Cos under voluntary liquidation can replace liquidator

The Insolvency and Bankruptcy Board of India (IBBI) has amended the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017, to allow a company opting for voluntary liquidation to replace the liquidator by appointing another insolvency professional as liquidator.

The Insolvency and Bankruptcy Code, 2016 enables a company to initiate voluntary liquidation process if it has no debt or it will be able to pay its debts fully from the proceeds of the assets. The company can appoint an insolvency professional to conduct the voluntary liquidation process by a resolution of members or partners, or contributories, as the case may be.

However, there can be situations which may require appointment of another resolution professional as the liquidator. The existing law does not clearly provide for replacement of the liquidator by another. Thus, the law has now been amended to provide for replacement of the liquidator by appointing another insolvency professional as liquidator by a resolution of members or partners, or contributories, as the case may be.

The amended regulation is effective from 5 August 2020.