2018 (12) TMI 1978 - AT - Insolvency and Bankruptcy

Operational Creditors' Representation in Committee of Creditors Based on Verified Claims, Not Total Amount

Consolidated Engineering Company & Anr. Versus Golden Jubilee Hotels Pvt. Ltd.

Consolidated Engineering Company & Anr. Versus Golden Jubilee Hotels Pvt. Ltd. - TMI 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.