MEETING OF CREDITORS - INSOLVENCY RESOLUTION PROCESS - PERSONAL GUARANTOR TO CORPORATE DEBTOR

[Mr. M. GOVINDARAJAN]

Once the application for initiation of insolvency resolution process is admitted on the basis of the report of the Interim Resolution Professional (‘IRP’ for short) the insolvency resolution process starts.  The IRP makes public announcement calling for the claims from the creditors.  On receipt of the claims the IRP checked the same and prepared the list of creditors.  The debtor in consultation with the IRP prepares a repayment plan.  The IRP shall prepare a report that shall be submitted to the Adjudicating Authority. If the IRP is of the opinion that a meeting of the creditors should be summoned he shall also specify the date on which, and the time and place at which, the meeting should be held.

The date on which the meeting is to be held shall be not less than 14 days and not more than 28 days from the date of submission of report.  The RP shall consider the convenience of creditors in fixing the date and venue of the meeting of the creditors.  The notice sent shall state the address of the Adjudicating Authority to which the repayment plan and report of the resolution professional on the repayment plan has been submitted and shall be accompanied by-

• a copy of the repayment plan;
• a copy of the statement of affairs of the debtor;
• a copy of the said report of the IRP; and
• forms for proxy voting.

Statement of affairs

The RP shall prepare a statement of affairs of the guarantor which shall include the following-

• assets and liabilities for the preceding three financial years and the current financial year;
• details of the excluded assets and excluded debts;
• income statement for the preceding three financial years and the current financial year;
• income-tax returns filed by the guarantor, if any, for the preceding 3 financial years;
• creditor wise amount due, broken up into secured and unsecured debts for the preceding 3 financial years;
• details of debt owed by guarantor to his associates for the preceding three 3financial years;
• guarantees given in relation to any of his debts, and whether any of the guarantors is an associate of the guarantor; and
• details of the financial statements for the business owned by the guarantor, or of the firm in which he is a partner, as the case may be, for the preceding 3 financial years, if applicable.

Notice to meeting

A creditor, who is included in the list of creditors, shall be entitled to participate in the meetings of creditors.  The voting share of each creditor shall be in proportion to the debt owed to such creditor.  The RP shall convene the first meeting of creditors by giving such notice to the other participants as decided by the creditors, which shall not less than 48 hours.  The notice shall be served on every participant at the address provided to the resolution professional.  The notice convening the meeting of creditors shall inform the participants of the venue, the time, the date of the meeting and of the options available to participants to attend the meeting either in person, through video conferencing, or through a proxy and creditors to cast vote in person, through a proxy, by electronic means, or by electronic proxy, as the case may be.

The notice shall contain the following agenda-

•  list of matters to be discussed;
•  list of issues to be voted upon;
• relevant documents in relation to the matters to be discussed and issues to be voted upon.

If a creditor gives option to attend the meeting through video conferencing the notice shall state the facilities made available to them.  If an option is made to cast vote by electronic vote the notice shall state the facilities made available to them.

Meeting

The RP shall convene a meeting of creditors on a request by creditors having 33% of voting share of creditors.  Any decision of the creditors shall require approval of more than 50% of voting share of the creditors who voted.

The RP shall preside over the meeting of creditors.  At the commencement of a meeting, the resolution professional shall take a roll call, when every participant, including those attending by proxy or through video conferencing. 

A meeting of creditors shall be quorate if creditors representing at least thirty-three percent of voting shares are present in person, by proxy or through video conferencing.  The creditors in a meeting may modify the percentage of voting share required for quorum in respect of any future meetings.   Where a meeting of creditors could not be held for want of quorum, unless the creditors have previously decided otherwise, the meeting shall automatically stand adjourned to the same time and place on the next day and on that day, no quorum shall be required.  The RP shall ensure that the required quorum is present throughout the meeting.

Secured creditors shall be entitled to participate and vote in the meetings of the creditors.  A secured creditor participating in the meetings of the creditors and voting in relation to the repayment plan shall forfeit his right to enforce the security during the period of the repayment plan.  Where a secured creditor does not forfeit his right to enforce security, he shall submit an affidavit to the RP at the meeting of the creditors stating that the right to vote exercised by the secured creditor is only in respect of the unsecured part of the debt and the estimated value of the unsecured part of the debt.

The RP shall place the repayment plan as mentioned under section 105 in a meeting of the creditors for its consideration.   Where no repayment plan has been received within such period as stipulated, the resolution professional shall notify the same in a meeting of creditors.

Voting

The resolution professional shall take a vote of the creditors present in the meeting on any item listed for voting after discussion on the same.

Minutes

At the conclusion of the meeting, the resolution professional shall prepare minutes of the meeting, including the names of creditors, who voted for, against or abstained from voting on the items put to vote in the meeting. The RP shall circular the minutes to all participants electronically within 48 hours.    The RP shall seek a vote on the items listed for voting in the meeting from the creditors who were not present in the meeting or did not vote at the meeting, by electronic means, where the voting shall be kept open for at least 24 hours from the circulation of the minutes.  At the end of voting the RP shall record the decision arrived at on the items along with the names of creditors who voted for, against or abstained from voting on the items, after considering the voting at the meeting and through the electronic means.  He shall circulate the same to all participants electronically.

Approval

The repayment plan or any modification to the repayment plan shall be approved by a majority of more than three-fourth in value of the creditors present in person or by proxy and voting on the resolution in a meeting of the creditors.

Once the repayment plan has been approved by the creditors the RP shall file an application with the Adjudicating Authority reporting the approval of Repayment plan for its further order.