Authorised Representative Roles

As per the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 dated 6 June 2018, concept of Authorised Representative for a “Class of Creditors” has been introduced.

Class of creditors: As per Regulation-2(1) (aa) of IBBI (CIRP) Regulations, 2016: class of creditors means a class with at least ten financial creditors under clause (b) of sub-section (6A) of section 21 and the expression, “creditors in a class” shall be construed accordingly.

The class of creditors includes home-buyers or real estate buyers or deposit holders. Class of creditors is a group of 10 or more financial creditors other than banks and financial institutions or trustees in financial securities or deposits.

Appointment of Authorised Representative

Where the corporate debtor has at least ten financial creditors in a class, the Interim Resolution Professional shall offer a choice of three insolvency professionals and a creditor in the class may indicate its choice of an insolvency professional, from amongst the three, to act as its authorised representative. The insolvency professional, who is the choice of the highest number of creditors in the class, is appointed as the authorised representative of the creditors of the respective class.

Process for appointing Authorised Representative

The interim resolution professional shall make an application to the Adjudicating Authority (NCLT) along with the list of all financial creditors, containing the name of an insolvency professional, other than the interim resolution professional, to act as their authorised representative, who shall be appointed by the Adjudicating Authority prior to the first meeting of the committee of creditors and such authorised representative shall attend the meetings of the committee of creditors, and vote on behalf of each financial creditor in class to the extent of his voting share.

Other provisions relating to Authorised Representative

a. Any delay in appointment of the authorised representative for any class of creditors shall not affect the validity of any decision taken by the committee.

b. The interim resolution professional shall provide the list of creditors in each class to the respective authorised representative appointed by the Adjudicating Authority.

c. The authorised representative shall have no role in receipt or verification of claims of creditors of the class he represents.

d. The interim resolution professional or the resolution professional, as the case may be, shall provide electronic means of communication between the authorised representative and the creditors in the class.

e. The remuneration payable to the authorised representative- (i) under clauses (a) and (c) of sub-section (6A), if any, shall be as per the terms of the financial debt or the relevant documentation; and (ii) under clause (b) of sub-section (6A) shall be as specified which shall be jointly borne by the financial creditors.

f. The authorised representative shall cast his vote in respect of each financial creditor or on behalf of all financial creditors he represents in accordance with the provisions of sub-section (3) or sub-section (3A) of section 25A, as the case may be. The voting share of a creditor in a class shall be in proportion to the financial debt which includes an interest at the rate of eight per cent per annum unless a different rate has been agreed to between the parties.

g. The authorised representative shall circulate the agenda to creditors in a class and announce the voting window at least twenty-four hours before the window opens for voting instructions and keep the voting window open for at least twelve hours.

h. The authorised representative shall not act against the interest of the financial creditor he represents and shall always act in accordance with their prior instructions.

i. The authorised representative shall file with the committee of creditors any instructions received by way of physical or electronic means, from the financial creditor he represents, for voting in accordance therewith, to ensure that the appropriate voting instructions of the financial creditor he represents is correctly recorded by the interim resolution professional or resolution professional, as the case may be.

j. The authorised representative of creditors in a class shall be entitled to receive fee for every meeting of the committee attended by him in the following manner, namely:

“My Rupee Mantra” teams “Resolution Professionals” provide their services as “Authorised Representatives” for a class of creditors. They follow the rules and regulations provided by IBBI in this regard from time to time. If appointed by AA they do:

• Circulate the Agenda of COC meeting to the Creditors in a class.
• Seek their Views and suggestions and place before the COC.
• Submit the reports to IRP / RP.