Liquidator under IBC

The Liquidator is the insolvency professional appointed to oversee the orderly winding-up of a corporate debtor's affairs during liquidation proceedings under the Insolvency and Bankruptcy Code, 2016. The Liquidator plays a pivotal role in realising the assets of the corporate debtor and distributing the proceeds to stakeholders in accordance with the statutory priority laid down in Section 53.

Appointment of the Liquidator

When the NCLT orders liquidation under Section 33, the Resolution Professional who was conducting the CIRP is typically appointed as the Liquidator, unless the CoC recommends a different insolvency professional by a 66% vote. The Liquidator must be registered with the Insolvency and Bankruptcy Board of India (IBBI) and must not have any conflict of interest with the corporate debtor or its stakeholders. The appointment takes effect from the date of the liquidation order.

Powers of the Liquidator — Section 35

Section 35 of the IBC confers wide-ranging powers on the Liquidator, including the power to: verify claims of creditors; take into custody and control all assets, property, and actionable claims of the corporate debtor; carry on the business of the corporate debtor for its beneficial liquidation; sell assets through public auction, private contract, or any other mode; recover and realise amounts owed to the corporate debtor; institute or defend legal proceedings on behalf of the debtor; investigate the affairs of the corporate debtor; and apply to the NCLT for directions as may be necessary.

Duties of the Liquidator

The Liquidator's duties are governed by the IBBI (Liquidation Process) Regulations, 2016. Key duties include: forming the liquidation estate under Section 36; receiving and verifying claims within 30 days; preparing an asset memorandum and getting assets valued by registered valuers; obtaining the sale of assets at the best possible realisation; maintaining proper accounts; distributing proceeds strictly per the Section 53 waterfall; submitting quarterly progress reports to the NCLT; and applying for dissolution once the process is complete.

Stakeholder Consultation Committee

The Liquidator constitutes a Stakeholder Consultation Committee (SCC) comprising all creditors, including financial creditors, operational creditors, workmen, employees, and government authorities. While the SCC is advisory in nature and does not have binding authority over the Liquidator's decisions, the Liquidator must consult the SCC on matters including the sale of assets, the mode of sale, and the timeline for realisation. This mechanism ensures transparency and stakeholder participation during liquidation.

Distribution Waterfall & Completion

The Liquidator distributes the proceeds of asset realisation in strict accordance with the Section 53 waterfall. Each category of stakeholders must be paid in full before the next category receives any distribution. Upon completion of the distribution, the Liquidator applies to the NCLT for an order of dissolution. The Liquidator must complete the process within one year of the liquidation commencement date, though extensions may be granted by the NCLT in exceptional circumstances.

IBBI Regulations & Accountability

The Liquidator is regulated by IBBI and must comply with the IBBI (Liquidation Process) Regulations, 2016 and the IBBI (Insolvency Professionals) Regulations, 2016. The Liquidator is subject to the Code of Conduct prescribed for insolvency professionals and may face disciplinary action — including suspension or cancellation of registration — for misconduct, negligence, or failure to discharge duties. The Liquidator's fee is determined by the CoC or the NCLT and is treated as part of the liquidation costs, receiving the highest priority in the distribution waterfall.