Stemming Value Erosion: IBBI Unveils New Guidelines for CoC

On August 6, the Insolvency and Bankruptcy Board of India (IBBI) released guidelines for members of the Committee of Creditors (CoC) aimed at ensuring time-bound resolution and maximisation of the value of the corporate debtor’s assets. These guidelines have come into force with immediate effect.

The new guidelines mandate that CoC members share relevant information with the CoC or the Insolvency Professional, including details about transactions, guarantees, and claims related to the corporate debtor. Members must also disclose any existing or potential conflicts of interest arising from financial, personal, or professional relationships with stakeholders as soon as they become aware of them.

CoC members are required to actively participate in the presentation of valuation methodologies made by registered valuers. They must provide the Insolvency Professional with the latest financial statements, relevant audit extracts, and other significant information. This sharing of information is crucial for the efficient conduct of the process.

Furthermore, CoC members should seek details of all litigation involving the corporate debtor from the Insolvency Professional and recommend necessary actions to safeguard the corporate debtor’s interests. They are expected to review and assess the information memorandum prepared by the Insolvency Professional, offer additional insights, and contribute to the preparation of the marketing strategy. If needed, they may also take steps to market the corporate debtor’s assets.

All resolution plans received by the Insolvency Professional must be presented to the CoC. The members should also consider whether a monitoring committee is needed for the implementation of the resolution plan. The guidelines also address other obligations, including the nomination of representatives, adherence to confidentiality undertaking, and ensuring the regular conduct of meetings.