Can creditors apply for liquidation of a company

654 votes

Yes. The Creditors can apply for liquidation of a Company. Considering the detailed answers sought, you are adviced to contact us by taking an appointment.

Advocate Avneesh Garg LawRato

817 votes

Dear Sir,

Thank you for your query.

A creditor can approach the court directky and apply for liquidation. Generally, winding up petition is filed before the jurisdictional High Court and regarding the timing it all depends how quickly we want to get it but on an average it take 6-12 months.

Thanks
Saurabh

Advocate Saurabh Kumar LawRato

841 votes

The Companies Act, 1956 provides for winding up of a company if a company is unable to satisfy its creditors, pay its workmen, etc. To proceed with the procedure established under the Companies Act, the creditor ought to first send a legal notice calling upon the company to pay the debt amount failing which the company would be liable to be wound up. If the company fails to pay, the creditors can file a winding up petition before the high court and apply for appointment of a provisional liquidator till the company is wound up. All affairs of the company are then handled by the provisional liquidator. Once the company finally goes into liquidation, the official liquidator takes in charge of all assets of the company and disposes them off in a manner to settle the debts of its creditors. It is important to note that the debts of secured creditors are first satisfied and only after that, the debts of unsecured creditors are realised. While it is difficult to give you an exact time schedule for the aforesaid procedure, it is safer to estimate that the same can take roughly around 2-3 years. Do contact me for further assistance.

Advocate Shikhar Khare LawRato