{"id":1769,"date":"2022-04-30T05:35:56","date_gmt":"2022-04-30T05:35:56","guid":{"rendered":"https:\/\/demoitc.com\/resurgentindia\/?p=1769"},"modified":"2026-04-27T05:40:05","modified_gmt":"2026-04-27T05:40:05","slug":"committee-of-creditors-functioning-composition-and-significance","status":"publish","type":"post","link":"https:\/\/demoitc.com\/resurgentindia\/committee-of-creditors-functioning-composition-and-significance\/","title":{"rendered":"Committee of Creditors: Functioning, Composition and Significance"},"content":{"rendered":"

Committee of creditors<\/strong> is formed under regulation 21 of the code, and a major decision-maker in the corporate insolvency resolution process. Let\u2019s find out more in detail.<\/p>\n

To make the Corporate Insolvency Resolution Process effective, based on the guidance and suggestions of the members of the committee of creditors<\/strong><\/a>, the resolution plan is prepared for the company. As per this code, a company that is registered under the Companies Act 1956, such as Limited liability partnership, Partnership firms, and Individuals or under the Insolvency and Bankruptcy Code, any financial or operational creditor can start the process of corporate insolvency against the corporate debtor. This can be initiated only when the corporate debtor is a\u00a0defaulter in repayment of debts.<\/p>\n

Definition: Committee of creditors<\/h1>\n

In the process of\u00a0insolvency, the committee of creditors<\/strong> holds an influential position. This committee of creditors is considered to be a higher level decision-making body in initiating and governing the Corporate Insolvency Resolution Process. According to regulation 21 of the code, a committee of creditors is formulated to fulfill the responsibility of the interim resolution professional so as to call for claims from all the creditors. The maximum time duration should be 14 days from the public announcement and once the claim gets verified, the committee of creditors is formed.<\/p>\n

The mandatory condition of the code is to have all financial creditors in the committee of creditors. As per the regulations of the code, it also lists the financial creditors and operational creditors separately. A financial creditor is the one to whom the financial debt and the interest is due, for example Home-buyers, banks, bond holders, guarantee providers, etc. On the other hand, an operational creditor is a person who owns debts related to the goods and services supply, which includes employees, government dues.<\/p>\n

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Role & responsibility of Committee of creditors<\/h2>\n

Based on the Corporate Insolvency Resolution Process under the code, the committee of creditors<\/strong> have multiple roles and responsibilities to fulfil. Here are some major responsibilities:<\/p>\n