Liquidation Process

When a restaurant in Dadar shuts for good, the landlord wants the deposit, the staff want their last salary, the bank wants its loan back and the vegetable supplier wants his bills paid. There is not enough money for everyone. Who is paid first, who is paid in part and who gets nothing? In company insolvency, Chapter III of the Insolvency and Bankruptcy Code answers that question by law, not by who shouts loudest. This topic covers how liquidation starts, who runs it, what goes into the pot, and the order in which the pot is shared.

In two minutes

Liquidation under Chapter III (ss.33 to 54) begins when the NCLT orders it, most often because CIRP produced no approved plan; a liquidator appointed on the Board’s recommendation takes over, gathers the liquidation estate, avoids suspect transactions, pays creditors in the order fixed by section 53 and finally applies for the debtor’s dissolution.

The rest of this chapter

The full explanation, the cheat sheet, every previous-year question at every mark weight, the quiz and the answer skeletons are part of Bankruptcy Laws on LexBlox Semester. Sign in to unlock the subject, or read Module 1 of Legal Language and Writing free.