Section 27: Replacement of Resolution Professional by Committee of Creditors
Section 27 of the Insolvency and Bankruptcy Code, 2016 (IBC) permits the committee of creditors (CoC) to replace the resolution professional (RP) during the corporate insolvency resolution process (CIRP). The decision requires at least 66% of the CoC voting share, written consent from the proposed professional and the statutory appointment process.
What does Section 27 provide?
The CoC may decide that the resolution professional appointed under Section 22 of the IBC should be replaced. The Code prescribes the voting requirement, the proposal of a new insolvency professional and confirmation through the Adjudicating Authority and Insolvency and Bankruptcy Board of India (IBBI).
Section 27 explained, subsection by subsection
Section 27(1): Power to replace the RP
At any time during CIRP, the CoC may replace an RP appointed under Section 22 if it considers replacement necessary. This power is exercised in the manner prescribed by Section 27.
Section 27(2): 66% vote and written consent
At a CoC meeting, creditors holding at least 66% of the voting shares may resolve to replace the RP. The proposed replacement must give written consent in the specified form. The 75% threshold stated in older versions of this provision was replaced by the 2018 amendment and should not be used.
Section 27(3): Forwarding the proposed name
The CoC forwards the name of the proposed insolvency professional to the Adjudicating Authority, ordinarily the National Company Law Tribunal (NCLT) for a corporate debtor.
Section 27(4): Confirmation and appointment
The Adjudicating Authority forwards the proposed professional's name to the IBBI for confirmation. Appointment follows the statutory process referred to in Section 16.
Section 27(5): Continuity during pending disciplinary proceedings
Where disciplinary proceedings are pending against the proposed professional, the existing RP appointed under Section 22 continues until another RP is appointed under Section 27. This prevents a vacancy in management of CIRP.
Important terms and related legal provisions
- Committee of creditors (CoC)
- The body constituted primarily of financial creditors under Section 21, exercising voting rights based on assigned voting shares.
- Resolution professional (RP)
- The insolvency professional appointed to conduct CIRP and perform duties including those under Section 25.
- Voting share
- The proportion of voting rights assigned to a financial creditor according to the Code and applicable regulations; 66% refers to voting share, not simply the number of creditors present.
- Adjudicating Authority
- For corporate persons, generally the NCLT under Section 60 of the IBC.
Practical procedure for replacing a resolution professional
- Place the proposal for replacement before a duly convened CoC meeting.
- Identify an eligible insolvency professional and obtain written consent in the prescribed form.
- Record a resolution supported by at least 66% of voting shares.
- Forward the proposed name and necessary records to the NCLT.
- Complete IBBI confirmation and the appointment process; ensure continuity and handover of CIRP records.
Meeting notices, minutes, consent forms and other procedural requirements must comply with the applicable CIRP Regulations as amended.
Frequently asked questions
Can the CoC replace an RP without proving misconduct?
Section 27 permits replacement when the CoC considers it necessary; the provision does not expressly require a finding of professional misconduct. The statutory voting and appointment process must still be followed.
Is 75% voting approval required?
No. The applicable threshold under Section 27(2) is 66% of voting shares, following the 2018 amendment.
Can the CoC appoint a replacement directly?
The CoC selects and proposes the replacement, but appointment proceeds through the Adjudicating Authority and IBBI confirmation process under Section 27.
Official legislation and regulations
Check the latest consolidated law and notifications at the India Code portal and the IBBI Legal Framework, including the Insolvency Resolution Process for Corporate Persons Regulations, 2016, as amended. For the wider framework, see The Insolvency and Bankruptcy Code, 2016.
Legal information only. Verify the version and commencement of any later amendments and applicable rules before relying on this article in a proceeding.