Law pdf detailed

1. WINDING UP AND
DISSOLUTION OF LLP

2. ⚫ SEC 65- rules for winding up and dissolution of LLP
⚫ LLP (winding up and dissolution) Rules, 2012
⚫ LLP Liquidator:

3. Meaning of winding up
⚫ All assets are disposed to meet the liabilities
⚫ Surplus distributed among partners

4. Diff b/w winding up and
dissolution
⚫ Meaning
⚫ Legal entity

5. Modes of winding up
⚫ Voluntary winding up
⚫ IBC 2016
⚫ Compulsory winding up by the tribunal

6. 1. Voluntary winding up
⚫ Chapter V Part II of IBC 2016: voluntary liquidation of
Corporate person
⚫ Voluntary liquidation Regulations, 2017 issued by IBBI
wef 1 April 2017
⚫ Pre-requisites of Voluntary liquidation :
⚫ Corporate person must be solvent
⚫ In a position to pay all its debts from assets
⚫ Not to defraud anyone

7. Steps in Voluntary liquidation
1. Commencement of liquidation
a) Obtaining declaration of solvency
b) Documents
c) Passing of resolution
d) Approval by creditors
e) Notification to registrar
f) Commencement of liquidation proceedings
EFFECT OF LIQUIDATION

8. ⚫ 2. Appointment And Remuneration Of Liquidator
(regulation 6)
⚫ It is a part of liquidation cost
⚫ The resolution will contain these t&c
⚫ Liquidator will prepare reports

9. ⚫ 3. public announcement by the liquidator ( regulation 14)
⚫ Public announcement in Form A of Schedule 1 within 5
days of appointment
⚫ Invites claims from stakeholders
⚫ Mode of publishing

10. ⚫ 4. verification of claims
⚫ 5. realization of assets
⚫ 6. deposit and distribution of proceeds of liquidation
⚫ 7. completion of liquidation and preparation of final report
⚫ 8. Submission of final report
⚫ 9. Passing of order by NCLT
⚫ 10. Filing of order with ROC

11. 2. IBC, 2016
⚫ 255 sections and 11 schedules
⚫ Corporate debtors- default of at least Rs 1 lakhs
⚫ 2 stages:
⚫ Insolvency resolution process (IRP)
⚫ liquidation

12. Insolvency Resolution Process (IRP)
⚫ Sec 30- following steps:
⚫ (i) commencement of IRP
⚫ (ii) Moratorium
⚫ (iii) appointment of resolution professional
⚫ (iv) creditors committee and revival plan
Whether to proceed with a revival plan or liquidation within
180 days ( one-time 90 days extension)

13. Liquidation
⚫ 75% majority of creditor’s committee
⚫ Non-approval of resolution plan within 180 days (
one-time 90 days extension)
⚫ NCLT rejects resolution plan
⚫ Debtors contravenes the plan
⚫ IBBI (Third Amendment) Regulations, 2018

14. IBC (amendment) Act,2019
⚫ M&As
⚫ Time bound disposal of NCLT order on resolution
application
⚫ Timeline for CIRP increases- now 330 days
⚫ Authorised representative of financial creditors
⚫ Distributions under resolution plan
⚫ Resolution Plan binding on all stakeholders
⚫ Liquidation by COC

15. 3. COMPULSORY WINDING UP BY
THE TRIBUNAL
⚫ SEC 64
a) Petition by LLP
b) No. of partners below statutory minimum- 6 months
c) Inability to pay its debts
d) LLP acting against the national interest
e) Default in filing the statement of account of solvency-
previous consecutive 5 years
f) Just and equitable

16. Who may file the petition for
winding up
⚫ Rule 26 of LLP (Winding up and dissolution) Rules, 2012
⚫ Petition can be filed by-
1. LLP or any of its partner or partners
2. By any secured creditor or creditors, including any
contingent or prospective creditor or creditors
3. By the registrar
4. By any person authorized by the central government
5. By the central government (sec 51)
6. By the central government or state government (Sec 64)

17. ⚫ Powers of the tribunal on hearing the winding up petition
⚫ Commencement of winding up

18. ⚫ Steps in the compulsory winding up
⚫ Filing petition
⚫ Waiting for hearing
⚫ Getting order from tribunal
⚫ Meeting of creditors and other parties
⚫ Realization of all assets and their distribution
⚫ Defining Role of liquidator
⚫ LLP will be dissolved under the supervision of assigned
liquidator

19. liquidator
⚫ Provisional liquidator
⚫ Duties of liquidator
⚫ Carry on business for beneficial winding up
⚫ Execute all deeds and use LLP’s seal
⚫ Take custody of property, books of accounts
⚫ Sell property
⚫ Inspect records
⚫ Prove claim in the insolvency of any partner
⚫ Negotiable instruments on behalf of LLP

20. ⚫ Apply to tribunal for winding up
⚫ Security arrangements
⚫ Appoint valuers
⚫ Advertisement for sale of assets
⚫ Investigation into affairs of LLP
⚫ Call any person for recording any statement
⚫ Maintain a separate bank account of LLP
⚫ Submit statements to Tribunal
⚫ Invite creditors’ claims and examining proofs
⚫ Any other necessary act

21. Provisions applicable to every
mode of winding up LLP (Winding
up and dissolution) Rules, 2012
⚫ Debts of all descriptions to be admitted to proof (Rule 50)
⚫ Powers of LLP Liquidator (Rule 51)
⚫ Statement that LLP is in liquidation (Rule 52)
⚫ Books and papers of LLP to be evidence (rule 53)
⚫ Inspection of books and papers by creditors and partners ( Rule
54)
⚫ Payment of money received by liquidator (rule 57 & 58)
⚫ Not to deposit money received by Liquidator into private bank
( Rule 59)

22. ⚫ Filing of return, account, document, notice etc (Rule 62)
⚫ Tribunal to declare dissolution of LLP void (Rule 64)
⚫ Commencement of winding up by Tribunal (Rule 65)

23. Order of payment of liabilities
1. Cost and expenses of winding up
2. Preferential creditors
3. Creditors secured by floating charge (current asset)
4. Unsecured creditors

24. Disposal of books and papers of
LLP (Rule 55)
⚫ Complete winding up of affairs of LLP:
⚫ Tribunal
⚫ Voluntary winding
⚫ Responsibility of LLP, LLP liquidator: after 5 years
⚫ Authority of central government
⚫ Penalty for contravention