Definition
The committee constituted under Section 21 of the IBC comprising all financial creditors of the corporate debtor — which has supreme decision-making authority during the CIRP, approves the resolution plan, and can decide to liquidate the company.
The Committee of Creditors (CoC) is the IBC's central decision-making body — the real power in the CIRP. Composition: all financial creditors whose claims have been admitted by the RP (operational creditors are not members but have limited rights). Key decisions requiring CoC approval: replacement of RP (66%); extension of CIRP period (66%); approval of resolution plan (66%); liquidation (66%). The CoC evaluates resolution plans received by the RP and votes to approve the plan that maximises value for all stakeholders. The CoC's commercial judgment in selecting a resolution plan is treated as final by courts — the Supreme Court in Essar Steel (2019) held that the CoC's decision is not subject to judicial review of its commercial wisdom, only to review of legal compliance.
Statutory Definition
Section 21(1), Insolvency and Bankruptcy Code, 2016: 'The 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): 'All financial creditors shall be part of the committee of creditors: Provided that a financial creditor or the authorised representative of the financial creditor referred to in sub-sections (6) and (6A), if it is a related party of the corporate debtor, shall not have any right of representation, participation or voting in a meeting of the committee of creditors.'
Etymology & Origin
From 'committee' (a group delegated to perform a function, from Latin 'committere' — to entrust) + 'of creditors' (those to whom money is owed). The CoC is the 'committee' of those who have lent to the corporate debtor — they collectively decide the company's fate.
Full Legal Analysis
Committee of Creditors: The CIRP’s Supreme Authority
In the IBC framework, creditors are in charge — not courts, not the government, not the distressed company’s management. The CoC, comprising the financial creditors who lent to the company, has ultimate decision-making power over the company’s fate: which resolution plan to approve, whether to liquidate, and how the CIRP is conducted. This creditor supremacy is the IBC’s most significant philosophical departure from earlier Indian insolvency law.
Voting in the CoC
CoC votes are by value — each financial creditor votes proportionate to their admitted claim. Key thresholds: (a) 51% — routine decisions (approval of Information Memorandum, process decisions); (b) 66% — major decisions (resolution plan approval, liquidation, RP replacement, CIRP extension); (c) Matters requiring 100% — no provision for this under IBC; the 66% threshold is the maximum. Related-party financial creditors are excluded from the CoC — they cannot vote or even participate in meetings.
Essar Steel: CoC’s Commercial Wisdom Is Final
The Supreme Court in Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta (2019) 28 SCC 1 — the landmark IBC case — held: (a) the CoC’s decision to approve a resolution plan is a commercial decision that courts do not second-guess; (b) courts only review whether the plan complies with the IBC’s legal requirements; (c) the CoC has the authority to determine how the plan’s benefits are distributed among different classes of creditors; (d) the NCLT and NCLAT cannot impose their commercial judgment over the CoC’s decision. This insulates CoC decisions from judicial interference on commercial merits.
“The Committee of Creditors is the IBC’s parliament of lenders. They vote with their money — those who lent more have more votes. And their vote is what matters most: approve the resolution plan, refuse it, or choose liquidation. Courts stay out of these commercial decisions. The CoC’s word is the IBC’s law in the resolution process.”
This Term in Indian Statutes
Insolvency and Bankruptcy Code, 2016, 2016
"The 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."
CoC: all financial creditors; voting by value; 66% for major decisions; Essar Steel: CoC commercial judgment not judicially reviewable
