Notification/Circular No.: IBBI/PR/2025/02
Document Date: January 31, 2025
Applicable Act/Rule: Insolvency and Bankruptcy Code, 2016
Applicable Section/Rule: Liquidation Process and Voluntary Liquidation Process Regulations
Effective Date: January 28, 2025
Description
1) Auction Process
When a company is being liquidated, its assets are sold through auctions to recover money. The amendments improve this process:
This strengthens the auction process, making it more transparent and efficient. Bidders have more time, rules are clearer, and there’s less risk of delays caused by ineligible bidders.
2) Submission of Final Report
When a company undergoes liquidation, the liquidator must prepare a final report summarising everything (e.g., assets sold, money recovered, creditors paid, etc.).
The process becomes more accountable, as there’s a detailed record of how the liquidation was handled.
3) Corporate Liquidation and Voluntary Liquidation Accounts
When money is left unclaimed during liquidation (e.g., a creditor cannot be found), it is deposited into a specific account managed by IBBI.
IBBI’s continued management ensures unclaimed money is handled securely and claims are processed quickly.
4) Realisation of Uncalled or Unpaid Capital
Sometimes, during liquidation, a company has “uncalled” or “unpaid” capital (money that shareholders promised to pay but haven’t yet).
This avoids unnecessary delays in completing the liquidation process.
5) Filing of Forms
Liquidators are required to submit details of the liquidation process to IBBI using online forms.
This ensures that liquidators file all details on time and stay compliant. The penalty encourages timely submissions.
6) Disclosure of Tax Deductions
Before depositing unclaimed money into the liquidation accounts (e.g., unpaid dividends or undistributed proceeds), liquidators must disclose:
The updated forms now include fields for these details.
This adds transparency to the process, ensuring that all taxes are properly accounted for before funds are deposited.
Impact:
Overall, these amendments aim to:
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