Voluntary Liquidation
Voluntary Liquidation is a process through which a solvent company or corporate entity decides to close its operations and wind up its affairs in an orderly and lawful manner. This process is governed by the Insolvency and Bankruptcy Code, 2016 (IBC) and is generally adopted when the company has no intention to continue business but has the ability to pay its debts in full.
In voluntary liquidation, the decision to wind up the company is taken by the shareholders or partners. The directors of the company are required to make a declaration of solvency, confirming that the company has no outstanding debts or that it will be able to pay its debts completely from the proceeds of asset realisation.
Once the declaration of solvency is made and approved, the members pass a special resolution to initiate voluntary liquidation and appoint a Liquidator to oversee the process. The Liquidator takes charge of the company’s assets, settles its liabilities, and distributes the remaining assets among shareholders or partners.
Voluntary liquidation ensures that the closure of a business is carried out in a transparent and legally compliant manner while protecting the interests of creditors and stakeholders.
Our Voluntary Liquidation Services
We assist companies throughout the voluntary liquidation process by providing professional guidance and ensuring compliance with the legal requirements under the Insolvency and Bankruptcy Code.
Advisory on Voluntary Liquidation
Providing guidance to companies and shareholders on the voluntary liquidation process, legal requirements, and regulatory compliance.
Preparation of Declaration of Solvency
Assisting directors in preparing and filing the declaration confirming the solvency of the company.
Passing of Board and Shareholder Resolutions
Drafting necessary board resolutions and shareholder resolutions required to initiate the voluntary liquidation process.
Appointment of Liquidator
Assisting in the appointment of a qualified liquidator to manage and supervise the liquidation proceedings.
Public Announcement and Claim Verification
Making public announcements inviting claims from creditors and verifying claims submitted by stakeholders.
Asset Realisation and Liability Settlement
Managing the sale or distribution of company assets and settling liabilities of creditors and stakeholders.
Final Reporting and Dissolution
Preparation and submission of final reports and filings with the Insolvency and Bankruptcy Board of India (IBBI) and NCLT for the dissolution of the company.
F.A.Q.
Voluntary liquidation is a process through which a solvent company decides to close its operations and distribute its assets after settling all liabilities.
Voluntary liquidation can be initiated by the shareholders or partners of a company after the directors declare that the company is solvent.
Yes. Voluntary liquidation applies to solvent companies that are able to pay their debts, while insolvency liquidation occurs when a company cannot pay its debts.
A declaration of solvency is a statement made by the directors confirming that the company has no outstanding debts or will be able to pay its debts in full.
A liquidator appointed by the shareholders manages the entire voluntary liquidation process.
The duration of voluntary liquidation depends on the complexity of the company’s assets and liabilities, but it typically takes several months to complete.
After all assets are realised and liabilities are settled, the liquidator submits the final report and the company is formally dissolved through the regulatory authorities.
