IBBI proposes mechanism to allow withdrawal from voluntary liquidation

The process to rescind would be the same as was followed to initiate it - approval by a special resolution, passed by members or partners

The Insolvency and Bankruptcy Board of India (IBBI) has proposed a statutory mechanism that will allow a company to withdraw from the process of voluntary liquidation at any point after its initiation.
 

Unlike the corporate insolvency resolution and liquidation process of a stressed company, voluntary liquidations are not supervised by a committee of creditors or a stakeholders’ consultation committee.
 

In the absence of such rules, there were concerns that certain corporate persons may be abusing the process and closing the liquidation process on their own without informing the adjudicating authority.
 

The IBBI said, “The proposed amendment provides an orderly framework