IBBI proposes new norms to strengthen CoC oversight and transparency

IBBI's discussion paper recommends detailed CoC deliberation records, mandatory going-concern assessments and clarified rules on delayed claims to improve IBC transparency and discipline

The Insolvency and Bankruptcy Board of India (IBBI) has in a discussion paper suggested that the committee of creditors (CoC) record its deliberations on the expected recovery for creditors in comparison with the fair value and liquidation value. The CoC, IBBI has said, should also record whether the market discovery undertaken during the corporate insolvency resolution process was adequate and wherever applicable, mechanisms such as challenge mechanism or re-invitation of plans were put to use.

 

These measures are expected to bring more transparency to the Insolvency and Bankruptcy Code (IBC) process and help address the avoidable disputes regarding the robustness of evaluation and decision-making processes of CoC.

 

The committee, IBBI has proposed, should make a record of its deliberations on the capability and credibility of the resolution applicant, and the certainty of implementation of the resolution plan, including availability of funds.

 

The insolvency regulator said that the proposed amendments would strengthen creditor oversight and improve procedural discipline of the IBC process.

 

The IBBI has further proposed to make it mandatory for the CoC to place a structured Going Concern Assessment Report of the company undergoing insolvency at its first meeting. A Going Concern Assessment Report evaluates a business's ability to continue operations, meet financial obligations, and avoid liquidation for the foreseeable future, typically the next 12 months.

 

“This assessment shall examine, inter alia, the financial viability of operations, estimated income, expenditure and associated cash flows, working capital requirements, and the risks of value erosion arising from continuation or suspension of operations,” the IBBI said in its discussion paper.

 

This decision, the IBBI said, would form the commercial basis for incurring future operational insolvency resolution process costs.

 

The IBBI has sought to clarify the role of the CoC in terms of delayed claims in the proposed amendments. It has said that all delayed claims found acceptable by the resolution professional (RP) shall be placed before the adjudicating authority within one week of receipt of such claims, and before the CoC only for its recommendation regarding their treatment in the resolution plan.

 

The insolvency regulator has also proposed excluding related operational creditors from taking part in the CoC. However, if the number of such unrelated operational creditors is less than 18, then the committee shall include all such unrelated operational creditors in the CoC, the IBBI has said.

 

The IBBI has invited public comments to its discussion paper by March 10, 2026.

 

A CoC in IBC consists of financial creditors in insolvency cases and can also include operational creditors with limited participation and voting rights.

 

In August 2024, the IBBI had brought self-regulating guidelines that required the CoC to maintain integrity, confidentiality, and objectivity during the decision-making process, and disclose any conflict of interest.

 

In its order on Jet Airways’ liquidation in 2024, the Supreme Court had called the case an “eye-opener” that had brought to light the deficiencies in the IBC. The ruling highlighted deficiencies in stakeholder roles, urging better enforcement of CoC conduct and oversight to prevent future value erosion.