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9 June 2026
Voluntary Liquidation Process Refined
 
The Insolvency and Bankruptcy Board of India (Board) has notified the IBBI (Voluntary Liquidation Process) (Second Amendment) Regulations, 2026 (Amendment Regulations) with effect from 1 June 2026. The Amendment Regulations made several changes to the voluntary liquidation process.

The key amendments made vide Amendment Regulations are summarized in the table below for ease of understanding:

Key Amendment Comments
Stakeholders Assistance
  • The Amendment Regulations now provide that the liquidator can seek assistance from stakeholders such as shareholders.
  • The language of the amendment now makes it obligatory for stakeholders to provide assistance as sought by the liquidator.
  • It also reflects the intent of the law to empower the liquidator to engage the stakeholder for the support as may be required.
A new regulation 28A for submission and updation of claims has been inserted
  • A strict timeline introduced for the stakeholder to submit the claim. Stakeholders must submit their claims on or before the last date specified in the public announcement.
  • Further, the said amendment recognizes that a stakeholder claim may be satisfied from any source in any manner.
Verification of claims process streamlined
  • The Amendment Regulations require the liquidator to record the reason for rejection of the claim in writing.
  • Further, the framework permits stakeholders to approach the Adjudicating Authority upon rejection of their claim.
Termination of the voluntary liquidation process The Amendment Regulations stipulate the process for termination of voluntary liquidation process in terms of an insertion of sub-sections (5A), (5B), and (5C) made by way of an amendment to section 59 of the Insolvency and Bankruptcy Code, 2016. Accordingly, the framework of termination of voluntary liquidation is as follows:
  • Voluntary liquidation process can be terminated if the shareholders approve the same by a special resolution followed by creditors, if any, consent or such other conditions as the Board may specify
  • The liquidator needs to close the resolution within 7 days of its passing to the Registrar, and the liquidation shall be deemed to have been terminated from that date
  • The special resolution must specify:
    • The rationale for termination of voluntary liquidation proceedings
    • treatment of liquidation costs, and
    • a declaration that the termination will not result in prejudicially affecting the interest of any stakeholder
  • The liquidator shall cease to be the liquidator from the effective date of termination of the liquidation process
Our Comments

The Amendment Regulations have made significant changes to the voluntary liquidation, such as giving specific recognition to seeking the active assistance of stakeholders during the process. Further, the several amendments in the regulations make the process clearer, more streamlined and transparent.

The most significant change, however, is the introduction of a formal mechanism for termination of voluntary liquidation proceedings. Earlier, this was not part of the regulations or the statute. The lack of clear provisions and processes for termination led to a lot of practical issues and uncertainties in that regard.

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