When an organization in India decides to discontinue all its functions and dissolve itself for any reason, they have to go through voluntary liquidation under IBC. The voluntary winding up under IBC consists of a well-structured and systematic procedure that helps companies liquidity their assets and distribute them in a just and fair manner amongst the core members of the organization.

However, not every company can opt for voluntary Liquidation under IBC as there are a few terms and conditions that qualify an organization to be eligible for voluntary winding up under IBC. The most essential requirement is that any business willing to go through the process of voluntary winding up of company under ibc is in a no-default situation.

By being in a no-default situation, we mean that the companies don't owe anything to their creditors. Nevertheless, in case of a failure or delay in compensating some debt payments, the only way for the debtor to initiate its liquidation is by declaring insolvency under IBC.

To help you get more in-depth knowledge about how voluntary Liquidation under IBC works, read through these steps or voluntary Liquidation under the IBC checklist that we have compiled for your clarity and better understand the entire process of Voluntary Liquidation of Company.

1. Declaration: The members of the board make a Declaration of Solvency in the form of an Affidavit confirming the following to initiate the process of voluntary winding up of company under ibc:  

• The company is in a no-debt situation; that is, it does not have any default in the repayment of debt
• The organization is solvent, and it can pay its debts in full form if the assets are to be sold in voluntary  liquidation.
• The business is not getting liquidated to defraud anyone or any organization.

      Along with the declaration, the company, in case of voluntary liquidation under IBC, also has to              submit or present audited financial statements for the two preceding years. Or for the period since          its incorporation (whichever is later) plus a report consisting of all the assets, if any.

2. Approval: Within the four weeks of the declaration made by the company, the debtor is required to obtain the consent of shareholders or board members (as the case may be) for voluntary liquidation under IBC and appointment of liquidator by way of exclusive majority or resolution. A special resolution in a company's perspective means a shareholder who holds a vote with 75 per cent weightage or more shareholding.

3. Inform: If the debtor owes any money to any person, creditors representing two-thirds in value of the debt should also authorize this resolution. The Registrar of Companies is informed by the debtor along with other concerned authorities such as the Insolvency and Bankruptcy Board of India about the passed resolution.

Consider this voluntary liquidation under the IBC checklist, essential as it can help you create a definite blueprint or guideline to go through the entire process smoothly.

The Process of Voluntary Liquidation of Company

To help you get more clarity, here is the  entire process of voluntary liquidation under IBC explained in a few simple steps:

Step 1: Organize Meeting of Directors / Authorized Partners

Step 2: Affirmation of Solvency by Board / Authorized Partners

Step 3: Organize General Meeting of Stockholders / Partners

Step 4: Partnering With an Insolvency Professional as Liquidator

Step 5: Sessions with Registrar of Companies and IBBI

Step 7: Publicly Announcing Voluntary Liquidation Under IBC by Liquidator

Step 8: Creation of an Initial Report by Liquidator

Step 9: Setting Up a Bank Account for Liquidation purpose

Step 10: No-Objection from Tax Authorities

Step 11: Realization of Assets

Step 12: Distribution of Proceeds to Stakeholders

Step 13: Conclusion of Liquidation

Step 14: Creation of an Annual Report – (if liquidation extended beyond 12 months)

Step 15: Final Report by Liquidator

Step 16: Write an Application to NCLT

Step 17: Conservation of records by liquidator

Documents Required

During the process of voluntary liquidation under IBC, the company must be prepared with the following documents:

• Declarations by Meeting of Directors / Authorized Partners
• Resolutions of Solvency by Board / Authorized Partners
• Statements by General Meeting of Shareholders / Partner
• Agreement from Insolvency Professional as Liquidator
• The Letter of Appointment of Insolvency Professional as the Liquidator
• Submit the MGT-14 / GNL-2 form after filing with the Registrar of Companies and IBBI
• The liquidator has to make Public Announcement in Newspapers and IBBI Website
• Submit a Primary Report by Liquidator
• Bank Account opening by liquidator
• Communications to Regulatory Authorities
• No-Objection from Tax Authorities
• Auctioning of  Company Assets, if any
• Annual Report by Liquidator
• Get a full and final Report by Liquidator
• Application to NCLT with copies of documents
• Orders From NCLT

How TRC Helps with Voluntary Liquidation Under IBC? 

TRC Corporate Consulting's insolvency services provide you with years of experience and knowledge-based advisory that our financiers and trained consultants have achieved while working with many clients from different industries in the market. You leverage our insolvency and bankruptcy services and collaborate with us as we promise to provide the best results from our extensive expertise.  Thus, we assure you that the delivered assistance will be on the basis of in-depth considerations of the various legal compliances and laws. 

At TRC Corporate Consulting, we don't just consider you to be a customer. We believe you as our business partner and provide you with exceptional IBC advisory services. Moreover, fulfilling your business necessities are always our topmost priority. You can contact us if you want a further understanding of our services related to the voluntary liquidation under IBC or any other financial advisory service!