Liquidator

A liquidator is the insolvency professional or officer appointed to wind up a company: to take custody of its assets, convert them into cash, verify and settle creditor claims in a statutory order of priority, distribute any surplus to shareholders, and finally have the company dissolved. In India the role arises mainly under the Insolvency and Bankruptcy Code, 2016 (IBC), with the older winding-up machinery of the Companies Act, 2013 applying in a narrower set of cases.

Who is appointed, and under which law

• IBC liquidation — where a corporate insolvency resolution fails, the resolution professional is appointed liquidator under Section 34 of the IBC, on written consent. The person must be an insolvency professional registered with the IBBI.
• Voluntary liquidation — a solvent company with no default may appoint an insolvency professional as liquidator under Section 59 of the IBC.
• Winding up by the NCLT under the Companies Act, 2013 — the Tribunal appoints a Company Liquidator (Section 275), while the Official Liquidator attached to the court is appointed by the Central Government (Section 359).

Core duties

On appointment the powers of the board and management cease. Under Section 35 of the IBC the liquidator forms the liquidation estate, verifies claims, values and sells assets, may run the business where that aids a beneficial liquidation, distributes the proceeds, and applies to the NCLT for the company's dissolution.

Order of distribution (the "waterfall")

Section 53 of the IBC fixes the priority in which sale proceeds are paid out:

Rank	Claim
1	Insolvency resolution and liquidation process costs
2	Workmen's dues (24 months) and secured creditors who relinquish security — rank equally
3	Other employees' dues (12 months)
4	Unsecured financial creditors
5	Government dues (2 years) and secured debt left unpaid after enforcing security — rank equally
6	Remaining debts, then preference shareholders
7	Equity shareholders or partners