Operational Creditors' Representation in Committee of Creditors Based on Verified Claims, Not Total Amount The National Company Law Appellate Tribunal held that Operational Creditors' representation in the 'Committee of Creditors' should be based on the claim ...
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Operational Creditors' Representation in Committee of Creditors Based on Verified Claims, Not Total Amount
The National Company Law Appellate Tribunal held that Operational Creditors' representation in the 'Committee of Creditors' should be based on the claim collated and noticed by the resolution professional, not the total amount claimed by all Operational Creditors. If the verified claim is less than 10%, Operational Creditors cannot claim representation. In this case, the Operational Creditor was allowed to observe the Committee proceedings without participation rights. The decision could be challenged at the appropriate stage. The appeal was disposed of with these directives, not setting a precedent for future cases.
Issues involved: Calculation of representation in 'Committee of Creditors' for Operational Creditors.
Analysis: The judgment by the National Company Law Appellate Tribunal, New Delhi, addressed the issue of calculating the representation of 'Operational Creditors' in the 'Committee of Creditors'. The Tribunal held that the Adjudicating Authority was correct in determining that 10% of the total debt for representation in the Committee should be based on the claim collated and noticed by the resolution professional, not on the total amount claimed by all Operational Creditors until verified and compared. If after verification, the claim of Operational Creditors is less than 10%, they do not have the right to claim representation in the Committee. However, in this specific case, the Tribunal allowed the representative of the Operational Creditor to only observe the proceedings of the Committee, without the right to object or participate, as agreed by the Resolution Professional. The judgment emphasized that any contrary decision taken by the Operational Creditor could be challenged through the appropriate forum at the proper stage. The Operational Creditor was also permitted to obtain the name of the representative who would observe the proceedings. It was explicitly stated that this order should not be considered as a precedent in any other case. The appeal was disposed of based on these observations.
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