Who is a Liquidator

August 21, 2025
Registrationwala

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Who is a Liquidator

Who is a Liquidator

August 21, 2025

Registrationwala

Liquidation of a company means the process of closing a business and distributing its assets to pay for the outstanding debts. The process of liquidation formally concludes the affairs of the company. In India, the liquidation is governed by the Companies Act 2013, and the Insolvency and Bankruptcy Code, 2016. A company can be placed into liquidation by a court order or through a resolution passed by its shareholders or creditors.

During the liquidation process, the company liquidator is responsible for overseeing the winding up of the company. This includes managing its assets and distributing the proceeds to creditors and stakeholders.

The company liquidator serves as an independent and impartial representative during the company's dissolution. In this blog post, we shall explain the meaning of liquidator in company law, their functions and powers and duties.

Meaning of Liquidator in Company Law

A liquidator is an insolvency professional appointed by the Adjudicating Authority (NCLT/DRT), unsecured creditors or the shareholders of the company. The need for appointment of liquidator arises when the company becomes insolvent and bankrupt. For the purpose of liquidation, the liquidator can sell the company’s assets in an open market for cash and other equivalents.

One of the main responsibilities that a liquidator has is to investigate all aspects of the company's affairs. This includes determining whether any assets have been misplaced or sold at prices that are lower than their value in the market. The liquidator has the authority to reverse such transactions if the same is considered necessary.

During liquidation process, the liquidator is granted all the powers previously held by the Board of Directors, key managerial personnel and partners of the Corporate Debtor upon the issuance of a liquidation order by the Adjudicating Authority, as outlined in Section 33 of the Insolvency and Bankruptcy Code, 2016.

When the Adjudicating Authority orders the liquidation of a corporate debtor that has undergone the CIRP, the appointed Resolution Professional will serve as the Liquidator unless the Adjudicating Authority decides to replace them. According to Section 34(4) of the Code, the Adjudicating Authority may replace the Liquidator under the following circumstances:

The resolution plan submitted by the resolution professional under section 30 was rejected for failure to meet the requirements mentioned in sub-section (2) of section 30; or
The Board recommends the replacement of a resolution professional to the Adjudicating Authority for reasons to be recorded [in writing; or] [Substituted 'in writing' by Act No. 26 of 2018, dated 17.8.2018.].
The resolution professional fails to submit written consent under sub-section (1).] [Inserted by Act No. 26 of 2018, dated 17.8.2018.]

In cases where the Resolution Professional must be replaced, the Adjudicating Authority may instruct the Board to propose names of eligible Insolvency Professionals to be appointed as Liquidator, along with a written consent form. This needs to be done within a period of 10 days from the date of the issued direction. After receiving the proposal, the order for the appointment of the Liquidator will be issued.

Functions of Liquidator

A liquidator must sell off a company’s assets and ensure the proceeds of the sale are used for repayment or clearance of outstanding debts and monetary liabilities of the corporation. Other functions of liquidator are as follows:

Realize all the assets of a bankrupt company and sell for the best possible price.
Distribute money to all the creditors in order of priority.
Go to the bank and ask for the bankrupt property to pay the wages, salary or any other kind of income for a certain period.
Take direct actions against the director and other people in authority for the benefit of the creditors.
Replace individual assets with others of a higher value. It excludes tools, vehicles, and domestic items like furniture and household equipment.

Powers and Duties of Liquidator

The powers and duties of liquidator are mentioned in Section 35 of the IBC 2016. They are as follows:

To verify claims made by all the creditors of the company.
To control/take into custody all the assets, property, effects and actionable claims of the corporate debtor.
Evaluation of property and assets of the corporate debtor (CD) in the manner prescribed by the Board and come up with a report.
Take measures for protection and preservation of assets and properties as deemed necessary.
Carry on the corporate debtor’s business for its beneficial liquidation as considered necessary.
To sell immovable/movable property and actionable claims of CD in liquidation via public auction or private contract with power to transfer such property to any individual or body corporate, or to sell the same in parcels in the prescribed manner. (It is important to note that the liquidator cannot sell the immovable and movable property or actionable claims of the corporate debtor in liquidation to anyone who is not eligible to be a resolution applicant.)
Draw, accept, make and endorse any negotiable instruments, incl. bills of exchange, hundis or promissory notes, in the name and on behalf of the CD. These actions will have the same legal effect concerning liability as if such instruments had been drawn, accepted, made or endorsed by the CD in the ordinary course of its business.
To obtain, in his official capacity, letters of administration for any deceased contributory. The liquidator may also perform any other necessary actions in their official capacity to recover money that is due and payable from a contributory or their estate, which cannot typically be done in the name of the CD. In such cases, the money owed will be considered as due to the liquidator himself and let him to obtain the letters of administration or recover the funds.
To seek professional assistance from an individual or appoint a professional, in discharge of his responsibilities, duties and obligations.
The liquidator may invite and settle claims of credits/claimants and distribute the proceeds in accordance with IBC 2016.
Take actions, steps, or to sign, execute and verify paper/deed/receipt document/application/bond/affidavit/instrument and use the common seal for such purposes, if any, as considered necessary for liquidation, asset distribution and in the capacity of his role as a liquidator.
Investigate the company’s financial affairs to detect whether any transactions were undervalued or preferential.
To initiate or defend any legal actions, whether civil or criminal, in the name of or on behalf of the CD.
To request the Adjudicating Authority for necessary orders/directions pertaining to the liquidation of CD, and to provide updates on the progress of the liquidation process in a manner as may be specified by the Board.
To perform other duties specified by the Board.

Conclusion

The liquidator is an insolvency professional who plays an essential role in the liquidation process of a company. They are appointed by the Adjudicating Authority, unsecured creditors or shareholders. The main motive behind appointing a liquidator is to allow a company to successfully wind up and pay all the outstanding debts to the concerned parties.