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

Two financial creditors of Himalaya Foods Ltd, A and B, are owed financial debts of Rs 60 crore and Rs 40 crore. Under section 24, how is voting at the CoC decided?

Voting is by voting share based on financial debts owed to each creditor, determined by the RP in the manner specified by the Board. Sections 24(6) and 24(7) provide this, so A and B vote in proportion to their debts, not one creditor one vote.

  1. AEach creditor has one vote regardless of debt
  2. BVotes are in proportion to voting share based on financial debts owed, which the RP determines in the manner specified by the BoardCorrect
  3. CVotes are fixed by the Adjudicating Authority
  4. DOnly the creditor with the larger debt votes

Explanation

Section 24(6) provides that each creditor votes per the voting share assigned based on the financial debts owed. Section 24(7) makes the RP determine the share in the manner specified by the Board. Here A would hold 60% and B 40%, not equal votes.

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