Corporate Restructuring, Valuation and Insolvency · Liquidation on or after Failing of Resolution Plan

Appointment and Powers of Liquidator under IBC

Updated 11 October 2026 · Fact-checked

When the Adjudicating Authority orders liquidation under section 33, the resolution professional acts as liquidator once he gives written consent, unless replaced. All powers of the board and management then vest in the liquidator. Section 35 lists his powers and duties, including claim verification, asset custody, sale and investigation of transactions.

Understand Appointment and Powers of Liquidator

Liquidation under the IBC begins when the Adjudicating Authority passes an order under section 33, for example after a resolution plan fails. Someone must now take charge of the company, collect its assets, sell them and pay creditors. That person is the liquidator.

Section 34(1) makes the process simple. The resolution professional who ran the corporate insolvency resolution process (or the pre-packaged process under Chapter III-A) acts as liquidator. He must first submit a written consent in the specified form to the Adjudicating Authority. The Adjudicating Authority can replace him under section 34(4).

On appointment, section 34(2) says all powers of the board of directors, key managerial personnel and partners of the corporate debtor cease and vest in the liquidator. The personnel must give him all assistance and cooperation.

Section 35 gives the liquidator his powers and duties. They are all subject to the directions of the Adjudicating Authority. They cover verifying claims, taking custody of assets, valuing them, preserving them, carrying on the business where needed, selling assets, hiring professionals, investigating undervalued or preferential transactions, and applying to the Adjudicating Authority for directions.

The liquidator may also consult stakeholders entitled to a distribution under section 53. This consultation is not binding. Records must be made available to stakeholders who were not consulted. His fee is set by the Board, as a proportion of the value of liquidation estate assets, and is paid from the proceeds of the liquidation estate under section 53.

Key rules to remember

Default liquidator: Liquidator = the resolution professional of the CIRP (or pre-pack process), on written consent in specified form; Section 34(1). Applies unless the Adjudicating Authority replaces him under section 34(4).
Grounds for replacement: Replace if: (a) plan rejected for failing section 30(2) requirements; (b) Board recommends replacement, reasons in writing; (c) RP fails to submit written consent; Section 34(4). The Adjudicating Authority replaces by order.
Replacement procedure: Adjudicating Authority directs Board to propose a name → Board proposes within 10 days with written consent → Adjudicating Authority appoints by order; Sections 34(5), (6), (7). The direction under 34(5) applies to grounds (a) and (c) only.
Effect of appointment: Powers of board, KMP and partners cease and vest in the liquidator; Section 34(2).
Fee: Fee = as specified by the Board, in proportion to the value of liquidation estate assets; paid from proceeds under section 53; Section 34(8) and (9). Do not quote a percentage unless you are sure of the regulation.
Consultation: Liquidator may consult stakeholders entitled under section 53; not binding; records open to others; Section 35(2).
Sale restriction: No sale of assets to a person not eligible to be a resolution applicant; Proviso to section 35(1)(f).

How to solve Appointment and Powers of Liquidator questions

Use this method for any question on appointment, replacement or powers of the liquidator.

1Identify the trigger: has the Adjudicating Authority passed a liquidation order under section 33?
2Name the default liquidator: the RP of the CIRP or pre-pack process, acting on written consent in the specified form.
3Check for a replacement ground under section 34(4): plan rejected under section 30(2), Board recommendation with reasons, or no written consent.
4If replacement applies, follow the route: direction to the Board, name within ten days with consent, appointment by order.
5State the effect: board and management powers vest in the liquidator and personnel must cooperate.
6Match each action in the facts to the clause of section 35(1), and note that powers are subject to the Adjudicating Authority's directions.
7Check special conditions: the section 35(1)(f) sale proviso, non-binding consultation under section 35(2), and fees under section 34(8) and (9).
8Conclude clearly with the provision, the facts applied and the result.

Quickest way: Four-box check for liquidator questions

When to use it: Use when time is short and the question gives a short fact pattern.

Box 1, Who: RP becomes liquidator on written consent, unless replaced.
Box 2, Replace: three grounds in 34(4), a, b and c.
Box 3, Powers: map each act to 35(1)(a) to (o), all subject to Adjudicating Authority directions.
Box 4, Money and consultation: fee set by the Board and paid under section 53; consultation is allowed but not binding.

Common mistakes in Appointment and Powers of Liquidator

Saying the liquidator is chosen by the committee of creditors.
Students mix up section 27, where the CoC replaces an RP during CIRP, with section 34.
Fix: In liquidation the RP continues as liquidator. Replacement is by the Adjudicating Authority under section 34(4), with the Board proposing a name.
Forgetting the written consent requirement.
Students assume the appointment is automatic.
Fix: Section 34(1) makes the appointment subject to written consent in specified form. Failure to submit it is itself a ground for replacement under 34(4)(c).
Treating consultation with stakeholders as binding.
Students link consultation to the CoC's binding voting powers.
Fix: Section 35(2) says consultation is not binding. Records must be made available to stakeholders not consulted.
Listing powers as absolute.
Students memorise the list and skip the opening words.
Fix: Section 35(1) begins 'Subject to the directions of the Adjudicating Authority'. Say so in every answer.
Ignoring the restriction on who can buy assets.
The proviso is short and easy to miss.
Fix: The liquidator cannot sell to any person who is not eligible to be a resolution applicant.
Quoting a fixed fee percentage from memory.
Students recall figures from the liquidation regulations and mix them up.
Fix: State the rule in section 34(8) and (9): the Board specifies the fee in proportion to the value of liquidation estate assets, and it is paid from the proceeds under section 53.

Worked examples

Example 1

Alpha Steels Ltd goes into liquidation under section 33 after its resolution plan was rejected for failing the requirements of section 30(2). Mr. Rao was the resolution professional. Can he act as liquidator? What happens next?

Show the solution

Provision: section 34(1) makes the RP the liquidator on written consent, unless replaced under section 34(4).
Analysis: section 34(4)(a) requires the Adjudicating Authority to replace the RP where the plan he submitted was rejected for failing section 30(2) requirements.
Under section 34(5) the Adjudicating Authority may direct the Board to propose another insolvency professional.
Under section 34(6) the Board must propose a name, with written consent, within ten days of the direction.
Under section 34(7) the Adjudicating Authority appoints that professional by order.

Answer: Mr. Rao will be replaced because his plan was rejected for failing section 30(2). The Adjudicating Authority directs the Board to propose a name, the Board does so with consent within ten days, and the Adjudicating Authority appoints the new liquidator by order.

Example 2

The liquidator of Beta Textiles Ltd wants to sell a factory to a bidder who is ineligible to be a resolution applicant. He also consulted two secured creditors but not the workmen and says he is bound by their view. Advise.

Show the solution

Provision: the proviso to section 35(1)(f) bars sale of property or actionable claims to any person who is not eligible to be a resolution applicant.
Analysis: the bidder is ineligible, so the sale cannot proceed. The liquidator may sell by public auction or private contract, but only to an eligible buyer.
Section 35(2) allows consultation with stakeholders entitled under section 53, but it is not binding.
The liquidator must make the records of the consultation available to stakeholders not consulted, in the manner specified by the Board.
Conclusion on binding view: he is not bound by the secured creditors' view.

Answer: The sale to the ineligible bidder is not permitted. The liquidator is not bound by the creditors he consulted, and he must make the consultation records available to the stakeholders he did not consult.

Exam tips

Open every answer with section 33 as the trigger, then section 34 for appointment.
Learn the three replacement grounds in 34(4) and the ten-day Board timeline in 34(6).
For powers, group section 35(1) into custody and valuation, sale and business, investigation and litigation, and distribution.
Always write 'subject to the directions of the Adjudicating Authority' when listing powers.
In fee questions, state the rule from section 34(8) and (9) and avoid unverified percentages.

Practice questions from Liquidation on or after Failing of Resolution Plan

Appointment and Powers of Liquidator in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CS ExecutiveCessation of Board's Powers on Appointment of Liquidator

Appointment and Powers of Liquidator: frequently asked questions

Who becomes the liquidator when a company goes into liquidation under IBC?

The resolution professional of the CIRP, or the pre-packaged process, acts as liquidator under section 34(1). He must submit written consent in the specified form. The Adjudicating Authority can replace him under section 34(4).

When can the Adjudicating Authority replace the liquidator?

It must replace the RP if his plan was rejected for failing section 30(2) requirements, if the Board recommends replacement with reasons in writing, or if he fails to submit written consent. The Board then proposes another professional within ten days of the direction.

What happens to the directors' powers on liquidation?

Under section 34(2), all powers of the board of directors, key managerial personnel and partners cease and vest in the liquidator. The company's personnel must assist and cooperate with him.

How is the liquidator's fee decided and paid?

The Board specifies the fee, in proportion to the value of the liquidation estate assets. It is paid to the liquidator from the proceeds of the liquidation estate under section 53.