A code of conduct for CoC, finally

The Code of Conduct for Committee of Creditors is finally going to be true. In a consultation paper released on 27 August 2021, the Insolvency and Bankruptcy Board of Indian (IBBI) has laid down a number of dons and don’ts for the CoC.

A member of the committee of creditors, while discharging its duties shall abide by the following code of conduct, as individual and jointly with other members of the committee.

A member of the committee shall:

1) maintain integrity in performing its roles and functions under the Code.

2) must not misrepresent any facts or situations and should refrain from being involved in any action that is detrimental to the objectives of the Code.

3) must maintain objectivity in exercising decisions on the subject matter bestowed to the committee under the Code.

4) must disclose the details of any conflict of interests to the stakeholders, whenever it comes across such conflict of interest during a process.

5) not acquire, directly or indirectly, any of the assets of the debtor, nor knowingly permit any relative of the committee member to do so, without making a disclosure to the stakeholders.

6) not adopt any illegal or improper means to achieve any objective.

7) co-operate with the insolvency professional in discharging his duties under the Code.

8) not influence the decision or the work of committee so as to make undue gain or advantage for itself or its related parties.

9) disclose the existence of any pecuniary or personal relationship with any stakeholders entitled to distribution, as soon as it becomes aware of it.

10) ensure that decisions are made without any bias, favour, fear, coercion, undue influence or conflict of interest.

11) maintain transparency in all activities and decision making.

12) respect the moratorium and creditors who maintain the accounts of the CD shall not adjust the receipts of the CD during CIRP for past due in violation of moratorium.

13) become fully aware of the provisions of the Code and rules/regulations. It must have complete knowledge of the role and responsibilities assigned to it by the Code.

14) nominate representative with sufficient authorization to participate in meetings and make decisions during the process.

15) participate actively, constructively and effectively in deliberations and decision making.

16) not conceal any material information or knowingly make a misleading statement to the Board, the Adjudicating Authority or any stakeholder, as applicable.

17) ensure that timelines provided in the Code and Regulations are not breached.

18) facilitate the appointment of various professionals within timelines prescribed under the Code and the Regulations.

19) cooperate with the insolvency professionals in seeking various approvals from Adjudicating Authority within model timeline prescribed under the Code and Regulations.

20) ensure complete confidentiality of information that they receive or come across as part of the process at all times. It shall not share any information with any person who is not authorised to receive such information and without the consent of the relevant parties or as required by law.

21) at all times respect the privacy of any information.

22) take necessary measures to ensure that the insolvency resolution process cost is reasonable, keeping in balance the need to conduct a smooth and timely resolution process.

22) ensure that their cost associated with the process is not booked as insolvency resolution process cost.

23) not withhold release of insolvency resolution process cost, including fee of professionals.

24) adhere to the Code and regulations in performing their roles and functions under the Code at all times.

25) bear the collective interest of all stakeholders in mind in all activities and decision making.

26) respect the demarcation of roles and responsibilities assigned by the Code to different stakeholders and shall not, either directly or indirectly interfere with the functions of the insolvency professional.

27) at all times endeavor to ensure that timelines prescribed in the Code and Regulations are adhered to.

28) not contravene any provisions, of the Code, regulations, instructions, guidelines and circulars issued by the Board from time to time.

29) endeavor to protect the CD as a running business and its assets and take necessary steps to protect the value of the assets of the CD.

30) extend interim finance to the extent required for completion of the process.

Also See: Parliamentary committee recommends threshold for haircuts, code of conduct for CoCs under IBC