IBBI Regulations on Voluntary Liquidation of Corporate Persons, 2017
Facilitating voluntary closure of solvent businesses under the Insolvency and Bankruptcy Code
In addition to a framework that mandates liquidation of a corporate person, among other grounds, on the failure of its insolvency resolution, the Insolvency and Bankruptcy Code, 2016 (Code) also provides for voluntary liquidation of a corporate person as long as it is solvent and has not defaulted on its debts.
A few months after the implementation of the core regulations for the corporate insolvency framework under the Code, the subordinate legislation pertaining to the voluntary liquidation process was drawn up and notified as the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017. These Regulations lay down the detailed mechanism for voluntary liquidation of corporate persons.
The Regulations also provide for the appointment of a regulated insolvency professional as the liquidator. In detailing the powers and functions of the liquidator, the treatment of claims submitted by various creditors of the corporate debtor, the realisation of assets, and the distribution of proceeds of liquidation, these Regulations emphasize the importance of a speedy and efficient liquidation. They also outline the eligibility conditions for appointment of an insolvency professional as a liquidator.
These Regulations are useful for solvent businesses that intend to close their operations and dissolve the legal entity being used for carrying out the operations in an efficient manner.
Filed Under
About the Contributors
Debanshu is one of Vidhi’s Co-Founders. He has over a decade of experience in commercial laws and the financial sector and has advised the Government of India on several legislative projects in this space. He was instrumental in advising the Government on the design and drafting of the Insolvency and Bankruptcy Code and its subsequent implementation. He has developed and curated Vidhi’s work on insolvency law, corporate law, financial regulation, and competition law and conceptualized its Bankruptcy Research Program. He has served as a member of a Government-appointed committee for operationalizing the National Company Law Tribunal and deposed before two Parliamentary committees examining financial sector legislation. He has also worked as a teaching fellow at Harvard Law School. He is an alumnus of the Harvard Law School, the University of Oxford, and Hidayatullah National Law University. He attended Harvard as a Fulbright Scholar and was awarded the Irving Oberman Memorial Prize in Bankruptcy and the Dean’s scholar prize in Corporations. He was also awarded a Distinction for his graduate studies at Oxford. In 2017, he was selected for NYU School of Law’s Hauser Global Scholarship, which he waived. His academic work has been published in peer-reviewed journals and an edited book published by Cambridge University Press, New York. He has been consulted by and mentioned in global business publications, such as IFR Asia and The Economist. Earlier, Debanshu practiced as an M&A and regulatory lawyer with AZB & Partners at its Mumbai and New Delhi offices.
Shreya was a Research Fellow at Vidhi.
