Context:
The recently Insolvency and Bankruptcy Board of India (IBBI) has issued guidelines for the Committee of Creditors (CoC).
Committee of Creditors (CoC):
- A group formed by financial creditors who lent money to a debtor, typically during insolvency proceedings.
- CoC plays a crucial role in the resolution process under the Insolvency and Bankruptcy Code, 2016
- Formation – An insolvency professional is appointed to manage the debtor’s assets and form the CoC
- Members – The CoC consists of all financial creditors of the debtor
- Not permitted for operational creditors
- Functions and Powers –
- Decides the future of the debtor’s outstanding debt.
- They can choose to revive the debt by restructuring the repayment schedule or liquidate the debtor’s assets to recover dues
- Reviews and approves the resolution plan submitted by potential resolution applicants.
- The plan must receive at least 66% of the votes from the CoC members to be approved
- Monitors the implementation of the approved resolution plan to ensure compliance with the agreed terms
- Decides the future of the debtor’s outstanding debt.
- Significance –
- CoC empowers financial creditors to have control over the insolvency resolution process, ensuring their interests are protected
- By involving creditors directly, the CoC aims to achieve a more efficient and effective resolution of insolvency cases
Source: Business Standard
Previous Year Question
Consider the investments in the following assets:
1. Brand recognition
2. Inventory
3. Intellectual property
4. Mailing list of clients
How many of the above are considered intangible investments?
[UPSC Civil Service Exam – 2023 Prelims]
(a) Only one
(b) Only two
(c) Only three
(d) All four
Answer: (c)
Explanation:
Inventory is not an intangible investment.
