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

Veda Textiles Ltd is in liquidation. The liquidator, after finishing realisation, is preparing the application for dissolution together with the final report. Some avoidance applications against a former promoter are still pending and cannot be finished before dissolution. Under the Liquidation Process Regulations (as amended up to 22-09-2026), what must the liquidator do about these pending proceedings?

The liquidator must, with the committee's approval, set out in the application filed along with the final report how the pending avoidance proceedings will be pursued after dissolution or closure and how any proceeds will be distributed. Withdrawal is not required.

  1. AWithdraw them, because proceedings cannot continue after dissolution
  2. BProvide in the application filed with the final report how the proceedings will be pursued after dissolution and how any proceeds will be distributed, with the committee's approvalCorrect
  3. CHand them over to the promoter to settle privately
  4. DDistribute the expected proceeds to the creditors in advance, without any provision in the application

Explanation

Regulation 44A requires the liquidator, with the approval of the committee, to state in the application filed with the final report under regulation 45 how avoidance or fraudulent or wrongful trading proceedings will be pursued after dissolution or closure, and how proceeds will be distributed. Withdrawal is not required, and the promoter has no role in settling them.

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