Committee of Creditors explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Regulation 8 continues the Committee of Creditors constituted under Section 21 into the liquidation process, replacing the abolished Stakeholders' Consultation Committee. It sets a first meeting within seven days of LCD, a standing agenda, a list of matters requiring prior approval, and three matters requiring not less than 66% of voting share.
Constitution and continuance
- The CoC constituted under Section 21 continues to function during the liquidation process.
- A secured creditor who has not relinquished its security interest under Section 52 shall not be a member of the Committee during liquidation.
- Where a secured creditor realises its security and part of its debt remains unpaid, that remaining debt is treated as unsecured, and the creditor continues as a member with voting rights corresponding to its value.
- For determining the remaining unsecured portion, the value of the security interest is the liquidation value determined under Regulation 35.
- The Authorised Representative appointed during the CIRP continues to represent the respective class of creditors, and Regulations 16A(3A) to 16A(12) of the CIRP Regulations apply mutatis mutandis.
Meetings and functioning
The provisions on CoC meetings in Regulations 18 to 26 of Chapter VI and Chapter VII of the CIRP Regulations apply mutatis mutandis to meetings of the Committee during liquidation. The liquidator must convene the first meeting within seven days from the liquidation commencement date.
In every meeting, the liquidator shall place before the Committee:
- Actual liquidation costs, along with reasons for any excess over the estimated costs;
- Consolidated status of all legal proceedings; and
- Progress achieved in the liquidation process.
The Committee has access to all relevant records and information required for discharging its functions and giving approvals under the liquidation process.
Matters requiring prior approval
The liquidator must obtain prior approval of the Committee before:
- appointing and remunerating professionals engaged under Regulation 7;
- determining the liquidator's fees;
- incurring liquidation costs;
- conducting valuation under Regulation 35(2);
- continuing or instituting suits or legal proceedings by or against the corporate debtor;
- extending the payment period for balance sale consideration beyond ninety days as permitted under Schedule I;
- arrangements for pursuing proceedings relating to distribution of proceeds under Section 54(1B); and
- any other matter relating to the liquidation process, except those requiring a higher voting threshold.
The three 66% matters
Approval by a voting share of not less than sixty-six per cent is required for:
- Sale of assets under Regulation 32 — including the manner of sale, reserve price, eligibility criteria for bidders, marketing strategy and auction process;
- The manner in which proceedings relating to preferential, undervalued and extortionate credit transactions, and fraudulent or wrongful trading, shall be pursued after dissolution — and the manner of distribution of the resulting proceeds; and
- Assignment of not readily realisable assets.
Each of these determines what stakeholders ultimately receive, which is why the higher threshold attaches to them rather than to procedural matters.
Role and significance
- The Committee plays an active supervisory and decision-making role, providing approvals on key commercial and procedural aspects.
- Unlike the earlier Stakeholders' Consultation Committee framework, several important actions of the liquidator now require the Committee's prior approval, enhancing creditor participation and oversight.
- The Committee ensures greater transparency, accountability and stakeholder involvement in decisions affecting value maximisation and efficient completion.
The practical consequence for liquidators
Under the SCC regime the liquidator consulted and then decided. Under Regulation 8 the liquidator must obtain approval before acting on a long list of matters, including the ordinary business of incurring costs and instituting proceedings.
That changes the rhythm of a liquidation. Meetings become a gating mechanism rather than a reporting occasion, and a liquidator who has not planned the approval calendar against the 180-day timeline will lose weeks waiting for authority to act.
Compliance checklist
- Convene the first meeting within seven days of LCD.
- Exclude unrelinquished secured creditors from membership.
- Recompute voting share on the unsecured residue at Regulation 35 value.
- Place the three standing items before every meeting.
- Obtain prior approval — not subsequent ratification — for listed matters.
- Secure 66% for sale, post-dissolution avoidance proceedings, and NRRA assignment.
- Plan the approval calendar against the 180-day timeline.
Common mistakes
- Consulting rather than obtaining approval, as under the SCC.
- Allowing an unrelinquished secured creditor to vote.
- Applying the simple majority to a Regulation 32 sale decision.
- Omitting reasons for cost overruns from the standing agenda.