Definition
Committee of Creditors (CoC)
The Committee of Creditors is the body of financial creditors that decides the fate of a company in insolvency, including approving or rejecting resolution plans.
Under the IBC, once a company is admitted to insolvency, its financial creditors form the CoC, with voting rights weighted by the size of their dues. The CoC evaluates resolution plans and must approve one by the required majority for it to proceed to the NCLT.
The CoC's commercial wisdom is largely beyond judicial second-guessing under settled law, giving banks significant control over outcomes. The haircut creditors accept and the recovery they realise depend heavily on the plan the CoC chooses to back.
Related terms
- Insolvency and Bankruptcy Code (IBC)The Insolvency and Bankruptcy Code, 2016 is India's unified framework for time-bound resolution or liquidation of defaulting companies through the NCLT.
- National Company Law Tribunal (NCLT)The NCLT is the adjudicating authority for corporate insolvency under the IBC and for company-law matters such as mergers and oppression cases.
- Resolution PlanA resolution plan is the proposal a bidder submits to take over and revive a company in insolvency, approved by the Committee of Creditors and the NCLT.
- Haircut (Resolution)A haircut is the portion of their dues that lenders forgo when a stressed loan is resolved, settled or sold below its full value.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.