Checklist on voluntary liquidation of corporate person as per Bankruptcy Code, 2016, by Barsha Dikshit and Deepa Devi

Steps of Voluntary liquidation of Corporate Person as per Insolvency and Bankruptcy Code, 2016(‘Code’) and Insolvency and Bankruptcy Board of India ( Voluntary Liquidation) Regulations, 2017 (‘liquidation Regulation’)

Updated as on August 16, 2022

Section Particular Time frame Our Remarks
As per Companies Act, 2013 Convening of board meeting for –
1. approving voluntary liquidation of the company, subject to approval of members’ in General Meeting (‘GM’);
2. approving appointment of liquidator and his remuneration, subject to approval of members’ in GM;
3. fixing date and time for the GM;
4. taking note DoS received from majority of directors;
4. authorising liquidators to operate company’s account, subject to approval of his appointment in the GM
Say on X day The Corporate person should be solvent before opting for the voluntary liquidation process
Sec 59 (3) (a) of the Code Declaration of Solvency (‘DoS’) duly verified by an affidavit is to be provided by the majority of directors (in case of company) / DPs (in case of LLP). DoS shall be accompanied by:
a. audited financial statements and record of business operations of the Company for the previous two years or for the period since its incorporation, whichever is later;
b. a report of the valuation of the assets of the Company, if any, prepared by a registered valuer
X day 1. Date of DoS may be the same as the date of Board meeting.
2. DoS shall list each debt of the Company as on the date and state that the Company will be able to pay all its debts in full from the proceeds of assets to be sold in liquidation.
As per Companies Act, 2013 Sending of notice of EGM to all the members/designated partners, directors say (X+1) day
Sec 59 (3) (c) of the Code Holding of general meeting and passing SR therein
1.for voluntary liquidation up and
2. for appointment of liquidator (fixing his remuneration too)
Within (X+1) + 28 days 1. Only an Insolvency professional can be appointed as a Liquidator.
2. Remuneration due to Liquidator shall form part of Liquidation Cost.
3. Date of passing SR or date of obtaining approvals of Crs (whichever is later) shall be considered as liquidation commencement date
Proviso to Section 59 (3) of the Code In case the Corporate Person owes any debt to any person:
Take NOC from the creditors representing 2/3rd of the value of debt of the Corporate person or pass special resolution at a duly convened meeting (within 7 days from the date of passing of SR).
Within (X+1)+28+7 days
Regulation 14 of the VL Regulation Liquidator to make public announcement in Form A –
(a) to call upon the stakeholders to submit their claims due to the Company;
(b) the PA shall provide the last date for submission of claim, which shall be thirty days
from the liquidation commencement date
Within (X+1)+28+5 days Announcement shall be published in
i) English and Regional Language Newspapers with wide circulation at the location of the registered office and principal office or such office as opined by the liquidator;
ii) On the website of the Company, if any;
iii) On the website designated by the Board i.e., IBBI.
Section 59 (4) of the Code Intimation of the Resolution passed by the Corporate person to the Registrar and to the IBBI within 7 days of passing of SR. (X+1)+28+7 days
OR
(X+1)+28+7+7days (in case Company is reqd to obtain Crs approval)
Section 176 and Sec 178 of the Income Tax Act, 1961 Intimation to Assessing Officer regarding discontinuation of operation of Corporate Person Within (X+1)+28+15 days
Regulation 34 of the VL Regulation Liquidator to open a bank account in the name of the corporate person followed by word “in voluntary liquidation” in a scheduled bank, for receiving all moneys due to the corporate person and and for meeting all the liquidation cost say Y day The money in the credit of the bank account shall not be used for any purpose except as mentioned in section 53 (1) of the Code.
Regulation 14 (2) of the VL Regulation Last date of receiving statement of claim as per public announcement (X+1)+28+30 days Claimant shall bear cost of proving the claim; however, cost incurred by liquidator for verifying the claim shall form part of the liquidation cost.
Regulation 9 of the VLRegulations Liquidator to submit Preliminary report detailing:
a) the Capital structure of the Corporate Person;
b) the estimates of its assets and liabilitiesas on liquidation commencement date based on the books of the Corporate Person.
c) whether he intends to make any further inquiry into any matter relating to the Corporate Person or to the conduct of the business thereof;
d) proposed plan of action for carrying out the liquidation (including the timeline within which he proposes to carry out the process and the estimated liquidation cost).
Within X+1+28+45 days
Regulation 29 of the VL Regulations Liquidator to verify the claims submitted and shall either accept or reject the claim, in whole or in part as the case may be. (X+1)+28+30+30 days
Regulation 30 of the VL Regulation Liquidator shall prepare a list of stakeholder on the basis of the proof of claims submitted and accepted with the following columns as may be applicable:
i) Amount of claim admitted;
ii) the extent of dues to which the debts dues are secured or unsecured;
iii) the details of stakeholders;
iv) proof admitted or rejected in part or proof rejected fully.

Within 45 days from the last date of receipt of claim

Within X+1+28+30+45 days The list of stakeholders shall be displayed on the website of the Company and on the webste of the Board.
Regulation 35 of the VL Regulation Liquidator to realise all the assets of the Company and shall deduct the liquidation cost from the said realisation and after deducting the liquidation cost, shall distribute the realisation among the stakeholders, within 30 days of receipt of the receipt of amount to the stakeholders Suppose we realise the amount on Z day,
so the payment shall be made within Z+30 days
Assets which are of a peculier nature can be distributed by the liquidator among the stakeholders with the prior approval of the corporate person.
Regulation 37 of the VL Regulation The liquidator shall endeavour to complete the liquidation process of the corporate person and submit the Final Report within:-
a. 270 days from the liquidation commencement date (where the Company has debt) or
b. 90 days from the liquidation commencement date (when the Company has no debt)
Within X+1+28+270 days (where the Company has debt)
OR
Within X+1+28+90 days
Regulation 37 of the VL Regulation In case the liquidation process continues for more than 12 months, the liquidator shall:
a. call a meeting of the contributories of the corporate person within fifteen days from the end of the year in which he is appointed, and at the end of each succeeding year; and
b. present a Annual Status Report(s) indicating progress in liquidation aincluding-
(i) settlement of list of stakeholders,
(ii) details of any assets that remains to be sold and realized,
(iii) distribution made to the stakeholders, and
(iv) distribution of unsold assets made to the stakeholders;
(v) developments in any material litigation, by or against the corporate person; and
(vi) filing of, and developments in applications for avoidance of transactions in accordance with Chapter III of Part II of the Code. Annual Status Report shall enclose the audited accounts of the liquidation
Requisite time
Regulation 38 of the VL Regulation On completion of the liquidation process, the liquidator shall prepare the Final Report consisting of
a) audited accounts of liquidation, showing receipts and payments pertaining to liquidation since its commencement;
b) statement demonstrating that assets of the corporate person are dispoed off, debts are satisfied and no litigation is pending against the corporate person
c) A sale statement in respect of all assets realised.
Requisite time
Regulation 38 of the VL Regulation Liquidator to submit final report to the IBBI and to the Registrar Requisite time
Section 59 (7) of the Code Liquidator shall make application to the NCLT for dissolution of Corporate Person Requisite time
Section 59 (8) of the Code On receipt of the application, NCLT shall pass an order that the corporate person ahll be dissolved from the date of order Requisite time
Section 59 (9) of the Code Within 14 days of the order, copy of order shall be forwarded to the authority with which the corporate person is registered. Requisite time
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