Liquidation Order explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A liquidation order under Section 33 may now be passed on four grounds. The 2026 Amendment adds a fourth — a CoC resolution under Regulation 40E for direct dissolution — and changes what follows the order: the moratorium can be extended into liquidation, and the CoC replaces the abolished Stakeholders' Consultation Committee as the supervisory body.
The grounds
Under Section 33 of the Code, the Adjudicating Authority may order liquidation of the corporate debtor where:
- No resolution plan is received before the expiry of the insolvency resolution process, or within 180 days of its initiation;
- The CoC intimates a liquidation decision before the expiry of the resolution process, approved by not less than sixty-six per cent of the voting share;
- An approved resolution plan is contravened by the corporate debtor — in which case any person other than the corporate debtor whose interests are prejudicially affected may apply for a liquidation order; and
- The CoC resolves by 66% for direct dissolution during the CIRP under Regulation 40E, where assets are insufficient to cover process costs or cannot be effectively realised.
Regulation 40E is not another route to a liquidation order — it is a route past one. Where the CoC determines that the assets will not cover CIRP and likely liquidation costs, or cannot be effectively realised in the ordinary course of liquidation, it may seek direct dissolution during the CIRP itself.
The RP must then, within 10 days, file an application with the CoC resolution, details of assets, details of claims and avoidance transactions, and a statement demonstrating why continuation would not be economically beneficial.
What follows the order
Once a liquidation order is passed, a moratorium is imposed on pending legal proceedings against the corporate debtor, and the assets of the debtor — including the proceeds of liquidation — vest in the liquidation estate.
The moratorium extended into liquidation
The 2026 Amendment extends the moratorium to the liquidation phase. On passing a liquidation order, the Adjudicating Authority may declare that:
- Section 14(1)(a) — institution or continuation of suits and proceedings; and
- Section 14(1)(c) — actions to foreclose, recover or enforce a security interest,
shall apply mutatis mutandis to the liquidation estate. The purpose is stated directly: to prevent creditors from fragmenting the liquidation estate through parallel proceedings during the liquidation phase.
The CoC as supervisory body
Section 33 is amended to provide that the Committee of Creditors constituted under Section 21 shall continue to function as the supervisory body over the liquidation process from the date of the liquidation order.
| Earlier (SCC) | Now (CoC) | |
|---|---|---|
| Body | Stakeholders' Consultation Committee, Regulation 31A | CoC under Section 21, continued |
| Nature of input | Consultative | Binding oversight powers |
| Status | Abolished | Supervisory body |
Powers transition
- On appointment of a liquidator, all powers of the board of directors and KMP cease and are transferred to the liquidator.
- The personnel of the corporate debtor must assist and cooperate with the liquidator.
- The CoC decides whether the corporate debtor can continue as a going concern.
Practical steps immediately after the order
- Notify the RoC in Form INC-28; the MCA master data status changes from "Under CIRP" to "Under Liquidation".
- Inform the board of directors about discharge or continuation of employee services.
- Open a new bank account in the company's name with "in liquidation" in the title, and close the old accounts.
- Note that SEBI suspends trading in the company's equity shares on initiation of liquidation.
- Inform the relevant statutory and government authorities.
Valuation on a liquidation order
Where valuation has already been conducted under the CIRP Regulations, the liquidator must consider the average of those estimates. Where no valuation was performed under the CIRP, the liquidator must appoint two registered valuers to determine estimated realisable value. The liquidator retains discretion to initiate a fresh valuation if necessary.
Compliance checklist
- Identify which of the four grounds supports the order.
- Seek the moratorium declaration under 14(1)(a) and (c) for the liquidation estate.
- Treat the CoC as the supervisory body, not a consultative one.
- File INC-28 and update MCA master data.
- Open the "in liquidation" account and close old accounts.
- Use the average of CIRP valuations or appoint two registered valuers.
Common mistakes
- Assuming only three grounds and missing the Regulation 40E route.
- Treating CoC input in liquidation as advisory, as under the SCC regime.
- Not seeking the extended moratorium, allowing parallel proceedings.
- Commissioning fresh valuation where CIRP estimates should be averaged.