On June 28, 2024, the Insolvency and Bankruptcy Board of India (IBBI) issued Circular No. IBBI/LIQ/74/2024, introducing a set of electronic forms designed to streamline the monitoring and reporting of voluntary liquidation processes under the Insolvency and Bankruptcy Code (IBC), 2016. This initiative aims to replace the traditional, inefficient email-based submission system with a more efficient electronic reporting mechanism.
1. Purpose and Scope of the Circular:
The circular targets the improvement of reporting and compliance for voluntary liquidation cases. Under Section 59 of the IBC, a corporate person (CP) can initiate voluntary liquidation, and the circular provides a structured approach to managing this process through new electronic forms. The primary objectives are to enhance efficiency, reduce delays, and minimize errors in reporting.
2. Benefits of the New Electronic Forms:
- Increased Efficiency: The electronic forms are designed to speed up the reporting process by allowing Insolvency Professionals (IPs) to submit required information online. This shift from email-based submissions to an electronic platform aims to significantly reduce delays and processing times.
- Improved Accuracy: By standardizing the reporting process and reducing manual intervention, the new forms decrease the likelihood of errors and omissions, ensuring more reliable and accurate data.
- Enhanced Transparency: The electronic platform facilitates systematic record-keeping and transparent reporting, which is crucial for monitoring the liquidation process and ensuring compliance with legal requirements.
3. Overview of the New Forms:
The circular outlines four key forms that IPs must use to report different stages of the voluntary liquidation process:
- Form VL 1: Requires details about the Corporate Debtor (CD) and the voluntary liquidation process. This form must be filed on or before the 10th day of the second month after the public announcement.
- Form VL 2: Captures details of contributory meetings, reasons for process delays, and any changes in the liquidator. This form is due on or before the 10th day of the month following the meeting or replacement of the liquidator.
- Form VL 3: Includes information on the dissolution application, unclaimed proceeds, realization and distribution of assets, pending litigations, and detection of fraud, if any. It must be filed on or before the 10th day of the month after submitting the dissolution application or withdrawal/suspension application.
- Form VL 4: Pertains to details following the order for dissolution, including the distribution of proceeds and receipts and payments. This form is due within 14 days of the dissolution order or the withdrawal/suspension of the liquidation process.
4. Filing Requirements and Deadlines:
- For New Cases: IPs must file forms according to the timelines specified in the circular for cases where voluntary liquidation commences on or after the issuance of the circular.
- For Ongoing Cases: The deadlines are set for September 30, 2024. Forms VL 1 and VL 2 must be submitted for ongoing cases, while forms VL 1, VL 2, and VL 3 are required for cases with pending dissolution or withdrawal/suspension applications. For cases with a dissolution order, forms VL 1, VL 3, and VL 4 are necessary.
5. Compliance and Penalties:
IPs must ensure accurate and timely filing of all required forms. Non-compliance, including failure to file or submitting incomplete or inaccurate information, will lead to penalties under the applicable provisions of the Code and regulations.
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Insolvency and Bankruptcy Board of India
7th Floor, Mayur Bhawan, Connaught Place, New Delhi-110001
Circular No. No. IBBI/LIQ/74/2024 Dated: 28th June, 2024
To
All Registered Insolvency Professionals
All Recognised Insolvency Professional Entities, and
All Registered Insolvency Professional Agencies
(By mail to registered email addresses and on the website of the IBBI)
Dear Madam / Sir,
Subject: Filing Forms to monitor Voluntary liquidation processes under the Insolvency and Bankruptcy Code, 2016, and the regulations made thereunder.
A corporate person (CP) may initiate voluntary liquidation in terms of section 59 of the Insolvency and Bankruptcy Code and the IBBI (Voluntary Liquidation Process) Regulations, 2017. During the process, the liquidator invites claims and prepares a list of stakeholders based on the verified claims, sells assets of the CP in the manner and mode approved by the CP, and distributes proceeds as per section 53 of the Code. Upon completion, the liquidator submits the Final Report and an application for dissolution of CD, to the Adjudicating Authority.
2. The Insolvency Professional (IP), functioning as a liquidator, is also required to ensure compliance with legal requirements and reporting to the Adjudicating Authority (AA) and IBBI. Presently, the IPs submit the details regarding the voluntary liquidation process to the Board through emails, which is time-consuming and inefficient.
3. To alleviate the compliance burden for Insolvency Professionals (IPs), a set of forms on an electronic platform has been created by the IBBI to capture the details of the voluntary liquidation process. These forms are vital for the voluntary liquidation procedure under the Insolvency and Bankruptcy Code (IBC), as they enable systematic and transparent record-keeping and seamless reporting. The primary advantages of these forms include:
- Boosting the efficiency and effectiveness of the voluntary liquidation process.
- Allowing liquidators to conveniently access and submit forms online, reducing delays and enhancing efficiency.
- Decreasing the chances of errors and omissions, ensuring more accurate and reliable information.
4. An overview of these Forms is as per the Table below:
| Form No. | Period Covered and Scope | Timeline |
| VL 1 | This includes details of the Corporate Debtor (CD) and the details of the Voluntary Liquidation Process | On or before the 10th day of the second month after the public announcement. |
| VL 2 | Details of the meetings of contributories with the reasons for delay in the process and details of replacement of liquidator, if any. | On or before the 10th day of the subsequent month, after the meeting of contributories or replacement of liquidator. |
| VL 3 | Details of dissolution application, details of Unclaimed Proceeds, Details of realisation and distribution made to stakeholders, Details of Pending Litigations, Detection of Frau d or Insolvency, if any. | On or before the 10th day of the subsequent month, after submission of the dissolution application of the CP or withdrawal/suspension application for the voluntary liquidation process, to the Adjudicating Authority. |
| VL 4 | Details of order for Dissolution: This includes details of, the distribution of proceeds, Receipts and Payments, etc. (The details required in these forms are carried forward from the VL-3 form and hence need not be filled again) | On or before the 14 days of passing of the order for dissolution of the CP. or withdrawal / suspension of the voluntary liquidation process. |
5. For the purpose of smooth filing of these Forms, a platform is hosted on the IBBI website at https://www.ibbi.gov.in. An IP shall access the platform with a unique username and password provided by the IBBI and upload/submit the Forms, along with relevant information and records, after affixing DSC or e-signing. Further, timely filing of complete and accurate information along with records is the sole responsibility of the IP.
6. It is directed that an IP shall file the forms on the electronic platform only:
a. within the prescribed timeline for all cases where a voluntary liquidation process has commenced on or after the date of issuance of this circular.
b. for the ongoing cases: in which no application for dissolution of the corporate person has been filed, the IP shall file the following forms latest by 30th September 2024:
- Form VL 1 for all cases
- Form VL 2 for cases where the process is delayed or the liquidator is replaced, as the case may be.
c. for cases where an application for dissolution or withdrawal / suspension of the voluntary liquidation process of the CP has been filed with AA, shall file forms VL1, VL2 and VL3 latest by 30th September 2024.
d. for cases where dissolution of the CP or withdrawal / suspension of voluntary liquidation process has been ordered by AA, shall file forms VL 1, VL 3, and VL 4 latest by 30th September 2024. It is clarified that an IPs who do not comply with applicable provisions of the Code and the Regulations made thereunder, shall be liable as per applicable provisions of the Code and the Regulations made thereunder for:
(i) failure to file the requisite Forms along with relevant information and records,
(ii) inaccurate and incomplete information and/or records filed in or along with a Form.
8. This is issued in exercise of the powers under sub-section (1) of section 196 of the Insolvency and Bankruptcy Code, 2016.
Yours faithfully,
(Rajesh Tiwari)
General Manager
