creditors hold more than sixty-six per cent of the voting share.

  1. AGive those creditors double voting weight in the meetings
  2. BInvite the five largest unrelated operational creditors, including the three largest statutory-dues authorities, as observers without voting rights, and record their observations in the minutesCorrect
  3. CInvite all operational creditors as voting members of the committee
  4. DReplace the CoC with a committee of scheduled banks only

Explanation

Regulation 16E applies where creditors other than scheduled banks or public financial institutions hold more than sixty-six per cent of the voting share; 70 exceeds that. The RP must invite the five largest unrelated operational creditors, including the three largest authorities owed statutory dues, as observers with no voting rights, and record their observations in the minutes.

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