National Company Law Appellate Tribunal Clarifies Committee of Creditors Approval and Promoter Cooperation Rules

The National Company Law Appellate Tribunal (NCLAT) has held that obtaining approval from the Committee of Creditors (CoC) cannot be treated as conclusive proof that suspended directors have extended full cooperation during corporate insolvency proceedings. The tribunal underscored that statutory cooperation duties require independent verification rather than relying solely on creditor consensus. During insolvency resolution processes, suspended management and promoters are legally mandated to assist the resolution professional in uncovering financial records and managing corporate assets.

Creditor approval of a resolution plan or settlement serves a different commercial purpose and does not automatically absolve promoters of their duty to cooperate with statutory investigators and administrators. Insolvency professionals must independently document promoter cooperation levels regardless of creditor sentiments when submitting compliance reports to adjudicating authorities. Legal advisors representing corporate debtors or creditors should ensure that cooperation metrics are formally verified on record.

Bottom line: Rigorous documentation of promoter compliance protects stakeholders during corporate restructuring.