Completion of Administration under Section 137 IBC

Understand Completion of Administration under Section 137

Key rules to remember

Final meeting (s.137(1))

Administration and distribution complete → trustee convenes CoC meeting

The duty is on the bankruptcy trustee. Administration must be done in accordance with Chapter V.

Report (s.137(2))

Trustee gives CoC a report of the administration of the estate in that meeting

The report is given at the meeting, not merely filed.

Approval time (s.137(3))

CoC approves report within 7 days of receipt

The same sub-section says the CoC also determines whether the trustee should be released under section 148.

Meeting expenses (s.137(4))

Trustee retains sufficient sums from the estate for the meeting expenses

Retention is made during the administration of the estate.

Release on completion (s.148(3))

Release of trustee takes effect from the date the CoC approves the s.137 report

Section 148(1) is different: release on replacement, resignation or vacancy takes effect from the date of the Adjudicating Authority's order appointing a new trustee.

Discharge application (s.138(1))

Apply (a) on expiry of 1 year from bankruptcy commencement date; or (b) within 7 days of CoC approval under s.137, if approval comes before that period ends

The Adjudicating Authority passes the discharge order on the trustee's application, and a copy goes to the Board for the register under section 196.

How to solve Completion of Administration under Section 137 questions

1. 1Identify the stage. Check whether administration and distribution of the estate under Chapter V are complete. If not, section 137 is not yet triggered.
2. 2State the trustee's duty: convene a meeting of the committee of creditors and give it a report of the administration of the estate.
3. 3Check the time limit. The CoC must approve the report within seven days of receiving it. Count from receipt of the report.
4. 4Check the CoC's second task: deciding whether the trustee should be released under section 148.
5. 5Apply section 148(3). The trustee is released from the date the CoC approves the report. Keep this apart from section 148(1), which covers replacement, resignation or vacancy.
6. 6Move to discharge under section 138. If approval came before one year from the bankruptcy commencement date, the trustee applies within seven days of approval. Otherwise he applies on the expiry of one year.
7. 7Check expenses: the trustee must retain sufficient sums from the estate for the meeting. Then give a clear conclusion on the facts.

Quickest way: Four-beat recall: Meet, Report, Approve, Release

Common mistakes in Completion of Administration under Section 137

• Saying the Adjudicating Authority approves the trustee's report.

  Students link every IBC approval to the Adjudicating Authority.

  Fix: Under section 137(3) the committee of creditors approves the report. The Adjudicating Authority only passes the discharge order under section 138.

• Writing that the CoC has seven days from the date of the meeting or from the end of administration.

  The seven-day figure is remembered without its trigger.

  Fix: Write: within seven days of the receipt of the report.

• Mixing up release and discharge.

  Both sound like the end of the process and both involve seven days.

  Fix: Release (s.148) relieves the trustee of his office. Discharge (s.138) is an order of the Adjudicating Authority on the trustee's application. Keep them in separate lines.

• Saying the trustee is released only when the Adjudicating Authority appoints someone new.

  Section 148(1) is applied to every case.

  Fix: That rule covers replacement, resignation or vacancy. For completed administration, section 148(3) applies and release is from the date of CoC approval.

• Forgetting the retention of funds for the meeting.

  Section 137(4) is short and gets skipped.

  Fix: Add a line that the trustee must retain sufficient sums from the estate to meet the expenses of convening and conducting the meeting.

Worked examples