Introduction

The first step is to make efforts to revive and restart the corporate person by preparing resolution plan. If that does not work, next process is liquidation i.e extinction of corporate person. Revival or liquidation is required to be made in time bound manner. Hence, rigid time frame has been specified.

What are the steps to be taken by Liquidator before proceeding for liquidation of corporate person?

1. Prepare a preliminary report.
2. Prepare an asset memorandum.
3. Progress report
4. Sale report
5. Minutes of consultation with stakeholders.
6. Final report prior to dissolution.
7. Present all the required information along with above mentioned data before NCLT.

What are the steps that NCLT has to take?

1. Pass order for liquidation of corporate debtor.
2. Public announcement of liquidation.
3. Send order to authority with which corporate debtor is registered.

Steps to be taken after NCLT passes order

1. Corporate debtor may reject the idea or order of liquidation.
2. Creditors may approve the order and file an application for initiation of liquidation process.
3. NCLT after receiving application from Creditors will pass an order for liquidation.
4. No suit to be filed against corporate debtor during liquidation unless a government or financial regulator is a party to the suit.
5. NCLT will appoint the resolution professional as Liquidator.
6. Creditors may accept or reject the liquidator.
7. If RP is rejected, NCLT will direct the Board to propose a new Insolvency Professional within 10 days of receiving the order.
8. Proposed RP to act as Liquidator and conduct the liquidation process.
9. Liquidator to create an estate of assets.
10. Financial creditors and operational creditors to submit their claims to liquidator.
11. Liquidator will consolidate the claims within 30 days and allow a time period of 14 days to withdraw or vary claims of their submissions.
12. After submission of claims, liquidator will verify the claims and make a list of stakeholders within 30 days.
13. The claims will be either accepted or rejected. Whatever be the resultant, the creditors and corporate debtor must be informed within 7 days.
14. File list of stakeholders before NCLT within 45 days
15. If creditor is dissatisfied he may appeal against the decision of liquidator before NCLT within 7 days.
16. After that there will be realization of assets through prescribed manner and mode of sale.
17. An asset memorandum will be prepared as per section 36 within 75 days.
18. Liquidator will submit the memorandum before NCLT along with valuation of assets intended to be sold and an asset sale report.
19. The corporate debtor will be liquidated within 2 years of time.
20. Unclaimed proceeds will go into Public Account of India.

Conclusion

Liquidation of corporate person is considered to be the last resort in order to recover money. When all the plan of resolution have failed and no other way could be adopted then dissolution of company is done. An auction is conducted where the assets of the company is sold to realize money to return it to the lenders. This article has tried to make aware of the whole process in a precise manner.

Disclaimer – the above summary is based on the personal interpretation of the revised regulations, which may differ person to person. Hence, the readers are expected to take expert opinion before placing reliance on this article.

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