Under insolvency and bankruptcy law, it’s always not been the situation that the resolution process for the revival of corporate debtor initiated under the code becomes successful and everyone gets the satisfied solution. In such situation, liquidation of the debtor becomes the last option.
There could be following four situations under which liquidation can be ordered:-
- Resolution plan not submitted to NCLT: – During the corporate insolvency resolution process, resolution professional has to submit resolution plan to the adjudicating authority – National Company Law Tribunal (NCLT) which is duly passed by the committee of creditors, when NCLT do not receives resolution plan within the maximum period allowed for corporate insolvency resolution process (CIRP), NCLT shall order the liquidation of corporate debtor.
- Resolution Plan received but rejected – U/S 30, once the resolution plan is made, it is submitted to the resolution professional which is subsequently passed by committee of creditors(COC) having at least 66% voting share . Further u/s Sec 31 of IBC, the resolution plan approved by COC will be approved by (NCLT), if NCLT feels that this resolution plan do not contains proper provisions for its effective implementation or any other non-compliance as mentioned in sec31, it may reject the resolution plan and orders liquidation.
- Committee of creditors(COC) decides to liquidate company:- Where by committee of creditors(COC) having at least 66% voting share, have passed resolution that the corporate debtor be liquidate, in that case the resolution professional shall make an application NCLT for passing order of liquidation.
- Resolution plan contravened by corporate debtor:– Where resolution is passed but any provisions of resolution plan is contravened which affects the interests of any person other than corporate debtor, then such person may apply before NCLT to stop the implementation of resolution plan, in such case, if NCLT deems it fit, may pass liquidation order.
To develop more understanding on the subject you may read our other blogs on Insolvency and bankruptcy code. https://www.easylegaltax.com/?s=IBC
Disclaimer:- The article is intended for the awareness and education of the readers, if any of reader is intended to use above in any legal work, it is advisable that before placing their reliance on it they reconfirm it from the legal experts.
About Author:- Rajul Jain (CA, MCOM, LLB, MBA, CNPO, CPFA, NCFM) is Chartered Accountant & Corporate Lawyer, academically he is highly qualified and have gone through various certifications. He extensively speaks and writes on finance, taxation and legal matters. The author can be reached at firstname.lastname@example.org