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

Operational creditors of Mehta Steels Pvt Ltd (in CIRP) hold aggregate dues equal to 12% of the total debt, and they are represented through an association. The resolution professional is preparing the notice for a CoC meeting. What does Section 24 require regarding such operational creditors?

Notice must be given to the operational creditors or their representatives, because their aggregate dues of 12% are not less than the ten per cent threshold. They do not need to be CoC members or hold a majority to receive notice, though they cannot vote.

  1. ANo notice is needed because operational creditors are never CoC members
  2. BNotice must be given to the operational creditors or their representatives, as their aggregate dues are not less than ten per cent of the debtCorrect
  3. CNotice need only be given if the operational creditors hold a majority of the debt
  4. DNotice must be given only to the suspended directors, not to operational creditors

Explanation

Section 24(3)(c) requires notice of each meeting to operational creditors or their representatives if their aggregate dues are not less than ten per cent of the debt. At 12% the threshold is met. Their non-membership of the CoC does not remove the notice duty, and no majority is required.

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