Public announcement, Preliminary report, Early dissolution and Progress reports in Liquidation under Insolvency and Bankruptcy Code 2016 (IBC)

Liquidation Process
Public announcement, Preliminary report, Early dissolution and Progress reports under Liquidation

Public announcement, Preliminary report, Early dissolution and Progress reports under Liquidation

I. Public announcement by liquidator [LP Reg.-12]

1. The liquidator shall make a public announcement in Form B of Schedule II within five days from his appointment. The public announcement shall-

(a) call upon stakeholders to submit their claims or update their claims submitted during the corporate insolvency resolution process, as on the liquidation commencement date; and

(b) provide the last date for submission or updation of claims, which shall be thirty days from the liquidation commencement date.

 

2. The announcement shall be published:

(a) in one English and one regional language newspaper with wide circulation at the location of the registered office and principal office, if any, of the corporate debtor and any other location where in the opinion of the liquidator, the corporate debtor conducts material business operations;

(b) on the website, if any, of the corporate debtor; and

(c) on the website, if any, designated by the Board for this purpose.

 

II. Preliminary report [LP Reg.-13]

The liquidator shall submit a Preliminary Report to the Adjudicating Authority within seventy-five days from the liquidation commencement date, detailing-

(a) the capital structure of the corporate debtor;

(b) the estimates of its assets and liabilities as on the liquidation commencement date based on the books of the corporate debtor. However, if the liquidator has reasons to believe, to be recorded in writing, that the books of the corporate debtor are not reliable, he shall also provide such estimates based on reliable records and data otherwise available to him;

(c) whether, he intends to make any further inquiry in to any matter relating to the promotion, formation or failure of the corporate debtor or the conduct of the business thereof; and

(d) the proposed plan of action for carrying out the liquidation, including the timeline within which he proposes to carry it out and the estimated liquidation costs.

 

III. Early dissolution [LP Reg.-14]

The Liquidator may apply to the Adjudicating Authority for early dissolution of the corporate debtor and for necessary directions in respect of such dissolution any time after the preparation of the Preliminary Report, if it appears to the liquidator that-

(a) the realizable properties of the corporate debtor are insufficient to cover the cost of the liquidation process; and

(b) the affairs of the corporate debtor do not require any further investigation.

 

IV. Progress reports [LP Reg.-15]

1. Time of submission

The liquidator shall submit Progress Reports to the Adjudicating Authority as under-

(a) the first Progress Report within fifteen days after the end of the quarter in which he is appointed; and

(b) subsequent Progress Report(s) within fifteen days after the end of every quarter during which he acts as liquidator.

However if an insolvency professional ceases to act as a liquidator during the liquidation process, he shall file a Progress Report for the quarter up to the date of his so ceasing to act, within fifteen days of such cessation.

2. Contents of the Progress Report

A Progress Report shall provide all information relevant to liquidation for the quarter, including-

(a) appointment, tenure of appointment and cessation of appointment of professionals;

(b) a statement indicating progress in liquidation, including-

(i) settlement of list of stakeholders,

(ii) details of any property that remain to be sold and realized,

(iii) distribution made to the stakeholders, and

(iv) distribution of unsold property made to the stakeholders;

(c) details of fee or remuneration, including-

(i) the fee due to and received by the liquidator together with a description of the activities carried out by him,

(ii) the remuneration or fee paid to professionals appointed by the liquidator together with a description of activities carried out by them,

(iii) other expenses incurred by the liquidator, whether paid or not;

(d) developments in any material litigation, by or against the corporate debtor;

(e) filing of, and developments in applications for avoidance of transactions in accordance with Chapter III of Part II of the Code; and

(f) changes, if any, in estimated liquidation costs.

 

3. Enclosures of the Progress Report

  • A Progress Report shall enclose an account maintained by the liquidator showing-

(a) his receipts and payments during the quarter; and

(b) the cumulative amount of his receipts and payments since the liquidation commencement date.

  • A Progress Report shall enclose a statement indicating any material change in expected realization of any property proposed to be sold, along with the basis for such change. This statement shall not be accessible to any person during the course of liquidation, unless permitted by the Adjudicating Authority.
  • The Progress Report for the fourth quarter of the financial year shall enclose audited accounts of the liquidator’s receipts and payments for the financial year. In case an insolvency professional ceases to act as liquidator, the audited accounts of his receipts and payments for that part of the financial year during which he has acted as liquidator, shall be enclosed with the Progress Report to be filed after cessation of his appointment.

Illustration: An insolvency professional becomes a liquidator on 13th February, 2017, and ceases to act as liquidator on 12th February, 2019. He shall submit Progress Reports as under:

Report No. Period covered in the Quarter Last Date of Submission of Report
1 13th February – 31st March, 2017 15th April, 2017
2 April – June, 2017 15th July, 2017
3 July – September, 2017 15th October, 2017
4 October – December, 2017 15th January, 2018
5 January – March, 2018 15th April, 2018
6 April – June, 2018 15th July, 2018
7 July – September, 2018 15th October, 2018
8 October – December, 2018 15th January, 2019
9 January – 12th February, 2019 27th February, 2019

He shall submit the audited accounts of his receipts and payments as under:

Audited Account No. Period covered in the Year Last Date of Submission
1 13th February – 31st March, 2017 15th April, 2017
2 April – March, 2018 15th April, 2018
3 April – 12th February, 2019 27th February, 2019

 

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