Insolvency and Bankruptcy - Law and Practice · Liquidation of Corporate Person

Powers and Duties of Liquidator under IBC

Updated 11 October 2026 · Fact-checked

When the Adjudicating Authority orders liquidation under section 33, the resolution professional normally becomes the liquidator under section 34. The liquidator takes over the board's powers, verifies claims, takes custody of assets, sells them, investigates the debtor's affairs and distributes proceeds under section 53, subject to the Adjudicating Authority's directions.

Understand Liquidator: Appointment, Powers and Duties

Liquidation under the IBC begins with an order under section 33. Someone must then take charge of the company, collect its assets, convert them to cash and pay creditors. That person is the liquidator. Section 34 and section 35 together tell you who he is, how he can be replaced and what he can do.

The default rule is 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 give a written consent to the Adjudicating Authority in the specified form. He holds office unless the Adjudicating Authority replaces him.

Once he is appointed, the powers of the board of directors, key managerial personnel and partners cease and vest in the liquidator. The personnel of the corporate debtor must extend all assistance and cooperation to him.

Section 35 lists his powers and duties. They are all subject to the directions of the Adjudicating Authority. They fall into groups: claims (verify, invite and settle), assets (take custody, value, protect, carry on business, sell), investigation (undervalued and preferential transactions), litigation (institute or defend suits in the debtor's name) and reporting (apply to the Adjudicating Authority and report progress as the Board specifies).

He also earns a fee, fixed by the Board in proportion to the value of the liquidation estate assets, and paid from the liquidation estate proceeds under section 53. As an insolvency professional he must follow the code of conduct in section 208(2).

Key rules to remember

Default appointment (s.34(1)): Order under s.33 → RP of the CIRP (or pre-pack process) acts as liquidator, after written consent in specified form; Applies unless the Adjudicating Authority replaces him under s.34(4).
Grounds for replacement (s.34(4)): (a) plan rejected for failing s.30(2) requirements; (b) Board recommends replacement, reasons in writing; (c) RP fails to submit written consent; Replacement is by order of the Adjudicating Authority.
Replacement procedure (s.34(5)-(7)): AA may direct Board to propose a name (for grounds (a) and (c)) → Board proposes within 10 days with written consent → AA appoints by order; The direction to the Board applies only for clauses (a) and (c), not (b).
Effect of appointment (s.34(2)): Powers of board, KMPs and partners cease and vest in the liquidator; Personnel must cooperate with him.
Liquidator's fee (s.34(8)-(9)): Fee = as specified by the Board, in proportion to value of liquidation estate assets; paid from proceeds under s.53; Do not quote percentages unless the regulations are in front of you.
Powers and duties (s.35(1)): Subject to AA's directions: verify claims; take custody; value assets; protect assets; carry on business; sell; raise negotiable instruments; use professionals; settle claims and distribute; sue and defend; investigate; sign documents; apply to AA and report progress; Listed in clauses (a) to (o).
Sale restriction (s.35(1)(f) proviso): No sale of property or actionable claims to a person not eligible to be a resolution applicant; Sale is by public auction or private contract, subject to section 52.
Consultation (s.35(2)): Liquidator may consult stakeholders entitled under s.53; consultation is not binding; records made available to stakeholders not consulted; Stakeholders cannot direct the liquidator.

How to solve Liquidator: Appointment, Powers and Duties questions

Liquidator questions are case-based. Work through the facts in the order of provision, analysis, conclusion.

1Identify what is being asked: appointment, replacement, a specific power, fees or conduct.
2State the trigger: a liquidation order under section 33 and who was the resolution professional.
3Quote the rule from section 34 or 35 in plain words, with the exact condition.
4Apply it to the facts. Check consent, the ground for replacement, or which clause of section 35 matches the act done.
5Check limits: Adjudicating Authority's directions, section 52 for secured creditors, the eligibility bar on buyers.
6Conclude clearly, for example 'the Adjudicating Authority may replace him' or 'the sale is not permitted'.
7Add the practical step: file the consent, report progress, record consultations, or apply to the Adjudicating Authority for directions.

Quickest way: Four-box memory frame

When to use it: Use when you have little time and the question asks you to list or explain the liquidator's role.

Box 1 Who: the RP, with written consent, unless replaced.
Box 2 Replace: plan rejected under s.30(2), Board recommendation, no consent; Board names a replacement in 10 days.
Box 3 Do: claims, assets, sale, investigate, sue, distribute, report.
Box 4 Pay and conduct: fee set by the Board and paid under s.53; section 208(2) code of conduct.
Write one line on each box, then add facts from the question.

Common mistakes in Liquidator: Appointment, Powers and Duties

Saying a new liquidator is always appointed by the Adjudicating Authority on its own choice.
Students forget the default rule that the RP becomes liquidator.
Fix: State the default first. Then explain that replacement happens only on the three grounds, and the Board proposes the name.
Omitting the written consent requirement.
It is a small clause and sounds procedural.
Fix: Mention that the RP must submit written consent in the specified form. Failure is itself a ground for replacement.
Saying the Board proposes a name within 30 days.
Mixing with other timelines in the Code.
Fix: Remember ten days from the Adjudicating Authority's direction under section 34(6).
Treating the liquidator's powers as unlimited.
The list in section 35 is long.
Fix: Begin with 'subject to the directions of the Adjudicating Authority' and note the section 52 and eligibility limits on sale.
Thinking the liquidator must follow the stakeholders' advice after consulting them.
Confusing with the committee of creditors' role in resolution.
Fix: Write that consultation under section 35(2) is not binding, but records must be shared with others not consulted.
Stating the liquidator's fee as a fixed percentage.
Students memorise figures from the regulations without checking them.
Fix: Say the fee is as specified by the Board, linked to the value of the liquidation estate assets, and paid from proceeds under section 53.

Worked examples

Example 1

Meridian Steels Ltd was in CIRP. Its resolution plan was rejected by the Adjudicating Authority for failing the requirements in section 30(2), and liquidation was ordered under section 33. Mr Rao was the resolution professional. Advise on who will act as liquidator and what can follow.

Show the solution

Provision: under section 34(1), after a section 33 order the RP of the CIRP acts as liquidator, after written consent in the specified form, unless replaced under section 34(4).
Analysis: the plan was rejected for failure to meet section 30(2). That is ground (a) for replacement under section 34(4).
So the Adjudicating Authority shall by order replace Mr Rao. Under section 34(5) it may direct the Board to propose another insolvency professional.
The Board must propose a name with written consent in the specified form within ten days of the direction (section 34(6)). The Adjudicating Authority then appoints that person (section 34(7)).
Conclusion: Mr Rao will not continue. A replacement is appointed on the Board's proposal.

Answer: Because the plan was rejected for failing section 30(2), the Adjudicating Authority shall replace Mr Rao. The Board proposes a new liquidator with consent within ten days of the direction, and the Adjudicating Authority appoints him.

Example 2

The liquidator of Sundaram Textiles Ltd wishes to sell the company's factory land to Karthik Pvt Ltd by private contract. Karthik Pvt Ltd is not eligible to be a resolution applicant. Separately, a creditor demands that the liquidator follow its advice on which assets to sell first. Advise.

Show the solution

Provision: section 35(1)(f) lets the liquidator sell immovable and movable property by public auction or private contract, subject to section 52.
The proviso bars sale to any person who is not eligible to be a resolution applicant.
Analysis: Karthik Pvt Ltd is ineligible, so the sale to it cannot be made, whatever the mode.
On the creditor's demand: section 35(2) allows the liquidator to consult stakeholders entitled under section 53, but consultation is not binding.
Conclusion: he may listen to the creditor but need not follow it. Records of consultation must be made available to stakeholders not consulted, as the Board specifies.

Answer: The sale to Karthik Pvt Ltd is not permitted because it is ineligible to be a resolution applicant. The liquidator may consult the creditor, but is not bound by its advice.

Exam tips

Open with the default rule in section 34(1), then list the replacement grounds. Examiners reward this order.
Learn the three replacement grounds and the ten-day period. They are easy marks.
For powers questions, group the clauses of section 35(1) into claims, assets, sale, investigation, litigation and reporting, instead of listing them all.
Always add 'subject to the directions of the Adjudicating Authority' when describing powers.
In open-book papers, flag section 34 and 35 in your copy of the Code, but still write the rule in your own words.

Practice questions from Liquidation of Corporate Person

Liquidator: Appointment, Powers and Duties in other exams

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

Liquidator: Appointment, Powers and Duties: frequently asked questions

Who becomes the liquidator when liquidation is ordered under the IBC?

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

On what grounds can a liquidator be replaced?

There are three: the resolution plan he submitted was rejected for failing section 30(2) requirements, the Board recommends replacement with reasons in writing, or he fails to submit written consent. The Adjudicating Authority replaces him by order.

How is the liquidator's fee decided?

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. Check the IBBI liquidation regulations for the exact scale.

Can the liquidator sell assets to anyone?

No. He may sell by public auction or private contract, subject to section 52, but not to a person who is not eligible to be a resolution applicant.

What happens to the directors' powers after the liquidator is appointed?

All powers of the board of directors, key managerial personnel and partners cease and vest in the liquidator. The personnel of the corporate debtor must assist and cooperate with him.