Would like to know if there are any provisions available in IBC or any other law, which allows a liquidator to charge financial and/or operational creditors when the liquidator does not know on the whereabouts of corporate debtor, for the expenses and the remuneration.
Please advise. Appreciate your help in advance!!
Hi Gunasekaran! Under the Insolvency and Bankruptcy Code (IBC), 2016, the relevant section dealing with the liquidator’s fees and expenses is:
This section lays down the order of priority in the distribution of the liquidation estate.
Clause (6) of Section 53 specifically provides that the liquidator’s fees and expenses are paid before any repayment to creditors.
The liquidation costs (including liquidator’s fees) are to be paid out of the liquidation estate.
The liquidator cannot directly charge creditors for expenses or remuneration beyond what is available in the liquidation estate.
There is no provision in the IBC that allows the liquidator to charge creditors directly.
The liquidator can only realize fees and expenses from the assets of the corporate debtor.
Liquidator’s fees and expenses are paid from the liquidation estate (assets of the corporate debtor), per Section 53(1)(c).
If no assets or estate are found, the liquidator cannot charge creditors directly under IBC.
In such cases, liquidator’s fees and expenses might remain unpaid or get settled by the Insolvency Professional Agency as per their norms, but no direct charge on creditors.
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