Successful completion of a process is as important as its beginning. Voluntary liquidation process is not only a completion of liquidation but result in dissolution of the company.
Suspension of Liquidation
Before completion of voluntary liquidation process, we shall discuss as passing thought, two cases where liquidation may be suspended.
Detection of fraud
According to sub – regulation (1) of regulation 40, where the liquidator is of the opinion that the liquidation is being done to defraud a person, he shall make an application to the adjudicating Authority to suspend the process of liquidation and pass any such orders as it deems fit.
Detection of insolvency
According to sub regulation (2) of regulation 40, where the liquidator is of the opinion that the corporate person will not be able to pay its debts in full from the proceeds of assets to be sold in the liquidation, he shall make an application to the Adjudicating Authority to suspend the process of liquidation and pass any such orders as it deems fit.
Voluntary Liquidation Period
According to sub – regulation (1) of regulation 37, the liquidator shall endeavour to complete the liquidation process of the corporate person within twelve months from the liquidation commencement date.
Extension of Liquidation period
According to clause (a) of sub – regulation (2) of regulation 37, in the event of the liquidation process continuing for more than twelve months, the liquidator shall hold a meeting of the contributories of the corporate person within fifteen days from the end of the twelve months from the liquidation commencement date, and at the end every succeeding twelve months till dissolution of the corporate person.
Annual Status Report
According to clause (b) of sub – regulation (2) of regulation 37, in the event of the liquidation process continuing for more than twelve months, the liquidator shall present an Annual Status Report(s) indicating progress in liquidation, including-
(i) settlement of list of stakeholders,
(ii) details of any assets that remains to be sold and realized,
(iii) distribution made to the stakeholders, and
(iv) distribution of unsold assets made to the stakeholders;
(v) developments in any material litigation, by or against the corporate person; and
(vi) filing of, and developments in applications for avoidance of transactions in accordance with Chapter III of Part II of the Code.
Audited Account
According to sub – regulation (3) of regulation 37, the Annual Status Report shall enclose the audited accounts of the liquidation showing the receipts and payments pertaining to liquidation since the liquidation commencement date.
Final Report
According to sub – regulation (1) of regulation 38, on completion of the liquidation process, the liquidator shall prepare the Final Report consisting of –
(a) audited accounts of the liquidation, showing receipts and payments pertaining to liquidation since the liquidation commencement date; and
(b) a statement demonstrating that-
(i) the assets of the corporate person has been disposed of;
(ii) the debt of the corporate person has been discharged to the satisfaction of the creditors;
(iii) no litigation is pending against the corporate person or sufficient provision has been made to meet the obligations arising from any pending litigation.
(c) a sale statement in respect of all assets containing –
(i) the realized value;
(ii) cost of realization, if any;
(iii) the manner and mode of sale;
(iv) an explanation for the shortfall, if the value realized is less than the value assigned by the registered valuer in the report of the valuation of assets under section 59(3)(b)(ii) or Regulation 3(1)(b)(ii), as the case may be;
(v) the person to whom the sale is made; and
(vi) any other relevant details of the sale.
According to sub – regulation (2) of regulation 38, the liquidator shall send the Final Report forthwith, to the Registrar and the Board.
Application for Dissolution
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).
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 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.
Preservation of records
According to regulation 41, the liquidator shall preserve a physical or an electronic copy of the reports, registers and books of account for at least eight years after the dissolution of the corporate person, either with himself or with an information utility.
AishMGhrana 