CHAPTER II - CORPORATE INSOLVENCY RESOLUTION PROCESS
Section 21 of the Insolvency and Bankruptcy Code 2016: Committee of Creditors
Section 21 governs constitution and composition of the Committee of Creditors, commonly called the CoC. It deals with financial-creditor membership, related-party restrictions, consortium and syndicated debt, creditors in a class, authorised representatives, voting share, access to financial information and, following the 2026 amendment, the CoC's continuing supervisory role in qualifying liquidation processes.
Section 21(1): Constitution of the Committee of Creditors
After collating claims received against the corporate debtor and determining its financial position, the interim resolution professional constitutes the Committee of Creditors. This duty follows the claims and information functions under Section 18.
Section 21(2): Financial Creditors and Related-Party Restriction
As a general rule, the CoC comprises all financial creditors of the corporate debtor. A financial creditor who is a related party of the corporate debtor is ordinarily excluded from the right of representation, participation and voting in CoC meetings.
The related-party proviso contains a statutory exception for a financial creditor regulated by a financial sector regulator where its related-party status arises solely because of conversion or substitution of debt into equity shares or instruments convertible into equity shares, or completion of prescribed transactions, before the insolvency commencement date.
Section 21(3): Consortium or Agreement Among Financial Creditors
Where financial debts are owed to two or more financial creditors as part of a consortium or agreement, each financial creditor is part of the CoC. Voting share is determined according to the financial debt owed to each creditor, subject to the Code and applicable regulations.
Section 21(4) and 21(5): Mixed Financial and Operational Debt
Section 21(6): Consortium, Syndicated Facilities and Securities
Where the terms of financial debt extended through a consortium arrangement or syndicated facility, or issued as securities, provide for a single trustee or agent to act for the financial creditors, a financial creditor may use the representation choices provided by Section 21(6), including authorising the trustee or agent, representing itself, appointing another insolvency professional at its own cost, or exercising voting rights jointly or severally as permitted by the Code.
Section 21(6A): Authorised Representatives
Section 21(6A) contains the specialised representation framework for specified categories of financial creditors, including creditors in a class. Depending on the applicable clause, the financial creditor may be represented by a trustee or agent, an authorised representative selected in the prescribed manner, or the insolvency professional appointed under the statutory framework. Voting by an authorised representative must also be read with Section 25A and the CIRP Regulations.
Section 21(6B): Remuneration of Authorised Representative
The remuneration payable to an authorised representative under Section 21(6A) is dealt with by Section 21(6B) and the applicable regulations. The treatment of that remuneration as insolvency resolution process cost depends on the statutory category and regulatory framework.
Section 21(7): Determination of Voting Share for Securities
The Insolvency and Bankruptcy Board of India may specify the manner of determining voting share in respect of financial debts issued as securities covered by Section 21(6).
Section 21(8): General Voting Rule
Except where the Code provides otherwise for a particular decision, decisions of the Committee of Creditors are taken by a vote of not less than 51 percent of the voting share of the financial creditors.
This general rule must not be confused with provisions that prescribe a higher threshold for specified decisions. For example, several major CIRP decisions require 66 percent voting share, while withdrawal under Section 12A is governed by its own higher statutory threshold.
Where the corporate debtor has no financial creditors, or all financial creditors are related parties and therefore ineligible in the circumstances covered by the regulations, the CoC is constituted in the manner specified by the Board. Regulation 16 of the CIRP Regulations addresses the committee where there are no financial creditors.
Section 21(9) and 21(10): CoC Right to Financial Information
The CoC may require the resolution professional to furnish financial information relating to the corporate debtor at any time during CIRP. The resolution professional must make the requested financial information available within seven days of the requisition.
Section 21(11): CoC Supervision During Liquidation - 2026 Amendment
The Insolvency and Bankruptcy Code (Amendment) Act, 2026 inserted Section 21(11). Where liquidation of the corporate debtor is initiated under Chapter III, the CoC constituted under Section 21 also supervises conduct of the liquidation process by the liquidator, and Sections 21 and 24 apply to liquidation as the context requires.
The Board may specify other classes of creditors who may attend CoC meetings during liquidation without voting rights. The statutory explanation applies the new framework to liquidation processes initiated after commencement of the 2026 amendment and to qualifying ongoing liquidations where the liquidator had not made an application under Section 54 on the commencement date.
Definitions Relevant to Section 21
| Provision | Term | Meaning |
|---|---|---|
| Section 3(7) | Corporate person | Includes a company, limited liability partnership and other persons incorporated with limited liability under applicable law, subject to the statutory exclusions. |
| Section 3(8) | Corporate debtor | A corporate person who owes a debt to any person. |
| Section 5(7) | Financial creditor | A person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred. |
| Section 5(8) | Financial debt | A debt, along with interest if any, disbursed against consideration for the time value of money and includes the categories specified in Section 5(8). |
| Section 5(20) | Operational creditor | A person to whom an operational debt is owed and includes a person to whom that debt has been legally assigned or transferred. |
| Section 5(24) | Related party | Defines related party in relation to a corporate debtor through the relationships and control tests specified in the Code. |
| Section 5(28) | Voting share | The share of voting rights of a single financial creditor in the CoC, calculated in accordance with the financial debt owed to members eligible to vote under the current Code. |
Section 21 in the CIRP Framework
| Provision | Connection |
|---|---|
| Section 18 | Requires the IRP to collate claims and constitute the CoC. |
| Section 21 | Governs CoC constitution, membership, representation, voting and information rights. |
| Section 22 | CoC considers appointment of the resolution professional. |
| Section 24 | Governs meetings of the CoC. |
| Section 27 | Provides for replacement of the resolution professional by the CoC. |
| Section 28 | Requires CoC approval for specified actions. |
| Section 30 | Deals with submission and CoC consideration of resolution plans. |
Official Legal Resources
For the current Code and regulations, refer to the India Code portal, IBBI Legal Framework, IBBI Acts, IBBI Regulations, IBBI Notifications and IBBI Orders.