STEP BY STEP PROCEDURE FOR VOLUNTARY LIQUIDATIONS UNDER INSOLVENCY & BANKRUPTCY CODE, 2016

STEP BY STEP PROCEDURE FOR VOLUNTARY LIQUIDATIONS UNDER INSOLVENCY & BANKRUPTCY CODE, 2016

Voluntary Liquidations IBBI notified on 31st March, 2017 the IBBI (Voluntary Liquidation Process) Regulations, 2017 to enable a corporate to liquidate itself voluntarily if it has no debt or if it will be able to pay its debts in full from the proceeds of the assets to be sold under the liquidation.

 In pursuance to these Regulations, ten corporates had initiated voluntary liquidation proceedings by 30th June, 2017. During this quarter July- September 2017, 32 corporates initiated such proceedings.

It is the easy way of closure of company under IBBI regulations. The following conditions have to be satisfied.

1.    There should be no debts

2.     Or It will be able to pay its debts in full from the proceeds of the assets to be sold under the liquidation.

1	CONVENEING OF BOARD MEETING FOR VOLUNTARY WINDING-UP a)     To convene a board meeting to approve the voluntary liquidation. b)    To call for a general meeting to get the approval of members for the voluntary winding up. c)     In the same meeting, pass a board resolution for the appointment of liquidator and fix his remuneration. d)     Pass a resolution to empower the liquidator to operate the bank account.
2	DECLARATION OF SOLVENCY AND VALUATION CERTIFICATE At the Board Meeting, Declaration of solvency duly verified by an affidavit is to be given by the majority of directors/ designated partners, as the case may be. * Audited financial statements and record of business operations of the /corporate for the last two years or for the period since its incorporation, whichever is later; * a report of the valuation of the assets of the corporate, if any, duly certified by a registered valuer;
3	FILING WITH THE ROC To file the declaration of solvency along with audited accounts, report of the auditors with the Registrar of Companies within one month immediately preceding the date of passing Special Resolution in the general meeting.
4.	NO OBJECTION CERTIFICATE FROM CREDITORS If  the Corporate  owes any debt to any one: To obtain No Objection Certificate ( NOC) from the creditors signifying 66% of the value of debt of the Corporate  or pass special resolution at a duly convened creditors meeting, within 7 days from the date of passing of Special Resolution at the general meeting.
5	PUBLIC ANNOUNCEMENT IN FORM A –SCHEDULE 1 A public announcement is to be made by liquidator in Form A of Schedule I within five days of his appointment inviting stakeholders to submit their claims due to the Corporate within one month from the date of application.
6	INTIMATION TO ROC & IBBI To intimate the special resolution passed by the Corporate to the Registrar and to the IBBI within one week of passing of Special Resolution.
7	A SEPARATE BANK ACCOUNT FOR VOLUNTARY LIQUIDATION A separate bank account to be opened by the Liquidator in the name of the corporate with the word “in voluntary liquidation” in a scheduled bank, for receiving all moneys due to the corporate person and to meet all the liquidation cost.
8	TO FIX DEADLINE FOR RECEIVING STATEMENT OF CLAIM Form B -Operational Creditors to submit their claim Form C- Financial Creditors to submit their claims Form D- Workmen and Employees to submit their claim Form E –where there are large number of  employees claims to be submitted Form F- For All Other Stakeholders or Claimants
9	PRELIMINARY REPORT BY LIQUIDATOR The Preliminary report which is to be  prepared by Liquidator should have the following a) The Capital arrangement of the Corporate; b) the evaluations of its assets and liabilities as on liquidation start date based on the books of the Corporate. C) whether the liquidator wants to inquire into any further inquiry into any matter relating to the  Corporate  or to the conduct of the business thereof; d) projected plan of action for carrying out by the liquidation (including the timeline within which he recommends to complete the procedure and the projected liquidation cost.
10	LIST OF CLAIMS Liquidator shall draw a list of claimants on the footing of the evidence of claims submitted and accepted with the following columns as may be applicable: i) Extent of claim acknowledged; ii) the amount of dues to which the debts dues are secured or unsecured; iii) the particulars of claimants; iv) evidence acknowledged or disallowed in part or proof rejected fully within one-and-half month  from the last date of receipt of claim
11	DISBURSEMENT OF REALISED VALUE Liquidator has to realise all the assets of the corporate and shall subtract the cost of liquidation from the amount so realised and after subtracting the liquidation cost, shall allocate the realised amount among the claimants, within 180 days of receipt of the receipt of claim from the stakeholders
12	DEADLINE FOR COMPLETION OF VOLUNTARY LIQUIDATION Liquidator to complete the liquidation process within one year from the date of start of liquidation process.
	ANNUAL STATUS REPORT In case the liquidation process prolongs s for more than 12 months : the liquidator shall a. should call a meeting of the contributories of the corporate person within 15 days from the close of the year in which he is nominated, and at the end of each succeeding year; and b. present an Annual Status Report(s) indicating progress in liquidation including- (i) A list of settlement of claimants, (ii) particulars of any assets that leftovers to be sold and realized, (iii) financial settlement made to the stakeholders, and (iv) The details of distribution of unrealised assets made to the claimants; (v) Is there  any material litigation, by or against the corporate ; and (vi) Filing of, and developments in applications for avoidance of transactions in accordance with Chapter III of Part II of the Code. Annual Status Report shall enclose the audited accounts of the liquidation
13	FINAL LIQUIDATION REPORT TO REGISTRAR AND IBBI Liquidator to submit final report to the IBBI and to the Registrar
14	APPLICATION TO NCLT FOR WINDING-UP Liquidator shall make application to the NCLT for dissolution of Corporate.
15	DISSOLUTION ORDER BY NCLT On receipt of the application, NCLT shall pass an order that the corporate shall be dissolved from the date of NCLT order.
16	FILING WITH THE REGISTRAR OF COMPANIES Within 2 weeks  of the NCLT dissolution order, copy of order shall be forwarded to concerned Registrar of Companies