The liquidator is an insolvency professional on whom all the powers of the Board of Directors, key managerial personnel and the partners, as applicable, of the Corporate Debtor are vested by the Adjudicating Authority upon Liquidation order being passed under section 33 of the Insolvency and Bankruptcy Code, 2016. (The Code)
Where the Adjudicating Authority passes an order for Liquidation of a corporate Debtor initially under CIRP, the Resolution Professional appointed under CIRP shall act as the Liquidator for the purpose of Liquidation unless replaced by the Adjudicating Authority. As per Section 34(4) of the Code, the Adjudicating Authority may order to replace the Liquidator if: –
- The resolution plan submitted by the Resolution Professional under section 30 of the Code, was rejected for failure to meet the requirements as per Section 30(2).;or,
- The Insolvency and Bankruptcy Board of India (The Board) recommends the replacement of the Resolution Professional for recorded reasons; or,
- The Resolution professional fails to submit written consent for appointment as Liquidator.
For cases where the Resolution Professional is required to be replaced, the Adjudicating Authority may direct the Board to propose names of Insolvency Professionals eligible to be appointed as Liquidator along with written consent form within 10 days of the direction issued, and upon receipt of the proposal, the order of appointment of Liquidator is passed.
Powers and Duties of Liquidators
Section 35 of the Code enumerates the Powers and Duties of the Liquidator which includes the following:-
- to verify claims of all the creditors and consolidate them;
- to take into his custody or control all the assets, property, effects and actionable claims of the corporate debtor;
- to evaluate the assets and property of the corporate debtor in the manner and prepare a report;
- to take such measures to protect and preserve the assets and properties of the corporate debtor;
- to carry on the business of the corporate debtor for its beneficial liquidation;
- to sell the immovable and movable property and actionable claims of the corporate debtor in liquidation by public auction or private contract, with power to transfer such property to any person or body corporate, or to sell the same in parcels, though transfer are subjected to section 52 and further the liquidator shall not sell the immovable and movable property or actionable claims to any person who is not eligible to be a resolution applicant.
- to draw, accept, make and endorse any negotiable instruments on behalf of the corporate debtor, with the same effect as if such instruments were drawn, accepted, made or endorsed by or on behalf of the corporate debtor in the ordinary course of its business;
- to take out, in his official name, letter of administration to any deceased contributory and to do in his official name any other act necessary for obtaining payment of any money due and payable from a contributory or his estate which cannot be ordinarily done in the name of the corporate debtor, and in all such cases, the money due and payable shall, for the purpose of enabling the liquidator to take out the letter of administration or recover the money, be deemed to be due to the liquidator himself;
- to obtain any professional assistance, in the discharge of his duties, obligations and responsibilities;
- to invite and settle claims of creditors and claimants and distribute proceeds in accordance with the provisions of this Code;
- to institute or defend any suit, prosecution or other legal proceedings, civil or criminal, in the name of on behalf of the corporate debtor;
- to investigate the financial affairs of the corporate debtor to determine undervalued or preferential transactions;
- to take all such actions, steps, or to sign, execute and verify any paper, deed, receipt document, application, petition, affidavit, bond or instrument and for such purpose to use the common seal, if any, as may be necessary for liquidation, distribution of assets and in discharge of his duties and obligations and functions as liquidator;
- to apply to the Adjudicating Authority for such orders or directions as may be necessary and to report the progress of the liquidation process in a manner as may be specified by the Board; and
- to perform such other functions as may be specified by the Board.
Other than the ones quoted above the Liquidator has the following Rights and Duties too:-
- To Admit and Reject claims of Creditors,
- Power to access any information system for the purpose of verification of Claims and identification of assets forming part of Liquidation Estate of the Corporate Debtor from sources such as, Information Utility, Credit Information Systems, Central and State Government Agency, database maintained by the Board etc. as specified in Section 37 of the Code.
- To evaluate preferential transactions, if any done by the Corporate Debtor.
- Avoid undervalued transactions
- Distribute the Liquidation proceeds as per Section 53 of the Code.
- Make application for the Dissolution of the Corporate Debtor once all its assets are duly liquidated.