India: IBBI Notifies The Insolvency And Bankruptcy Board Of India (Voluntary Liquidation) Regulations, 2017

Last Updated: 24 April 2017
Article by Lucy Rana and Rupin Chopra

The Insolvency and Bankruptcy Board of India ('IBBI') was established under Insolvency and Bankruptcy Code, 2016 ('Code'). On 31st March 2017, IBBI in exercise of its powers under the said Code notified the Insolvency and Bankruptcy Board of India (Voluntary Liquidation) Regulations, 2017 ('Regulation'). It came into force with effect from 1st April 2017. The Regulation provides for a complete framework for the voluntary liquidation of any corporate person.

Corporate person is defined under Section 3(7) of the Code as any company incorporated under the Companies Act and includes limited liability partnership or any other person incorporated with limited liability but does not include any financial service provider. However, the explanation attached to Regulation 3(3) of the Voluntary Liquidation Regulation specifies that the Regulation 3(1) to 3(3) applies to corporate person other than a 'company'. The procedure for voluntary liquidation of a company has been provided under Section 59 of the Code.

The regulations inter alia, specify the manner and content of public announcement, receipt and verification of claims of stakeholders, reports and registers to be maintained, preserved and submitted by the liquidator, realization of assets and distribution of proceeds to stakeholders, distribution of residual assets, and finally dissolution of corporate person.

Procedure for Voluntary liquidation by a Corporate Person-

  • Majority of designated partners or the persons exercising power in the corporate person give a statement of declaration in form of affidavit accompanied by audited financial statements and other such documents to the effect that-

    • The corporate person in question is under no debt or he will be able to pay all its debts in full from the proceeds of its assets and
    • The initiation of liquidation process is not to defraud others.
    If the liquidator is of the opinion that the voluntary liquidation is being done to defraud others or the corporate person will not be able to pay its debt in full from the proceeds of the assets, then he shall make an application to the Adjudicating Authority to suspend the process.1
  • Within 4 weeks of declaration of such statement, the corporate person may pass

    • A resolution by special majority is to be passed validating the corporate person to be liquidated voluntarily and appointment of insolvency professional to act as liquidator; or
    • A special majority resolution may also be passed mandating the liquidation of corporate person on the happening of any event or on expiry of certain duration and appointment of insolvency professional to act as liquidator2.
  • Further, creditors representing 2/3rd of the debts of the corporate person must approve such resolution within 7 days of its passing.
  • The process shall be deemed to commence from the date of passing of resolution. Upon the commencement of the voluntary liquidation process the corporate person shall cease to conduct any business but it will still bear all corporate powers until its dissolution is complete.
  • The liquidator shall make a public announcement according to Performa specified in Form A Schedule I to call upon the claims from the stakeholders within 5 days of his appointment. The last date for making such claim shall be within 30 days from the commencement date.3
  • Such public announcement shall be published in the Official Gazette, in English and in a regional newspaper having wide circulation, on the website of the corporate person, if any and on any such other website provided by IBBI for this purpose.

Eligibility of Insolvency Professional to be appointed as a 'liquidator' under Voluntary Liquidation Regulation-

  • According to Section 3(19) of the Code 'insolvency professional' means a person enrolled with insolvency professional agency and registered under IBBI as an insolvency professional.
  • He must be independent of the corporate person. He would be considered as being independent when-

    • He is eligible to be appointed as an independent director under Section 149 of the Companies Act 2013.
    • He is not a related party of the corporate person.
    • He has not been an employee/proprietor or partner of the firm of auditors, Company secretaries, etc. of the corporate person or of a legal consultancy firm having transactions with the corporate person contributing to 10% or more than gross turnover of the firm in the last three financial years4.

Duties of Liquidator-

The liquidator is obliged to make continued disclosures if he gains any interests in the corporate person. The liquidator is also obliged to preserve a physical or an electronic copy of the reports, registers and books of account for at least eight years after the dissolution of the corporate person, either with himself or with an Information Utility (IU).

Any public company can act as an Information Utility provided it is registered under the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017. Such IU stores financial information that help to establish defaults as well as verify claims expeditiously, thereby facilitating completion of transactions under the Code in a time bound manner.

Procedure for making claims-

  • A person, who claims to be a stakeholder, must prove his claim for debt or dues to him, including interest, if any, as on the liquidation commencement date. Debt payable at future time can also be claimed, however if debt has not fallen due as on the date of distribution of the claims, the claimant is entitled to reduced claim.
  • The stakeholders shall include financial creditors, operational creditors, workmen & employees along with other stakeholders.
  • Financial creditor means a person against whom any financial debt is owed such as interest upon money borrowings, debentures, etc. while an operational creditor means a person against whom an operational debt is owed with respect to goods and services.
  • Operational creditors, financial creditors, workmen & employees and other stakeholders can make claim in Form B, C, D and F of Schedule I respectively.5
  • The liquidator has the power to call for any documents and information from the claimant as he may deem necessary to substantiate the claim.
  • The claimant shall bear the costs of proving his claim, but the cost of verification and determination of claim shall form part of liquidation costs if such claim is proved.

Verification of Claims-

  • The liquidator shall verify the claims within 30 days from the last date for receipt of claims. He may either admit or reject the claim in whole or in part.6 The liquidator shall then prepare the list of stakeholders within 45 days from the last date for receipt of claims7
  • In case a claim is rejected the creditor has the right to appeal to the Adjudicating Authority ('National Company Law Tribunal-NCLT') against the decision of the liquidator with respect to such rejection.

Completion of Liquidation proceedings-

  • The liquidator shall endeavor to wind up the affairs of the corporate person within one year from the voluntary liquidation commencement date.8
  • When the affairs of the corporate person are fully wound up then the liquidator shall present a final report to the contributories, the Registrar of Companies, the IBBI and the NCLT showing relevant details such as audited financial reports showing receipts and payments with respect to liquidation, statement of no pending litigation, sale statement in respect of all assets, etc.9 The corporate person shall then be dissolved accordingly by order of the NCLT.
  • A copy of the order shall be sent to the authority with which the entity is registered within 14 days of the date of such order.
  • Before the order of liquidation is passed by the Adjudicating Authority, the liquidator shall apply by application for transfer of unclaimed proceeds or undistributed assets or any balance payable to the stakeholders into the Companies Liquidation Account (Public Account of India). Any person claiming under Companies Liquidation Account may apply to the IBBI for the same. If the monies remain unclaimed thereafter for a period of fifteen years, shall be transferred to the general revenue account of the Central Government.


1 Regulation 40

2 Regulation 3

3 Regulation 14

4 Regulation 6

5 Regulation 16-19

6 Regulation 29

7 Regulation 30

8 Regulation 37

9 Regulation 38

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Lucy Rana
Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions