CHAPTER III INSOLVENCY RESOLUTION PROCESSCentral

Section 109 of The Insolvency and Bankruptcy Code, 2016. in hindi

(1)A creditor shall be entitled to vote at every meeting of the creditors in respect of the repayment plan in accordance with the voting share assigned to him.
(2)The resolution professional shall determine the voting share to be assigned to each creditor in the manner specified by the Board.
(3)A creditor shall not be entitled to vote in respect of a debt for an unliquidated amount.
(4)A creditor shall not be entitled to vote in a meeting of the creditors if he—
1. (a)is not a creditor mentioned in the list of creditors under section 104; or
2. (b)is an associate of the debtor.

Summary

Creditors are entitled to vote at meetings in respect of the repayment plan based on their assigned voting share.
The resolution professional is responsible for determining the voting share of each creditor using the guidelines specified by the Board.
Creditors are not allowed to vote on any portion of a debt that represents an unliquidated, or unfixed, amount.
To vote, a creditor must be mentioned in the official list of creditors prepared under Section 104.
Creditors who are associates of the debtor, such as close relatives or business partners, are disqualified from voting.

Practical examples

1George has an active lawsuit against debtor Mary for damages, but the court has not yet decided the final compensation amount. Since George's claim is unliquidated, the resolution professional, Mr. David, explains to George that he cannot vote on this unfixed amount at the creditors' meeting.

2Sarah is the sister of debtor Peter. Peter owes Sarah five lakh rupees, and Sarah is on the creditor list. However, because Sarah is an associate of Peter, the resolution professional, Ms. Alice, does not allow Sarah to vote at the meeting to prevent any conflict of interest.

FAQ

1. How are voting shares determined at a creditors' meeting under Section 109 of the Insolvency and Bankruptcy Code, 2016?

Under Section 109 of the Insolvency and Bankruptcy Code, 2016, the resolution professional determines the voting share of each creditor in the manner specified by the Board.

2. Can a creditor vote on an unliquidated claim under Section 109 of the Insolvency and Bankruptcy Code, 2016?

No, under Section 109 of the Insolvency and Bankruptcy Code, 2016, a creditor is not entitled to vote in respect of a debt for an unliquidated amount.

3. Who is barred from voting at a creditors' meeting under Section 109 of the Insolvency and Bankruptcy Code, 2016?

Under Section 109 of the Insolvency and Bankruptcy Code, 2016, a creditor cannot vote if they are not mentioned in the list prepared under Section 104, or if they are an associate of the debtor.

4. What qualifies as an associate of the debtor under the voting restrictions of Section 109 of the Insolvency and Bankruptcy Code, 2016?

Under Section 109 of the Insolvency and Bankruptcy Code, 2016, associates include persons like immediate family members, relatives, or business partners who are barred from voting to ensure a fair process.

Test yourself

Q1.Under Section 109 of the Insolvency and Bankruptcy Code, 2016, who determines the voting share to be assigned to each creditor?

Q2.Under Section 109 of the Insolvency and Bankruptcy Code, 2016, a creditor is strictly prohibited from voting in respect of a debt that is:

Q3.Under Section 109 of the Insolvency and Bankruptcy Code, 2016, if a secured creditor participates in a meeting conducted under Section 108 and votes only on the unsecured portion of their debt as permitted under Section 110 of the Code, how is their voting share determined?

Q4.Under Section 109 of the Insolvency and Bankruptcy Code, 2016, which of the following creditors is disqualified from voting at the meeting?

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