Sale of a corporate debtor as a going concern has been the most talked-about—and most polarising—tool in the liquidator’s toolkit. From real recoveries that preserved value and jobs to failed auctions that burned money and time, the 2023–25 period shows that going-concern sales can be transformational if done right, but dangerous if attempted without preparation. Recent NCLAT orders and IBBI reporting over the period give us a practical road-map of what works, what doesn’t, and how tribunals are guiding liquidators.
Why “going concern” matters
A successful going-concern sale converts a distressed enterprise from a dismantled asset stack into a business that someone can run — preserving value, employment, and often delivering higher realisations for creditors than piecemeal asset disposal. The data bears this out: by June 2025, IBBI reported over 100 corporate debtors closed by sale as going concerns, showing that the route can and does work at scale when conditions align.
Success stories — what they share in common
Successful cases in 2023–25 share a few consistent features:
1. Early preparation and clean data — timely books, clear title and contract continuity make it easier for buyers to underwrite the business.
2. Strong buyer interest / sector tailwinds — when strategic buyers see integration value (capacity, distribution, brand), bids reflect synergies, not just scrap value.
3. Well-structured transaction mechanics — staggered payments, escrow/earnest money, hand-over protocols and transitional services reduce execution risk.
4. Judicial endorsements where needed — several NCLT orders have validated going-concern approaches where liquidators showed compliance with regulation and adequate stakeholder consultation. For example, tribunals explicitly recognised that sale as a going concern can be effected “on as-is-where-is basis” while still offering a clean slate to the purchaser — a key commercial attractor for bidders.
Failures & why they happened
Equally instructive are the failures and aborted attempts:
- Poor due diligence / incomplete asset packs — bidders are unwilling to accept large unknowns; repeated auctions with no takers are common.
- High operating costs to maintain going concern — running loss-making operations to preserve “going concern” status can quickly erode value, and some tribunals have scrutinised disproportionate spend.
- Litigation and encumbrance surprises — unresolved claims or late-emerging creditor objections scupper transactions or delay handovers. NCLT has been active in setting aside sales where procedural lapses or improper disclosure affected competitive parity.
What NCLT is telling the ecosystem (2023–25)
Several consistent strands run through NCLT jurisprudence in this period:
- Going concern is permissible but not automatic. Tribunals will ask whether the liquidator followed the Liquidation Regulations, obtained stakeholder input where needed, and structured the sale to actually transfer the business (including necessary permissions and contracts).
- Buyer’s ‘clean slate’ depends on statutory scheme and transaction mechanics. NCLT has held that purchasers of a going concern generally take the business free from past liabilities, but the scope depends on lawful completion of the sale and clarity in sale documents. That “clean slate” is a major value driver—but it must be legally defensible.
- Timelines and cost control matter. Several NCLT orders have emphasised that keeping a business running pending sale incurs costs that must be justified and controlled; indefinite maintenance in hope of a better bid is not acceptable.
Practical takeaways for liquidators and stakeholders
If you are contemplating a going-concern route, treat it as a project, not an auction:
1. repare an investor-grade data room — titles, litigations, contracts, licences, employee lists, turnkey handover plan.
2. Model two scenarios — (a) going concern sale with continuity risk and conversion costs; (b) piecemeal sale. Use both to set reserve pricing.
3. Negotiate transitional protections — escrow, staged payments, indemnities and limited warranties can bridge valuation gaps.
4. Engage regulators and counterparties early — permit renewals, change-of-control consents and statutory clearances matter to buyers.
5. Document stakeholder consultations and procedural steps — NCLT will probe process before endorsing outcomes.
The bottom line
Going-concern sales are not a silver bullet — they are a high-reward, high-preparation option. From 2023 through mid-2025, courts and tribunals have shown they will support these sales when the liquidator demonstrates rigorous preparation, transparent process, and proportionate cost management. But when those boxes aren’t ticked, the tribunals are ready to push back. For liquidators, the lesson is simple: treat going-concern as a strategic turnaround assignment — and litigable proof of good process must be part of the deliverable.
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I am Insolvency Resolution Professional handled/ handling many insolvency cases. In case of any queries related to IBC, you may contact me at Krit Narayan Mishra, kritmassociates@gmail.com | Mob: 9910859116
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