Keeping a company active is undoubtedly a tedious job and though the members put in all their efforts, yet at times it becomes difficult for it to fulfil its obligations! At such times the members may feel the necessity of winding up the company. At other times a company may have lived its life and fulfilled its purpose, then too, the best option is to wind it up. But most of the times the voluntary winding up of insolvent companies is initiated by the creditors, in order to reclaim their dues.
The Insolvency and Bankruptcy Code, 2016 (Code), is the best bet for all those who are looking for the fastest remedial measures. In case you or your company wish to seek assistance from one of the best insolvency law firms in Gurgaon, then stay informed that MUDS will give you best services in a cost-effective manner.
We are a name to reckon with, in the legal field, as dedicated towards delivering most viable solutions, advice and guidance. We are a firm which is full heartedly committed to legal solutions and in the process have established ourselves as a firm that stands way above other insolvency law firms in Gurgaon.
Any Company in Gurgaon that has failed to fulfill its financial obligations or is struggling to carry on its business, can take our help for voluntary liquidation of the entity under the Code. We have an excellent team of professionals with thorough knowledge of the Code and which has till date successfully completed 90+ such cases pan India.
There are two procedures in which voluntary winding up of a company can be done:
MUDS has been established with the mission to simplify legal & regulatory complexities with ethical dedication, and we have steadfastly followed it, giving a tough competition to all other insolvency law firms in Gurgaon. Our team of competent insolvency consultants will guide you throughout the process, from initiation to liquidation.
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.
To deal with cumbersome rules and regulations of the Code, you will need the guidance of not any one of insolvency law firms in Gurgaon, but someone like us, who is well equipped to tackle all issues related to it.
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.
The Insolvency Professionals, have replaced section 275 of Winding up of a company under the Companies Act, 2013 for the appointment of Company Liquidators who are appointed and governed by the committee under the Insolvency and Bankruptcy Code 2016.
A total omission in Insolvency and Bankruptcy Code 2016 of section 304 for Voluntary Winding Up of the companies which was previously under Winding up of a company under the Companies Act, 2013.
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.
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.
Members of a company can initiate voluntary winding up of a company but this can happen only when the company is solvent. In contrast to this, the creditors of an insolvent company can initiate the insolvency process.
The mandatory meeting has to coincide with the general meeting of the company. All the creditors need to be intimated about it by sending a Notice through post. In addition, it has to be published in the Official Gazette and two popular Newspaper of the district in which the registered office is located.
The Liquidator is the most important pillar in the entire liquidation process. IBC 2016 has bestowed immense powers in the Liquidator and he is duty bound to take it to a conclusive end. He has to present these reports:
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