Part II of Chapter XX of the Companies Act (discussed earlier here and here) has been omitted by the Insolvency and Bankruptcy Code, 2016. In new scheme, there will be voluntary liquidation, not voluntary winding – up as called earlier. In this post we will discuss Chapter V of the Insolvency and Bankruptcy Code, 2016 consisting of consisting of section 59.
According to sub – section (1) of Section 59 of the code, a corporate person who intends to liquidate itself voluntarily and has not committed any default may initiate voluntary liquidation proceedings under the provisions of this Chapter. As a precondition, there should be no prior default under the code related to voluntary liquidation committed by the corporate person.
According to sub – section (2) of section 59, corporate person shall meet conditions and procedural requirements specified by Insolvency and Bankruptcy Board of India (IBBI).
Accordingly, sub – section (3) to (5) prescribes conditions related to corporate person registered as company. Similar conditions, in relation to voluntary liquidation of other corporate persons are prescribed in Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017.
Application of other sections
According to sub – section (6) of section 59, provisions of sections 35 to 53 of Chapter III and VII shall apply to voluntary liquidation proceedings for corporate persons with such modifications as may be necessary.
|35||Powers and duties of liquidator|
|37||Powers of liquidator to access information|
|38||Consolidation of claims|
|39||Verification of claims|
|40||Admission or rejection of claims|
|41||Determination of valuation of claims|
|42||Appeal against the decision of liquidator|
|43||Preferential transactions and relevant time|
|44||Orders in case of preferential transactions|
|45||Avoidance of undervalued transactions|
|46||Relevant period for avoidable transactions|
|47||Application by creditor in cases of undervalued transactions|
|48||Order in cases of undervalued transactions|
|49||Transactions defrauding creditors|
|50||Extortionate credit transactions|
|51||Orders of adjudicating authority in respect of extorionate credit transactions|
|52||Secured creditor in liquidation proceedings|
|53||Distribution of assets|
|68||Punishment for concealment of property|
|69||Punishment for transactions defrauding creditors|
|70||Punishment for misconduct in course of corporate insolvency resolution process|
|71||Punishment for falsification of books of corporate debtor|
|72||Punishment for wilful and material omissions from statements related to affairs of corporate debtor|
|73||Punishment for false representations to creditors|
|74||Punishment for contravention of moratorium or the resolution plan|
|75||Punishment for false information furnished in application|
|76||punishment for non disclosure of dispute or repayment of debt by operational creditor|
|77||Punishment for providing false information in application made by corporate debtor|
Application for Dissolution
According to sub – section (7) of section 59, where the affairs of the corporate person have been completely wound up, and its assets completely liquidated, the liquidator shall make an application to the Adjudicating Authority for the dissolution of such corporate person.
According to sub – section (8) of section 59, the Adjudicating Authority shall on an application filed by the liquidator, pass an order that the corporate debtor shall be dissolved from the date of that order. The corporate debtor shall be dissolved accordingly.
According to sub – section (9) of section 59, a copy of the order of dissolution shall within fourteen days from the date of such order, be forwarded to the authority with which the corporate person is registered.
Though it is not clear from Section, who shall forward order of dissolution to the registration authority of the corporate person, however, it may be prudent for liquidator to forward such order. According to sub – regulation (3) of regulation 38, the liquidator shall submit the Final Report to the Adjudicating Authority along with the application under section 59(7).
Voluntary winding up process started on 28th March, 2014 but still in process and documents not yet submitted with High Court, then in that case do we need to appoint new liquidator as per Insolvency code, 2016 or existing liquidator member of ICAI but not passed the Limited Insolvency Examination would be eligible to continue as liquidator?????
Existing process under High Court shall continue, unless grant order/permission otherwise.
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