The Liquidator under IBC: Appointment, Powers and Duties

Once a liquidation order is passed, the liquidator takes charge of the corporate debtor. The liquidator gathers its assets, verifies the claims against it, sells what can be sold and distributes the proceeds according to the waterfall. The 2026 Amendment changed this office in important ways: the resolution professional can no longer simply continue as liquidator, the committee of creditors supervises the liquidation and can replace the liquidator, and the whole process must be completed in 180 days. This note explains the office as it now stands.

1. Appointment, Section 34

Figure 1: Appointment and replacement of the liquidator

• Before 2026. The resolution professional appointed for the CIRP acted as the liquidator unless replaced by the NCLT, which happened where the plan was rejected for non-compliance, the IBBI recommended replacement, or the committee resolved to replace him.
• Reference to the IBBI. Under the substituted section 34(1), the NCLT refers the appointment to the IBBI, which recommends an insolvency professional; the NCLT then appoints that person as liquidator.
• Not the resolution professional. Section 34(4) now provides that the resolution professional who conducted the CIRP shall not be appointed as liquidator, and section 34(6) requires the IBBI to propose another professional within ten days, with that person's written consent.
• Handover. The resolution professional must hand over the records of the corporate debtor to the liquidator (section 34(5))
• Rationale. The Parliamentary committee that examined the Bill was concerned that professionals could prolong or steer processes towards liquidation to earn fees, and that a fresh professional would bring independent judgment.

2. Replacement, Section 34A

During liquidation, the committee of creditors may, by a vote of not less than 66 per cent of the voting share, resolve to replace the liquidator with another insolvency professional who has given written consent. The NCLT then replaces the liquidator, provided no disciplinary proceedings are pending against the proposed professional.

3. Vesting of Powers and Cooperation

• Section 34(2). On appointment, all powers of the board of directors, key managerial personnel and partners of the corporate debtor cease to have effect and vest in the liquidator.
• Section 34(3). As substituted in 2026, section 19 applies to the liquidation process, so the personnel and promoters of the corporate debtor must cooperate with the liquidator, who may seek directions from the NCLT.
• Section 37. The liquidator may access information relating to the corporate debtor's assets, finances and operations from information utilities, credit information companies, government records and other sources.

4. Powers and Duties, Section 35

Figure 2: Principal powers and duties of the liquidator

• Assets. Take into custody or control all assets, property, effects and actionable claims of the corporate debtor; evaluate them in the manner specified; and take measures to protect and preserve them.
• Business. Carry on the business of the corporate debtor for its beneficial liquidation as he considers necessary.
• Sale. Sell immovable and movable property and actionable claims by public auction or private contract, transfer them to any person or body corporate, or sell them in parcels.
• Claims. Prepare an updated list of claims as specified, and settle claims of creditors and claimants and distribute the proceeds under section 53.
• Proceedings. Institute or defend suits and proceedings in the name of the corporate debtor, and, under the substituted clause (l), continue or institute proceedings in respect of avoidance transactions and fraudulent or wrongful trading.
• Investigation. Investigate the financial affairs of the corporate debtor to determine undervalued or preferential transactions, and obtain professional assistance as needed.
• Subject to the NCLT. The liquidator acts subject to the directions of the NCLT.

5. Supervision by the Committee of Creditors

• Before 2026. Section 35(2) allowed the liquidator to consult stakeholders entitled to distribution, but their views did not bind him; the Liquidation Regulations created a stakeholders consultation committee whose advice the liquidator could depart from by recording reasons (Topic 58)
• After 2026. Section 21(11) provides that the committee of creditors constituted in the CIRP shall also supervise the conduct of the liquidation, and the substituted section 35(2) subjects the liquidator to its supervision as specified; the IBBI may permit other classes of creditors to attend without voting rights.
• Application. The change applies to liquidations beginning after the amendment and to pending liquidations in which no application for dissolution has yet been filed.
• Fees. The liquidator's fee is fixed in the manner specified by the IBBI; draft regulations published with the amendment propose linking it to amounts distributed rather than amounts realised.

6. The Claims Process

Figure 3: Key time limits in liquidation

• Consolidation, section 38. The liquidator receives or collects claims of creditors within 30 days from the liquidation commencement date; claims already admitted in the CIRP are taken into account.
• Verification, section 39. The liquidator verifies claims within the period specified and may require further evidence.
• Admission or rejection, section 40. The liquidator may admit or reject a claim in whole or in part, recording reasons for rejection, and must communicate the decision to the creditor and the corporate debtor within seven days.
• Valuation, section 41. The liquidator determines the value of claims admitted in the manner specified.
• Appeal, section 42. A creditor may appeal to the NCLT against the liquidator's decision accepting or rejecting a claim within 14 days of receiving the decision.
• Completion. Under the amended section 54(1), the liquidator must complete the liquidation and apply for dissolution within 180 days of the liquidation commencement date, extendable by the NCLT by up to 90 days.

7. Frequently Asked Questions

Can the resolution professional who ran the CIRP become the liquidator?

Not after the 2026 Amendment. Section 34(4) bars the resolution professional from being appointed liquidator, and the IBBI must recommend another insolvency professional.

Is the liquidator bound by the wishes of creditors?

After 2026, the liquidator acts under the supervision of the committee of creditors, which can also replace him by 66 per cent. Before 2026, the liquidator only consulted stakeholders and was not bound by their advice.

Where does a creditor go if the liquidator rejects its claim?

To the NCLT, by an appeal under section 42 filed within 14 days of receiving the liquidator's decision.

Can the liquidator continue the corporate debtor's business?

Yes. Section 35(1) allows the liquidator to carry on the business so far as necessary for its beneficial liquidation, for example to complete pending orders or preserve value until assets are sold. Sale of the business as a going concern, however, was removed from the Liquidation Regulations with effect from 14 October 2025 (Topic 59).

8. Related Topics

• Topic 53: Section 33. Initiation of liquidation.
• Topic 55: Section 36. The liquidation estate.
• Topic 58: Liquidation Costs and the Stakeholders Consultation Committee. Costs and creditor oversight.