Section 35 of IBC : Section 35: Powers And Duties Of Liquidator

Explanation using Example

Imagine a company, XYZ Pvt. Ltd., has been declared insolvent and is undergoing the liquidation process under the Insolvency and Bankruptcy Code, 2016. A liquidator is appointed by the Adjudicating Authority (National Company Law Tribunal) to oversee the process. Here's how Section 35 of the Code would apply in this scenario:

• The liquidator begins by collecting and verifying all the claims made by creditors of XYZ Pvt. Ltd. to ensure a fair distribution of assets.
• They take control of all the company's assets, including its property, vehicles, and any outstanding debts owed to the company.
• The liquidator evaluates all these assets, perhaps hiring a professional valuer to determine their worth and prepares a detailed report on the same.
• To prevent any loss or damage, they take measures like insuring the property or hiring security services.
• If it's beneficial for the liquidation, the liquidator might continue to operate certain profitable divisions of XYZ Pvt. Ltd.
• When it's time to sell the company's assets, the liquidator does so through public auction or private contract, ensuring that buyers are eligible and not disqualified from being resolution applicants.
• They manage the company's financial instruments and legal claims to maximize recovery for creditors.
• The liquidator settles claims, distributes the proceeds to creditors, and may take legal action if necessary to recover any dues.
• Throughout the process, the liquidator consults with stakeholders, keeps them informed, and applies to the Adjudicating Authority for any orders or directions needed to efficiently liquidate XYZ Pvt. Ltd.

This example showcases the liquidator's role and powers as outlined in Section 35, ensuring that the liquidation of XYZ Pvt. Ltd. is conducted in an orderly and transparent manner for the benefit of all creditors and stakeholders.