The official liquidator exercises powers similar to resolution professional and is appointed by the Adjudicating Authority. Their powers are extensive and under their purview, the liquidation process of a corporate person is carried out.
In this article, we will briefly discuss powers and fees of liquidation professional as liquidator.
All powers of company management vest with the liquidator
- On the appointment of a liquidator under this section, all powers of the board of directors, key managerial personnel and the partners of the corporate debtor, as the case may be, shall cease to have an effect and shall be vested in the liquidator- section 34(2) of Insolvency Code, 2016.
- The personnel of the corporate debtor shall extend all the assistance and cooperation to the liquidator as may be required by him in managing the affairs of the corporate debtor.
- If they do not cooperate, the liquidator can apply to Adjudicating Authority for appropriate orders, like section 19 of Insolvency Code, 2016- section 34(3) of Insolvency Code, 2016.
Fees of liquidation professional as liquidator
- The liquidator shall charge the fee for the conduct of the liquidation proceedings in proportion to the value of the liquidation estate assets. This will be specified by the Board- section 34(8) of Insolvency Code, 2016.
- Fees of the liquidator shall be fixed by the committee of creditors before a liquidation order is passed under section 33(1)(a) or 33(2) of Insolvency Code, 2016.
- If fees are not so fixed, fees payable to liquidator shall be as specified in regulation 3(3) of IBBI (Liquidation Process) Regulations, 2016. The Fees as per table depending on the amount of realization/distribution. The liquidation shall be entitled to receive half of the fee payable on realization only after such realized amount is distributed – Regulation 4 of IBBI (Liquidation Process) Regulations, 2016.
- The fees for the conduct of the liquidation proceedings shall be paid to the liquidator from the proceeds of the liquidation estate under section 53 of Insolvency Code, 2016- section 34(9) of Insolvency Code, 2016.
- These fees have priority over other payments during liquidation.
The official liquidator is the first person to take care of the whole process of liquidation from beginning to end. His powers are extensive and legit. With his approval, the whole procedure will be conducted. The Insolvency Code, 2016 has very clearly and neatly mentioned the provisions related to insolvency procedure, and NCLT is taking the initiative to resolve the issues strictly.
Disclaimer – The above summary is based on the personal interpretation of the revised regulations, which may differ person to person. Hence, the readers are expected to take expert opinion before placing reliance on this article.