The Insolvency and Bankruptcy Board of India ( IBBI ) notified Vide Circular No. IBBI/LIQ/74/2024 dated 28.06.2024 extended the time for filing Forms to monitor voluntary liquidation processes under the Insolvency and Bankruptcy Code ( IBC ), 2016. The liquidators were directed to file forms relating to the voluntary liquidation latest by 30.09.2024.
Voluntary liquidation is the process by which a company or a corporate entity is liquidated, or brought to an end, by its shareholders or creditors when the company is solvent, meaning it is able to pay off its debts and liabilities. In the voluntary liquidation process, the assets of the company are sold off to pay creditors, and any remaining funds are distributed to shareholders.
The process begins when the shareholders or members of the company pass a special resolution to voluntarily liquidate the company. The Board of Directors must declare that the company has no outstanding debts or is capable of paying off its debts within a specific period (within 12 months).
Become PF & ESIC Pro: Basic to Advance Course – Enroll Today
A liquidator is appointed to oversee the liquidation process.The company appoints an Insolvency Professional (IP) as the liquidator. The liquidator manages the liquidation process, including the sale of assets and distribution of proceeds. Once the liquidation process begins, a public announcement is made to inform all stakeholders and creditors.
The liquidator settles all the debts and liabilities of the company by selling off the company’s assets. If the company has any surplus after settling liabilities, it is distributed among the shareholders. The proceeds from the sale of assets are distributed. The liquidator must submit periodic reports to the National Company Law Tribunal ( NCLT ) regarding the progress of the liquidation process.
Voluntary liquidation is generally faster and more straightforward than compulsory liquidation since it does not involve court orders or judicial intervention. It allows the company to wind up its affairs in an orderly manner while ensuring that creditors are paid off.
Regarding the time extension , the representations have been received by IBBI from the liquidators and Insolvency Professional Agencies citing the technicalities and issues involved in the submission of the forms.
Become PF & ESIC Pro: Basic to Advance Course – Enroll Today
Considering the above-mentioned representations and difficulties faced by the liquidator, it has been decided to extend the last date of submission of forms till 30.11.2024.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
