Voluntary Liquidation Process

Two friends start a small design company in Belapur, run it for ten years, and decide to call it a day. The company owes nothing and has a few computers, a lease deposit and some cash. They do not want a creditor to drag it to a tribunal, and they do not want years of paperwork. Can they simply close it down in an orderly way? Section 59 of the Insolvency and Bankruptcy Code says yes, provided the company is solvent, the owners are honest and they follow a fixed procedure. This topic sets out that procedure step by step.

In two minutes

Voluntary liquidation under section 59 lets a corporate person that has not committed any default wind itself up: directors declare solvency on affidavit, members pass a special resolution appointing an insolvency professional as liquidator, creditors (if any) approve by two-thirds in value, and the NCLT finally dissolves the entity.

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