Under the Insolvency and Bankruptcy Code 2016 (‘IBC’), the committee of creditors (‘CoC’) has a statutory role and serves as the custodian of public confidence. The CoC is entrusted with the task of unlocking the valuable assets for their optimum contribution to the gross domestic production. The decisions taken by CoC impact not only the life of the corporate debtor and consequently, its stakeholders, they have wider ramifications for the country’s economy. Even though it is the resolution professional who is responsible for the management of the day-to-day affairs of the corporate debtor, IBC envisages CoC as the supreme decision-making body during the corporate insolvency resolution process. Commercial decisions are left to the collective wisdom of the CoC. The Supreme Court has repeatedly recognized the importance of the CoC and supremacy of its commercial wisdom. The collective decisions of CoC are non-justiciable. 

It is therefore only right that the CoC’s decision-making process is impartial, open and inspires public confidence. The CoC should set highest levels of standards in conduct and performance. Recognising the pivotal role of CoC, Insolvency Law Academy constituted a Working Group to propose a voluntary code of conduct for CoC comprising of ‘best practice’; a mechanism for independent periodical assessment of performance of the members of CoC against the code of conduct; and incentives for higher standards of performance and disincentives for non-observance.

The ILA Working Group submitted its Draft Report on 3rd November, 2022 proposing Draft Standards in Conduct and Performance for the CoC. The Draft Standards were widely shared with the regulators and representative bodies of the insolvency industry for comments. The Draft was also discussed at the ILA Annual Conference held in February, 2023.  

After considering the feedback received, the ILA Working Group finalized the Statement of Standards in Conduct and Performancefor the CoC.