The Company Liquidator

In one line

On the winding up order the Tribunal appoints a Company Liquidator from among insolvency professionals; he takes custody of everything, reports to the Tribunal within sixty days, has fourteen statutory powers subject to the Tribunal's overall control, is advised by an advisory committee and directed by meetings of creditors and contributories, keeps books, has his accounts audited twice a year, and may be removed on five grounds and made to make good any loss he causes.

In exam wording: section 275 is appointment, section 276 removal, section 281 the report, section 283 custody, section 287 the advisory committee, section 290 powers and duties, and sections 293 and 294 books and accounts.

Why the law has this at all

When a winding up order is made, the company still exists but nobody is running it: the directors' authority is at an end in substance, the employees are discharged by the order itself, and the assets are exposed.

So the Act creates an officer to stand in the company's place, and it has to solve three problems at once.

He must have enough power to act. Hence the fourteen powers in section 290, which let him trade, sell, borrow, sue, settle claims and sign anything necessary.

He must not be free to use them as he likes. Hence the overall control of the Tribunal in section 290(2), the advisory committee in section 287, the directions of creditors and contributories in section 292, the quarterly reports in section 288, the books in section 293 and the audited accounts twice a year in section 294.

And he must be answerable if he fails. Hence section 276, which lets the Tribunal remove him on five grounds and recover from him the loss he caused.

Some words this chapter uses

An insolvency professional is a person registered under the Insolvency and Bankruptcy Code, 2016. The Official Liquidator is the officer attached to the Tribunal. A provisional liquidator is appointed before the winding up order under section 273(1)(c). A contributory is defined in section 2(26). Actionable claims are claims to a debt or beneficial interest in movable property not in possession. A going concern sale is a sale of the business as a working whole rather than of its assets separately.

Appointment: section 275

Section 275(1). For the purposes of winding up by the Tribunal, the Tribunal, at the time of passing the winding up order, shall appoint an Official Liquidator or a liquidator from the panel maintained under sub-section (2) as the Company Liquidator.

Section 275(2), as substituted by the Code. The provisional liquidator or the Company Liquidator shall be appointed by the Tribunal from amongst the insolvency professionals registered under the Insolvency and Bankruptcy Code, 2016.