India has been witnessing buoyant economic growth in recent years, with the ambition of being reckoned as a prosperous and developed nation. With government’s efforts in providing ease of doing business, lots of small, medium and large businesses have ventured into varied sectors.
It is obvious that the economic trajectory faces twists and turns, and not all of these companies or organizations, etc. thrive and make a name for themselves. There are many who are facing insolvency; a situation where one is not able to discharge liabilities or satisfy creditors, in short, when liabilities exceed assets. Numerous factors may be responsible for this situation: exorbitant cost structure, erroneous strategies, inadequate liquidity, etc.
If you are caught in a situation where you need to tackle insolvency or bankruptcy and are looking to contact bankruptcy lawyers in Gurgaon then avail our services.
MUDS is a consultancy firm par excellence, established with a commitment to provide complete legal solutions pan India. We are client centric with best human resources and also have our core values firmly in place. Our team of bankruptcy lawyers in Gurgaon work with zeal, devotion, dedication and ardent professionalism and this is, undoubtedly, the principal reason for our steadfast progress over the years.
There are two procedures in which voluntary winding up of a company can be done
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To execute voluntary winding up of a private limited company by the creditors, a winding up meeting is required to be called. In order to carry out the winding up process, a resolution is passed at this meeting.
It is mandatory that either on the days fixed for General Meeting or on the very next day, the creditor’s winding up meeting should be held. The notice for this creditor’s meeting must be sent by post to each of the creditors along with the notice for the General Meeting. It is required to be published in the Official Gazette along with two newspapers which are popular in the district and are located where the registered office is.
The list of creditors with the amount outstanding for each of them along with a Statement of Affairs should be processed well in advance and should be presented during the meeting. Once the resolution is passed during creditor’s meeting, within ten working days from the date when the resolution is passed, a copy of that resolution needs to be filed with the Registrar.
In this creditor’s meeting, the creditors have to nominate a liquidator. The IBC Code, 2016 should be kept in mind while nominating this liquidator as he would carry out all the functions of the winding up process of the company. The liquidator has to prepare a detailed list of assets and liabilities of the company. He shall also suggest a suitable process and timeline for liquidation.
The liquidator shall value, recover, sell and realize all assets of the corporate person. He is free to open a bank account for receiving money from the sale of such assets. Within 6 months of receiving these proceeds, he has to carry out the disposal of such proceedings with the stakeholders.
He is advised to keep an electronic copy of these reports. He has to save them for at least the next eight years from the date of dissolution of the corporate person. The liquidator ought to apply with NCLT for its dissolution along with final report once the winding up procedure ends.
It is quite clear that the process of voluntary winding up or liquidation is not a child’s play! If you seek the assistance of a firm which hires inexperienced or amateur bankruptcy lawyers in Gurgaon then chances of you getting relief is quite slim.
At MUDS we have the team, the infrastructure and tons of experiences that helps us decode the nitty gritty of the Code. We will extend unwavering support to you in the entire process and will bring your case to a positive conclusion.
The company that is filing for liquidation fall under two categories: 1) solvent and 2) insolvent. An insolvent company is the one which is at a shortfall of cash. Even after the liquidation of company assets, it may not be possible to pay off its creditors. In such a case, there is a possibility of a conflict of interest amongst the creditors because of insufficient assets to pay all the creditors in full.
Thus, the law tries to manage equality amongst the creditors by following a transparent process to liquidate the assets of the company to be distributed equally amongst the creditors as per the size of their individual claims.
The Insolvency and Bankruptcy Code, 2016 unifies the insolvency laws for the entities under a single legislation. It also governs organizations, partnership firms, and limited liability partnership firms. The Insolvency and Bankruptcy Code, 2016 has entrusted the creditors with a time-bound resolution to their insolvency process. This Code empowers creditors by giving them the freedom to lend money to Indian entrepreneurs with ease.
IBC Code 2016 has amended the various laws of Winding up of a company under the Companies Act, 2013. The definition of winding up as per IBC Code 2016, was formatted to be winding up or liquidation under the Insolvency and Bankruptcy Code 2016. All the laws of Winding up of a company under the Companies Act, 2013 section 270 that deals with the various modes of winding up were discarded and substituted by Winding up by Tribunal.
Voluntary winding up of the procedures of a private limited company has been made part of Insolvency and Bankruptcy Code, 2016 in Chapter 5 of Part II. As per Section 59 of IBC Code 2016, a voluntary winding up can be initiated by a person from corporate who has not committed any default.
A liquidator is accountable for preparing and submitting the following reports as per regulation (1) of regulation 8 of Insolvency and Bankruptcy Code, 2016 rules-
As per Regulation 9 of Insolvency and Bankruptcy code 2016, the liquidator is required to submit the Preliminary Report to corporate person within forty-five days of commencement of liquidation process including details like the capital structure of corporate person, the estimates of his assets and liabilities as on the date of commencement of liquidation, whether if he wants to make any further inquiry about promotion, formation or failure of corporate person or conduct of his business thereof, and the proposed plan of action with timelines to carry out the liquidation process.
Once the liquidation process is begun as per the above-discussed criteria’s, in that case, the moratorium shall commence. After the moratorium, a public announcement shall be made about the corporate debtor beginning with the liquidation process.
A liquidator is to be appointed as per section 34 and the fee for his services to be paid to him for the proceedings is already decided and this fees for the liquidator is part of proceeds from liquidation estate. The resolution professional can also act as a liquidator if he is replaced by NCLT.
Liquidation trust is formed as per section 36 of the Insolvency and Bankruptcy Code. This section is the core of the company liquidation process as it defines what assets of the corporate debtor which in turn shall form part of the liquidation estate, how the assets will be distributed by the liquidator, and who shall hold the estate as fiduciary for the benefit of all the creditors.
Then the claims from the creditors are processed. There are various sections which help in this process. Section 38 of the act outlines how to consolidate the claims from financial and operational creditors, section 39 defines how to verify claims. Section 40 defines the process of both, acceptance as well as the rejection of claims and section 42, defines how the applications against the liquidator decision shall be processed.
Yes, the Code can help you to liquidate your company in a systematic and time bound manner provided it is still solvent, that is, it is capable of repaying its debt in full.
Yes, you can. To execute voluntary winding up of a private limited company by the creditors, a winding up meeting is required to be called and a resolution to this effect is passed at this meeting.
The Liquidator is nominated by the creditors and usually the insolvency professional who is already working on it, is given this responsibility. At times, if need be, the Court appoints the liquidator.
The liquidator has to carry out all the functions of the winding up process of the company. He has to prepare a detailed list of assets and liabilities of the company. He shall also suggest a suitable process and timeline for liquidation. The liquidator shall value, recover, sell and realize all assets of the corporate person.
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