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Winding Up of a Limited Liability Partnership (LLP) – Legal Advisory by Nd Salva
Winding up a Limited Liability Partnership (LLP) is a formal legal procedure that involves ceasing operations, settling liabilities, distributing remaining assets, and officially dissolving the LLP. Whether undertaken voluntarily by the partners or ordered by a tribunal, the process requires meticulous legal and regulatory compliance.
At Nd Salva, we provide end-to-end legal support for both voluntary and tribunal-led LLP winding up, ensuring a compliant, transparent, and efficient closure of the LLP while protecting the rights of all stakeholders.
What is Winding Up of an LLP?
Winding up refers to the process of concluding the business affairs of an LLP, including:
Selling off assets
Paying outstanding debts
Settling obligations
Distributing surplus (if any) to partners
And eventually, dissolving the LLP as a legal entity
Legal Framework Governing LLP Winding Up
The winding up and dissolution of LLPs in India is governed by:
Section 63-65 of the LLP Act, 2008
LLP (Winding up and Dissolution) Rules, 2012
Insolvency and Bankruptcy Code (IBC), 2016 (in cases of insolvency)
Applicable provisions of the Companies Act, 1956 as extended via Notification GSR 6(E), dated 6 January 2010
Winding Up vs Dissolution
| Aspect | Winding Up | Dissolution |
|---|---|---|
| Meaning | The process of settling liabilities, liquidating assets, and closing operations | Final legal closure of the LLP as a registered entity |
| Legal Status | LLP exists as a legal entity during the process | LLP ceases to exist post-dissolution |
| Objective | To discharge debts and obligations | To remove the LLP’s legal identity from the Register |
Modes of Winding Up of LLP
LLPs in India may be wound up via three primary routes:
1. Voluntary Winding Up
Initiated by partners through a mutual resolution
LLP must be solvent
Conducted under the LLP Winding Up Rules or IBC, 2016 (for voluntary liquidation)
2. Compulsory Winding Up by Tribunal
Initiated by Tribunal for reasons such as:
Inability to pay debts
Less than 2 partners for 6+ months
Failure to file returns for 5 consecutive years
Activities against sovereignty or national interest
Just and equitable grounds
3. Insolvency under IBC, 2016
Invoked when LLP is unable to pay debts
Resolution process led by Insolvency Professional (IP)
Tribunal may approve a resolution plan or order liquidation
Voluntary Liquidation of an LLP (Under IBC, 2016)
Pre-Conditions:
LLP must be solvent
Declaration of Solvency from majority of designated partners
No fraudulent intent in initiating the liquidation
Procedure:
Declaration of Solvency (DOS):
Verified affidavit by designated partners
Must include financial statements and asset valuation
Resolution for Liquidation:
Passed by partners (3/4th majority)
Appointment of an eligible Insolvency Professional as Liquidator
Creditors’ Consent (if applicable):
Creditors representing 2/3rd value must approve the liquidation
Intimation to Authorities:
Registrar of LLP and IBBI must be notified within 7 days
Public Announcement:
Made within 5 days by Liquidator
Invite claims within 30 days from creditors/stakeholders
Verification of Claims:
Liquidator verifies and admits/rejects claims within 30 days
Asset Realisation and Distribution:
Sell assets, recover dues, and deposit funds in a designated bank account
Distribute surplus (after costs and debts) to partners
Final Reporting:
Submission of Final Report to ROC and IBBI
Application for dissolution to NCLT
Winding Up by Tribunal – Grounds & Procedure
Grounds for Tribunal Winding Up:
LLP has <2 partners for more than 6 months
Inability to pay debts
Acted against public/national interest
Not filed returns for 5 consecutive years
Just and equitable to wind up
Procedure:
Petition Filing:
By LLP, creditors, partners, Registrar, or Central Government-authorised persons
Admission & Hearing:
Tribunal evaluates grounds and may issue winding-up order
Appointment of Liquidator:
Tribunal appoints an eligible professional to manage the process
Public Notice & Claim Invitation:
Stakeholders invited to submit claims within stipulated period
Settlement of Claims & Asset Liquidation:
Liquidator realises and distributes LLP assets in accordance with law
Dissolution Order:
Once liabilities are settled and assets distributed, Tribunal issues dissolution order
Filing with Registrar:
Liquidator must file the dissolution order with ROC to remove LLP from records
Key Compliance Considerations
Filing of Form 24 (for strike-off if inactive without liabilities)
Proper accounting and record keeping during winding up
Ensuring creditors’ interests are adequately protected
Only a registered Insolvency Professional can act as Liquidator
Time-bound reporting to ROC, Tribunal, and IBBI is mandatory
Why Choose Nd Salva for LLP Winding Up?
At Nd Salva, we specialise in legal and regulatory compliance for LLPs across all stages of their lifecycle. For LLP winding up, we offer:
- Expert Legal Consultation – Assess the right mode of winding up for your LLP
- Preparation of Resolutions & Declarations – Including Solvency Affidavits, Partner Resolutions
- Liaison with Tribunal, ROC & IBBI – From petitions to public announcements
- Drafting & Filing – Forms, public notices, and final reports
- Liquidator Support – Assistance in appointment and compliance
- Representation – Before NCLT or other authorities as needed
Start the Winding-Up Process with Confidence
If your LLP is inactive, insolvent, or you wish to voluntarily close operations, Nd Salva ensures a fully compliant and efficient winding-up process with minimal disruption.
Contact us today to schedule a consultation with our legal experts.
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