REPORTING DURING LIQUIDATION UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016
A Liquidator has to file various reports to the Adjudicating Authority during Liquidation Process. These documents include a Preliminary Report, Asset Memorandum, Progress Reports, Sale Reports, Minutes of Consultation with Stakeholders, Final Report prior to dissolution.
The Liquidator has to preserve a physical as well as an electronic copy of these reports and minutes for eight years after the dissolution of Corporate Debtor.
If any stakeholder makes an application for copy of aforesaid reports and minutes and pays requisite costs for the same, the Liquidator has to make such report or minute available to such stakeholder. Such stakeholder has to give undertaking that it shall maintain confidentiality of such reports and minutes and will not use these to cause an undue gain or undue loss to itself or any other person.
PRELIMINARY REPORT
The Liquidator has to submit a Preliminary Report under Liquidation Regulation 13 to the Adjudicating Authority within seventy-five days from the liquidation commencement date. Such Preliminary Report consists of following details.
- Capital structure of the Corporate Debtor
- Estimates of assets and liabilities as on the liquidation commencement date based on the books of the Corporate Debtor. If the Liquidator has reasons to believe to be recorded in writing, that the books of the Corporate Debtor is not reliable, the Liquidator has to provide such estimates based on reliable records and data otherwise available to him
- Whether Liquidator intends to make any further inquiry in to any matter relating to the promotions, formation, or failure of the Corporate Debtor or the conduct of business thereof
- The proposed plan of action for carrying out the liquidation, including the timelines within which the Liquidator proposes to carry it out and the estimated Liquidation Costs.
PROGRESS REPORTS
The Liquidator has to submit various progress reports under Liquidation Regulation 15 to the Adjudicating Authority.
The Liquidator has to file the first Progress Report within 15 days after the end of the quarter in which he is appointed. Subsequent Progress Reports have to be filed within 15 days after end of every quarter during which he acts as Liquidator. If an Insolvency Professional ceases to act as a Liquidator during the Liquidation Process, the Liquidator has to file a Progress Report for the quarter up to the date of his ceasing of act within 15 days of such cessation.
A Progress Report has to provide all information relevant to liquidation for the quarter including:
- Appointment, tenure of appointment and cessation of appointment of professionals
- A statement indicating progress in liquidation
- A statement indicating progress in liquidation including settlement of List of Stakeholders, details of any property that remain to be sold and realised, distribution made to the stakeholders, distribution of unsold property made to the stakeholders
- Details of fee or remuneration including the fee due to and received by the Liquidator together with a description of the activities carried out by him, the remuneration or fee paid to professionals appointed by the Liquidator to-gather with a description of activities carried out by them, other expenses incurred by the Liquidator, whether paid or not
- Development in any material litigation by or against the Corporate Debtor
- Filing or and development in application for avoidance of transaction
- Changes in estimated Liquidation Cost
A Progress Report has to enclose an account maintained by the Liquidator showing receipts and payments during the quarter and the cumulative number of receipts and payments since the liquidation commencement date.
A Progress Report has to enclose a statement indicating any material change in expected realisation of any property proposed to be sold along with the basis for such change.
The Progress Report for the fourth quarter of the financial year has to enclose audited accounts of the Liquidator’s receipts and payments for the financial year. In case Insolvency Professional ceases to act as Liquidator, the audited accounts of his receipts and payments for that part of the financial year during which he acted as Liquidator, has to be enclosed with the Progress Report to be filed after cessation of appointment.
The filing of Progress Reports can be better comprehended from the following example. Suppose an Insolvency Professional becomes a Liquidator on 13th February, 2020 and ceases to act as Liquidator on 12th February, 2022, he has to submit progress reports as under:
| Report No. | Period covered in the Quarter | Last date of Submission of Report |
| 1 | 13th February to 31st March 2020 | 15th April, 2020 |
| 2 | April – June 2020 | 15th July, 2020 |
| 3 | July – September, 2020 | 15th October, 2020 |
| 4 | October- December 2020 | 15th January, 2021 |
| 5 | January- March 2021 | 15th April, 2021 |
| 6 | April – June 2021 | 15th July, 2021 |
| 7 | July – September 2021 | 15th October, 2021 |
| 8 | October –December 2021 | 15th January, 2021 |
| 9 | January – 12th February, 2022 | 27th February, 2022 |
The Liquidator has to submit audited accounts of his receipts and payments as under:
| Audited Account No | Period covered in the year | Last date of submission |
| 1 | 13th February to 31st March, 2020 | 15th April, 2020 |
| 2 | April – March, 2021 | 15th April, 2021 |
| 3 | April – 12th February, 2022 | 27th February, 2022 |
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Mukesh Kumar Suman is an advocate and legal author based at Delhi. He regularly appears before various Judicial Forums including NCLT, NCLAT, High Courts and the Supreme Court. He can be approached at mukesh_suman@outlook.com or +91 9717864570.
