Section 21 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.
Section 21 builds the committee of creditors: who is on it, who is kept out, how consortium and securities holders are represented, how the voting share is set and how decisions are taken. This article reads it as per the IBBI consolidated text of the Code amended up to 12 August 2021 and then covers the new sub-section (11) the Insolvency and Bankruptcy Code (Amendment) Act, 2026 adds on liquidation.
The interim resolution professional constitutes the committee after collating claims and determining the financial position. The committee comprises all financial creditors; a financial creditor that is a related party of the corporate debtor has no right of representation, participation or voting, with a proviso for regulated creditors holding through conversion of debt. Decisions need not less than fifty-one per cent. of the voting share, save as otherwise provided. The 2026 Act adds that the committee also supervises liquidation.
Constitution and membership: sub-sections (1) and (2)
Section 21(1): the interim resolution professional "shall after collation of all claims received against the corporate debtor and determination of the financial position of the corporate debtor, constitute a committee of creditors." Section 21(2): "The committee of creditors shall comprise all financial creditors of the corporate debtor".
The first proviso excludes a financial creditor, or the authorised representative referred to in sub-section (6) or (6A) or section 24(5), "if it is a related party of the corporate debtor": such a creditor "shall not have any right of representation, participation or voting in a meeting of the committee of creditors". The second proviso says the first does not apply to a financial creditor regulated by a financial sector regulator, if it is a related party "solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares or completion of such transactions as may be prescribed, prior to the insolvency commencement date".
"Related party" is defined in section 5(24); see our article on that clause. A creditor that cannot sit on the committee, for instance an operational creditor, may want to weigh the insolvency route against a recovery suit.
Consortium, dual-status and assigned debts: sub-sections (3) to (5)
- (3) Where the corporate debtor owes financial debts to two or more financial creditors as part of a consortium or agreement, each financial creditor is part of the committee and the voting share is determined on the basis of the financial debts owed to them, subject to sub-sections (6) and (6A).
- (4) A person who is both a financial and an operational creditor is a financial creditor to the extent of the financial debt owed (with voting share proportionate to it) and an operational creditor to the extent of the operational debt.
- (5) An assignee or transferee of operational debt from an operational creditor is considered an operational creditor to the extent of the assignment or transfer.
Trustee or agent and large classes: sub-sections (6), (6A), (6B) and (7)
Where the terms of a financial debt extended as part of a consortium arrangement or syndicated facility provide for a single trustee or agent to act for all financial creditors, each financial creditor may: (a) authorise the trustee or agent to act on his behalf to the extent of his voting share; (b) represent himself to the extent of his voting share; (c) appoint an insolvency professional (other than the resolution professional) at his own cost to represent himself; or (d) vote to the extent of his voting share with one or more financial creditors jointly or severally.
Sub-section (6A) applies where a financial debt: (a) is in the form of securities or deposits and the terms provide for a trustee or agent as authorised representative for all the financial creditors; (b) is owed to a class of creditors exceeding the number as may be specified, other than those under (a) or (6), in which case the interim resolution professional applies to the Adjudicating Authority with the list of financial creditors and the name of an insolvency professional, other than the interim resolution professional, to act as authorised representative, appointed prior to the first meeting; or (c) is represented by a guardian, executor or administrator, who acts as authorised representative. The authorised representative attends and votes for each financial creditor to the extent of his voting share.
Sub-section (6B) deals with remuneration: under (6A)(a) and (c), as per the terms of the financial debt or the relevant documentation; under (6A)(b), as specified, forming part of the insolvency resolution process costs. The text prints "shall be form part of the insolvency resolution process costs"; this is a drafting slip, quoted as printed. Sub-section (7) lets the Board specify the manner of voting and determining the voting share for debts covered by (6) and (6A). The rights and duties of authorised representatives are in section 25A.
Decisions: sub-sections (8) to (10)
| Sub-section | Rule |
|---|---|
| (8) | "Save as otherwise provided in this Code, all decisions of the committee of creditors shall be taken by a vote of not less than fifty-one per cent. of voting share of the financial creditors" |
| (8) proviso | Where a corporate debtor does not have any financial creditors, the committee shall be constituted and comprise such persons to exercise such functions in such manner as may be specified |
| (9) | The committee has the right to require the resolution professional to furnish any financial information in relation to the corporate debtor at any time during the process |
| (10) | The resolution professional shall make available such information within a period of seven days of the requisition |
Other sections set higher votes for particular decisions, for example sixty-six per cent. in sections 22, 27, 28 and 30; see the section 28 article and the section 22 and 23 article. Meetings are governed by section 24; see the section 24 article.
Example. Banerjee Cables Limited owes Rs 30 crore to a consortium of four banks, with one agent for all, Rs 8 crore to bondholders with a trustee, and Rs 3 crore to a company controlled by the managing director. The four banks vote by voting share (or through the agent per (6)); the trustee acts under (6A)(a); the director's company is a related party and has no right of representation, participation or voting unless the second proviso fits.
What the Amendment Act, 2026 changes
Section 13 of the Amendment Act, 2026 (No. 6 of 2026) inserts sub-section (11) after sub-section (10).
| As printed in the consolidated text | After the 2026 Act |
|---|---|
| Section 21 ends with sub-section (10) | New (11): "Where the liquidation process of the corporate debtor is initiated under Chapter III, the committee of creditors constituted under this section shall also supervise the conduct of the liquidation process by the liquidator, and the provisions of this section and section 24 shall apply to such liquidation process under Chapter III as the context may require" |
| Proviso: the Board may specify any other class or classes of creditors who may attend the meetings of the committee of creditors during liquidation process, but shall not have any right to vote | |
| Explanation: for the purposes of Chapter III, sub-section (11) of this section, section 34A and sub-section (2) of section 35, as amended by the Amendment Act, 2026, shall apply to (a) the liquidation process of a corporate debtor initiated after the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2026; and (b) the ongoing liquidation process as on such date of commencement, where the liquidator has not made an application under section 54, for which the committee of creditors shall continue for the remainder of the liquidation process |
The Amendment Act, 2026 comes into force on the date or dates the Central Government notifies; the notification is not in the texts consulted, so check whether this change has been notified. See the live post on liquidation reforms. Amendments and notifications made after 12 August 2021, other than the Amendment Act, 2026, are not in the texts consulted and should be checked.
Need help with the committee of creditors?
Standing on the committee, the voting share and the related-party question can decide an outcome. Our team can review the claim, the debt documents and the shareholding picture, and advise whether the committee route or a recovery suit suits your position.
Key takeaways
- The committee comprises all financial creditors; related-party financial creditors have no right of representation, participation or voting, with a proviso for regulated creditors.
- Consortium, trustee, agent and class-representation rules sit in sub-sections (3) to (6B).
- Decisions need not less than fifty-one per cent. of voting share save as otherwise provided.
- The resolution professional must provide requested financial information within seven days.
- The 2026 Act adds liquidation supervision by the committee; check whether it has been notified.
Read next
- Section 22 and 23: appointment of the resolution professional
- Section 24: meetings of the committee of creditors
- Section 25A: authorised representative
- Committee of creditors: constitution and voting
Disclaimer: Based on the IBBI consolidated text of the Insolvency and Bankruptcy Code, 2016 amended up to 12 August 2021 and on the Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026), which comes into force on the date or dates notified by the Central Government, as consulted on 2 October 2026. It explains the words of the statute only; commencement notifications, other amendments made after 12 August 2021, notified thresholds, the rules and IBBI regulations, and the way tribunals and courts apply these sections should be checked. This article is general information, not legal advice; check the official text before acting.