1. The interim administrator shall appoint a committee of creditors with such number of members as he may determine, but not exceeding seven, and as far as possible a representative each of every class of creditors should be represented in that committee.
2. The holding of the meeting of the committee of creditors and the procedure to be followed at such meetings, including the appointment of its chairperson, shall be decided by the interim administrator.
3. The interim administrator may direct any promoter, director or any key managerial personnel to attend any meeting of the committee of creditors and to furnish such information as may be considered necessary by the interim administrator.
Legal Commentary & Landmark Judgments: Section 257
Section 257 historically mandated the constitution of a Committee of Creditors during revival proceedings; omitted by the Insolvency and Bankruptcy Code, 2016, this provision represented the statutory genesis of the modern Committee of Creditors under Sections 21 and 24 of the IBC.
Creditors participating in CoC meetings must ensure that all decisions regarding approval of resolution plans, interim finance, or liquidation satisfy the requisite voting thresholds under Sections 21 and 28 IBC, as the commercial judgment of the majority cannot be second-guessed by the NCLT.