Chapter II - Corporate Insolvency Resolution Process
Section 21
Section 21: committee of creditors
Section 21 sets up the committee of creditors (CoC), the creditor body that takes key commercial decisions in a corporate insolvency resolution process. It comprises the financial creditors, with related parties generally excluded. Unless the Code provides otherwise, it decides by at least 51% of voting share. From 26 May 2026, new subsection (11) also makes it supervise a liquidation that follows under Chapter III.
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This article is for general information. Refer to the Insolvency and Bankruptcy Code, 2016 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(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.
(2) The committee of creditors shall comprise all financial creditors of the corporate debtor:
Provided that a financial creditor or the authorised representative of the financial creditor referred to in sub-section (6) or sub-section (6A) or sub-section (5) of section 24, 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:
Provided further that the first proviso shall not apply to a financial creditor, regulated by a financial sector regulator, if it is a related party of the corporate debtor 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.
(3) Subject to sub-sections (6) and (6A), where the corporate debtor owes financial debts to two or more financial creditors as part of a consortium or agreement, each such financial creditor shall be part of the committee of creditors and their voting share shall be determined on the basis of the financial debts owed to them.
(4) Where any person is a financial creditor as well as an operational creditor,—
(a) such person shall be a financial creditor to the extent of the financial debt owed by the corporate debtor, and shall be included in the committee of creditors, with voting share proportionate to the extent of financial debts owed to such creditor;
(b) such person shall be considered to be an operational creditor to the extent of the operational debt owed by the corporate debtor to such creditor.
(5) Where an operational creditor has assigned or legally transferred any operational debt to a financial creditor, the assignee or transferee shall be considered as an operational creditor to the extent of such assignment or legal transfer.
(6) Where the terms of the 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 in the committee of creditors to the extent of his voting share;
(b) represent himself in the committee of creditors to the extent of his voting share;
(c) appoint an insolvency professional (other than the resolution professional) at his own cost to represent himself in the committee of creditors to the extent of his voting share; or
(d) exercise his right to vote to the extent of his voting share with one or more financial creditors jointly or severally.
(6A) Where a financial debt—
(a) is in the form of securities or deposits and the terms of the financial debt provide for appointment of a trustee or agent to act as authorised representative for all the financial creditors, such trustee or agent shall act on behalf of such financial creditors;
(b) is owed to a class of creditors exceeding the number as may be specified, other than the creditors covered under clause (a) or sub-section (6), the interim resolution professional shall make an application to the Adjudicating Authority along with the list of all financial creditors, containing the name of an insolvency professional, other than the interim resolution professional, to act as their authorised representative who shall be appointed by the Adjudicating Authority prior to the first meeting of the committee of creditors;
(c) is represented by a guardian, executor or administrator, such person shall act as authorised representative on behalf of such financial creditors,
and such authorised representative under clause (a) or clause (b) or clause (c) shall attend the meetings of the committee of creditors, and vote on behalf of each financial creditor to the extent of his voting share.
(6B) The remuneration payable to the authorised representative—
(i) under clauses (a) and (c) of sub-section (6A), if any, shall be as per the terms of the financial debt or the relevant documentation; and
(ii) under clause (b) of sub-section (6A) shall be as specified which shall form part of the insolvency resolution process costs.
(7) The Board may specify the manner of voting and the determining of the voting share in respect of financial debts covered under sub-sections (6) and (6A).
(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:
Provided that where a corporate debtor does not have any financial creditors, the committee of creditors shall be constituted and shall comprise of such persons to exercise such functions in such manner as may be specified.
(9) The committee of creditors shall have the right to require the resolution professional to furnish any financial information in relation to the corporate debtor at any time during the corporate insolvency resolution process.
(10) The resolution professional shall make available any financial information so required by the committee of creditors under sub-section (9) within a period of seven days of such requisition.
(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:
Provided that 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 in such meetings.
Explanation.—For the purposes of Chapter III, it is hereby declared that the provisions of sub-section (11) of this section, section 34A and sub-section (2) of section 35, as amended by the Insolvency and Bankruptcy Code (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 of a corporate debtor 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.
Introduction
Subsections (1) to (10) reflect amendments made in 2018 (related-party rules, authorised representatives, the 51% threshold) and the 2020 addition of "or completion of such transactions as may be prescribed" in the second proviso to subsection (2). Section 13 of the Insolvency and Bankruptcy Code (Amendment) Act, 2026 inserted subsection (11), in force from 26 May 2026 under S.O. 2625(E).
The 2026 Act also amended the definition of "voting share" in Section 5(28). It now refers to the proportion of financial debt owed to the members of the committee of creditors who are eligible to vote. Meeting procedure is in Section 24 and the CIRP Regulations.
Key takeaways
Financial creditors form the committee
Subsection (2) places all financial creditors on the committee. A related-party financial creditor has no right of representation, participation or voting, subject to the regulated-lender carve-out in the second proviso.
51% unless the Code says otherwise
Subsection (8) sets 51% of voting share as the default threshold. Specific provisions, such as plan approval under Section 30(4), set their own higher thresholds.
Representatives for large classes
Subsection (6A) provides authorised representatives for creditors holding securities or deposits, for large classes of creditors and for creditors represented by a guardian, executor or administrator.
Supervises liquidation from 2026
Under subsection (11), the committee supervises the liquidator in a Chapter III liquidation. Sections 21 and 24 apply as the context requires, and the Board may specify non-voting attendees.
Constitution and membership
The interim resolution professional constitutes the committee after collating claims and determining the corporate debtor's financial position. A person who is both a financial and an operational creditor sits on the committee only for the financial debt. An assignee of an operational debt remains an operational creditor to that extent.
Where the corporate debtor has no financial debt, or all financial creditors are related parties, Regulation 16 of the CIRP Regulations sets out a committee with only operational creditors. With effect from 9 June 2026, that committee draws on the eighteen largest unrelated operational creditors by value.
Representation and voting
Consortium lenders with a single trustee or agent may authorise that agent, represent themselves, appoint a separate insolvency professional at their own cost, or vote jointly or severally. For a class of creditors under subsection (6A)(b), the tribunal appoints an insolvency professional as authorised representative before the first committee meeting.
Section 25A(3A), inserted in 2019, requires the authorised representative to vote for the whole class in line with the decision of more than fifty per cent of the voting share of class members who voted. A Section 12A withdrawal vote is the exception.
Role in liquidation after 26 May 2026
Subsection (11) applies to liquidations initiated after 26 May 2026. It also applies to liquidations ongoing on that date where the liquidator had not applied for dissolution under Section 54; in those cases the committee continues for the rest of the process.
Regulation 8 of the IBBI Liquidation Process Regulations, substituted with effect from 2 June 2026, provides that the committee continues to function during liquidation. A secured creditor that has not relinquished its security interest under Section 52 is not part of the committee. The first meeting is convened within seven days of the liquidation commencement date. The regulation also lists decisions needing the committee's prior approval.
Practical checklist
Do
- Check related-party status of every financial creditor before admitting it to committee voting.
- Confirm whether a creditor class needs an authorised representative under subsection (6A) before the first meeting.
- Record the voting share basis for each member and the threshold applied to each decision.
- In liquidations, check whether subsection (11) applies by reference to the initiation date and any Section 54 application.
Avoid
- Do not apply the 51% default where a specific provision sets a different threshold.
- Do not let a related-party financial creditor participate unless the second proviso clearly applies.
- Do not rely on a pre-2026 copy that has no subsection (11) when advising on liquidation governance.
Glossary
- Voting share
- Under Section 5(28) as amended in 2026, the share of the voting rights of a financial creditor based on the proportion of financial debt owed to it, relative to the financial debt owed to committee members who are eligible to vote.
- Authorised representative
- The trustee, agent, insolvency professional or other person who attends and votes for a group of financial creditors under subsection (6A).
Frequently asked questions
Can a related-party lender vote in the committee of creditors?
Generally no. The first proviso to Section 21(2) removes representation, participation and voting rights. The second proviso excepts a regulated financial creditor that became a related party only through the listed conversion or substitution of debt, or prescribed transactions, before the insolvency commencement date.
What majority does the committee need?
Section 21(8) requires at least 51% of voting share unless the Code provides otherwise. For example, Section 30(4) requires at least 66% to approve a resolution plan.
Does the committee continue in liquidation?
From 26 May 2026, Section 21(11) requires the committee to supervise a Chapter III liquidation. Its Explanation sets out which ongoing liquidations it covers.
Need help applying this provision to your situation?
Contact BizeneedLast updated 11 October 2026