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This is considered to be a faster winding process; however, it was observed that there were huge
pendencies. As of 13 June 2021, out of the 28,536 pending cases, nearly 10 per cent were pending from
th
more than 1000 days and 54 per cent cases (15,310) were pending for more than one year. Thereafter,
efforts were made by government to clear the backlog of applications. Consequently, the number of
pending cases has come down drastically to 9,768 as on 10 January 2022, out of which only about
th
16.3 per cent are pending for more than a year. Yet this process can be simplified further.
ii. Insolvency and Bankruptcy Code
Section 59 of Insolvency and Bankruptcy Code (IBC), 2016 together with the IBBI (Voluntary
Liquidation Process) Regulations, 2017 (Voluntary Liquidation Regulations) provide the mechanism
for voluntary liquidation of a corporate person. Section 59 of IBC states that ‘A corporate person
who intends to liquidate itself voluntarily and has not committed any default may initiate voluntary
liquidation proceedings under this chapter’. As on September 2021, 1042 cases have been filed under
this scheme so far and out of them, final reports have been received for 483 cases, and the final order of
dissolution has been passed in 257 cases. Out of the ongoing cases, nearly 32 per cent of the cases are
pending over 2 years and 19 per cent for between 1 and 2 years (Table 6A).

Table 6A: Status of Voluntary Liquidations as of September 30, 2021
Status No. of Liquidations
Initiated 1042
Closed by withdrawal 10

Final Report Submitted 483
Closed by Dissolution 257

Ongoing 549
> Two years 177
> One year ≤ Two years 104
> 270 days ≤ 1 year 61

> 180 days ≤ 270 days 107
> 90 days ≤ 180 days 35

≤ 90 days 65
Source: IBBI
The step-by-step procedure of the voluntary liquidation process under IBC is as follows:

Step 1: A board meeting is held approving the voluntary liquidation. Section 59(3)(a) of the Code
provides that the majority of the directors of the company shall pass a declaration regarding solvency
and the company not being liquidated to defraud any person. This declaration has to be supplemented
with 2 things:

(a) Audited financial statements and record of business operations of the company for the previous two
years or since its incorporation, whichever is later.
(b) A report of the valuation of assets of the company, if any, prepared by a Registered Valuer.