FILING OF NEW FORMS FOR LIQUIDATION PROCESS

In a Corporate Insolvency Resolution Process (‘CIRP’ for short) the Adjudicating Authority may order for liquidation of the corporate debtor if no resolution plan has been received by the Resolution Professional; or the time limit to the complete the CIRP expires or if the Committee of Creditors passed a resolution as to the liquidation of the Corporate Debtor.  The Resolution Professional, in the CIRP may be continued to act as liquidator or a new Resolution Professional may be appointed as liquidator.  The liquidator is having full responsibility to complete the liquidation process.  The liquidator is to comply with the provisions of the Code as well as the IBBI (Liquidation Process), 2016.

Section 59 of Insolvency and Bankruptcy Code, 2016 (‘Code’ for short) read with IBBI (Voluntary Liquidation Process) Regulations, 2017.  In this case the company itself comes forward to liquidate the company.  A corporate person who intends to liquidate itself voluntarily and has not committed any default may initiate voluntary liquidation proceedings.  The voluntary liquidation of a corporate person shall meet such conditions and procedural requirements as may be specified by the Board.

The liquidator, either in voluntary liquidation or as ordered by the Adjudicating Authority has to comply with the provisions of the Code as well as regulations.  Besides the Liquidator has to file reports to the Adjudicating Authority and the Insolvency and Bankruptcy Board of India (‘Board’ for short).  At present the liquidators submit the details regarding the liquidation process to the Board through emails, which is considered by the Board as time-consuming and inefficient.

The Board, for this purpose, proposed to introduce new three forms to be filed by the liquidator during the process of liquidation as well as voluntary liquidation as detailed below-

• Circular No. IBBI/LQ/73/2024, dated 28.06.2024;
• Circular No. IBBI/LQ/74/2024, dated 28.06.2024.

Filing the said forms will facilitate systematic and transparent record-keeping and seamless reporting.  The key benefits of these forms include-

• Enhancing the efficiency and effectiveness of the liquidation process;
• Allowing liquidators to easily access and submit forms online, reducing delays and improving efficiency; and
• Minimizing the likelihood of errors and omissions, ensuring more accurate and reliable information.

Forms

The newly proposed forms in both the liquidation processes  are as under-

• LIQ – 1;
• LIQ – 2;
• LIQ – 3;
• LIQ – 4.

Period and scope for liquidation process

The period covered and scope of the forms and the timelines set out in the circulars (for liquidation) are as detailed below-

• LIQ – 1 – From Commencement of Liquidation till Public Announcement: This includes details of the Liquidator, Corporate Debtor, and the liquidator’s fee – This form is to be filed on or before the 10^th day of the subsequent month, after a public announcement has been made.
• LIQ – 2 - From Public Announcement till Progress Report - This includes details of valuation, sale, litigations, PUFE, SCC meetings, Receipts and Payments – This form is to be filed on or before the 10^th day of the subsequent month, after submission of the Progress report to the Adjudicating Authority.
• LIQ – 3 - From last Progress Report to Application for Dissolution: This includes details of unclaimed proceeds, sale, litigations, PUFE, Realization, distribution of proceeds, Receipts and Payments. (The details required in these forms are carried forward from the last Progress Report and hence need not be filled again) – This form is to be filed on or before the 10^th day of the subsequent month, after submission of the Dissolution /closure application to the Adjudicating Authority.
• LIQ – 4 - From Application for Dissolution to Order for Dissolution: This includes details of, the distribution of proceeds, Receipts and Payments, etc. (The details required in these forms are carried forward from the last Progress Report and hence need not be filled again) – This form shall be filed on or before the 14 days of passing of the order for dissolution of corporate debtor or closure of the liquidation process by the Adjudicating Authority.

Period and scope for voluntary liquidation process

The period covered and scope of the forms and the timelines set out in the circulars (for voluntary liquidation) are as detailed below-

• LIQ – 1 – This includes details of the Corporate Debtor and the details of the Voluntary Liquidation Process – to be filed o n or before the 10^th day of the second month after the public announcement;
• LIQ – 2 - Details of the meetings of contributories with the reasons for delay in the process and details of replacement of liquidator, if any - This form is to be filed on or before the 10^th day of the subsequent month, after the meeting of contributories or replacement of liquidator.
• LIQ – 3 - Details of dissolution application, details of Unclaimed Proceeds, Details of realization and distribution made to stakeholders, Details of Pending Litigations, Detection of Fraud or Insolvency, if any – This form is to be filed on or before the 10^th day of the subsequent month, after submission of the dissolution application of the corporate debtor or withdrawal/suspension application for the voluntary liquidation process, to the Adjudicating Authority.
• LIQ – 4 - Details of order for Dissolution: This includes details of, the distribution of proceeds, Receipts and Payments, etc. (The details required in these forms are carried forward from the VL-3 form and hence need not be filled again) – to be filed on or before the 14 days of passing of the order for dissolution of the corporate debtor or withdrawal / suspension of the voluntary liquidation process.

Filing of forms – liquidation process

These forms are to be filed electronically in the website of IBBI using the IPs user and password.  Timely filing of complete and accurate information along with records is the sole responsibility of the liquidator.  The said forms are to be filed within the prescribed timeline for all cases where a liquidation order is passed on or after issuance of this circular.  Cases in which no application for dissolution of the corporate debtor/closure of the liquidation process has been filed, the liquidator shall file form LIQ 1 and LIQ 2 (for the March 24 quarter) latest by 30.09.2024.  Where an application for dissolution of the corporate debtor/closure of the liquidation process has been filed with Adjudicating Authority, the liquidator shall file forms LIQ 1 and LIQ 2 (for the last quarter of the process), and LIQ 3 by 30.09.2024.  Where an order for closure of the liquidation process or dissolution of the corporate debtor has been ordered by Adjudicating Authority, the liquidator shall file forms LIQ 1 and LIQ 2 (for the last quarter of the process), LIQ 3, and LIQ 4 by 30.09.2024.

Filing of forms – voluntary liquidation process

The said forms are to be filed within the prescribed timeline for all cases.  Where a liquidation order is passed on or after issuance of this circular.  Where no application for dissolution of the corporate person has been filed, the liquidator shall file the following forms latest by 30.09.2024:

• Form VL 1 for all cases
• Form VL 2 for cases where the process is delayed or the liquidator is replaced, as the case may be.

where an application for dissolution or withdrawal / suspension of the voluntary liquidation process of the corporate debtor has been filed with Adjudicating Authority, the liquidator shall file forms VL1, VL2 and VL3 latest by 30.09.2024.  Where dissolution of the corporate debtor withdrawal / suspension of voluntary liquidation process has been ordered by Adjudicating Authority, the liquidator shall file forms VL 1, VL 3, and VL 4 latest by 30.09.2024. 

Liability of liquidator

If the liquidator does not comply with applicable provisions of the Code and the Regulations made thereunder, he shall be liable for:

(i) failure to file a Form along with relevant information and records,

(ii) inaccurate and incomplete information and/or records filed in or along with a Form.

Conclusion

The contents of the said forms have not been notified by the Board.  The introduction of these forms will do the ease of liquidation process to some extent.