A solvent company with no default can close through voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code, 2016. Directors file a declaration of solvency, shareholders pass a special resolution appointing an insolvency professional as liquidator, creditors holding two-thirds of debt approve where applicable, and the liquidator realises assets, settles claims, distributes surplus and applies to NCLT for dissolution.
When to use it
For solvent companies with assets to distribute or liabilities to settle, where strike-off is not suitable.
Process
- Declaration of solvency by directors.
- Special resolution and creditor approval.
- Public announcement and claims.
- Asset realisation and distribution.
- Final report and NCLT application.
Timeline
Commonly several months to a year depending on assets and claims.
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Frequently asked questions
Liquidation vs strike-off?
Strike-off suits companies with no assets or liabilities; liquidation suits those needing formal distribution.
Can an LLP use this route?
IBC voluntary liquidation also applies to LLPs.
Who can be the liquidator?
A registered insolvency professional.
Can creditors object?
Creditors must approve where the company has debts.
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