Earlier, it was only High Courts which were empowered to deal with the issues of winding up of companies in all modes of winding up, and it was only ‘Official Liquidators’ who were authorised by the Companies Act to act as Liquidators. With the enactment of Insolvency and Bankruptcy Code (IBC), 2016, new systems have been introduced, and now there are three authorities who are empowered to wind up / liquidate the companies and two kinds of ‘Liquidators’ who shall act as Liquidators for winding up / liquidation of the Companies. A brief analysis of ‘Winding up’ or ‘Liquidation’ of the companies under the Companies Act, 1956; Companies Act, 2013 and IBC, 2016 is made hereunder before discussing the new system of ‘Liquidators’ that came into vogue.
Till the advent of IBC, 2016, winding up or liquidation of companies was completely under the purview of the erstwhile Companies Act, 1956 and later Companies Act, 2013. However, with the enactment of IBC, 2016, a company can be now wound up either under the Companies Act, 2013 or under IBC, 2016. Sections 230-231 and 270-365 of the Companies Act, 2013; and Sections 33 to 54 and Section 59 of IBC, 2016 deal with the issue of winding up of the companies, though the term ‘Liquidation’ has been used under the IBC, 2016 for winding up of the company.
Earlier, it was the Companies Act which alone dealt with the issues from incorporation to dissolution of the companies. The Companies Act, 1956, provided for three modes of winding up of companies, namely:
The issue of ‘inability to pay debts’ was one of the modes of winding up by the Court. In this mode, if after receipt of the 21 days statutory notice, if the company failed and neglected to pay its debts, the company was deemed to be insolvent and the winding-up proceedings would commence.The revised Companies Act, 2013 had the same provisions as of the Companies Act, 1956 with regard to the winding up of companies till the enactment of IBC, 2016.
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