Liquidator must verify claims and explore compromise under Section 230 before selling corporate debtor assets.

During liquidation under the Insolvency and Bankruptcy Code, 2016, the liquidator must verify, admit or reject claims by reasoned order, and communicate that decision to creditors, with the statutory remedy available to an aggrieved creditor. The liquidation process is also expected to preserve revival prospects rather than move straight to sale of assets. Before selling the corporate debtor's assets, the liquidator must first explore a compromise or arrangement under Section 230 of the Companies Act, 2013, and the Tribunal may consider a viable proposal if it supports revival, value maximisation and stakeholder protection.

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Issues: Whether the liquidator was required to verify and decide claims in accordance with the Insolvency and Bankruptcy Code, 2016, and whether before sale of the corporate debtor's assets the liquidator had to explore compromise or arrangement under Section 230 of the Companies Act, 2013.

Analysis: The liquidation framework under the Insolvency and Bankruptcy Code, 2016 requires the liquidator to take custody and control of the corporate debtor's assets, verify claims, collect and consolidate information, and then admit or reject claims by a reasoned decision communicated to the creditor. An aggrieved creditor may pursue the statutory remedy against such decision. The liquidation process is not intended to bypass revival possibilities. In light of the statutory scheme and the principles governing corporate rescue, the liquidator must first explore whether a compromise or arrangement can be worked out under Section 230 of the Companies Act, 2013 before proceeding to sale of assets. The Tribunal may examine objections and approve a viable arrangement if it furthers revival, maximisation of value, and protection of stakeholder interests.

Conclusion: The liquidator must proceed with claim verification and decision-making under the Insolvency and Bankruptcy Code, 2016 and, before asset sale, take steps under Section 230 of the Companies Act, 2013 for possible revival by compromise or arrangement.

Final Conclusion: The appeal was disposed of with directions that the liquidation process should first accommodate the statutory revival route, and only on failure of such effort should asset sale proceed.

Ratio Decidendi: During liquidation, revival options under Section 230 of the Companies Act, 2013 must be explored before sale of assets, and the liquidator remains bound to determine claims according to the prescribed procedure under the Insolvency and Bankruptcy Code, 2016.

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