Tribunal’s Ruling: The Bengaluru bench of the National Company Law Tribunal (NCLT) has clarified that the Insolvency and Bankruptcy Code (IBC) does not allow provisional constitution of the Committee of Creditors (CoC).
By Aniket Chakraborty
Feb 6, 2025
IBC's Clear Stance: According to the Code, once the CoC is constituted, it is final and cannot be revised or altered.
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No Provisional CoC: The ruling confirms that any provisional constitution of CoC is not supported under IBC.
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CoC's Finality: After its formation, the CoC cannot be changed or reconstituted, ensuring stability in the insolvency process.
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Legal Precedent: The bench’s decision sets a precedent for how CoC matters will be handled under the IBC in the future.
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Implications for Creditors: Creditors must be aware that once the CoC is formed, its structure and decisions are set and unchangeable.
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Impact on Insolvency Proceedings: The decision highlights the need for clarity and finality in insolvency resolution under the IBC framework.
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Judicial Interpretation: The bench interpreted the provisions of the IBC strictly, reinforcing its stance on the CoC’s final constitution.
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Lack of Provisional Clause: The absence of any provision for provisional CoC creation in IBC is central to the tribunal’s judgment.
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Guiding Future Cases: This ruling is likely to guide future cases, ensuring uniformity in how CoC formation is approached in insolvency matters.