IBC: Corporate affairs ministry working with FinMin, RBI on issue of committee of creditors' conduct
The corporate affairs ministry is working with the finance ministry, the Reserve Bank of India and the Indian Banks’ Association (IBA) on the issue of the conduct of the committee of creditors under the insolvency resolution process, corporate affairs secretary Rajesh Verma said on Friday.
The role of the Committee of Creditors (CoC) is crucial in deciding a resolution plan under the Insolvency and Bankruptcy Code (IBC), which provides for a market-linked framework for resolving stressed assets.
The discussions on the issue of the conduct of the CoC assume significance amid recent instances of creditors taking steep haircuts on their exposure under resolution plans.
Verma also acknowledged that it has been upheld in judgments that commercial wisdom lies with the CoC as the IBC provides for a competitive market-driven process for value discovery of the debtor.
According to him, the IBBI has been working on increasing the capacity of the CoC through various seminars and addressing the market issues.
The Insolvency and Bankruptcy Board of India (IBBI) and the National Company Law Tribunal (NCLT) are key constituents under the IBC framework.
Addressing a conference organised by the CII on five years of the IBC, Verma said erosion of the value of a debtor before it comes to the CIRP (Corporate Insolvency Resolution Process) is a matter of concern and emphasised that “timing and asset preservation is of real essence”.