Preparation of Liquidator’s Final Statement of Account

The Liquidator’s Statement of Account is a comprehensive financial report prepared by the liquidator during the winding-up process of a company. It captures all financial transactions from the commencement of liquidation to its completion. This statement ensures accountability, transparency, and statutory compliance, especially under the Companies Act, 2013 and the Insolvency and Bankruptcy Code (IBC), 2016.

Purpose and Importance:

The primary objective of preparing a Liquidator’s Statement of Account is to:

1. Disclose the financial position of the company under liquidation.

2. Track the realization and distribution of assets.

3. Provide transparency to stakeholders including creditors, shareholders, and regulatory authorities.

4. Ensure compliance with the legal and procedural norms under the Companies Act, IBC, and SEBI guidelines (where applicable).

It acts as a key document submitted to the Tribunal (NCLT), Registrar of Companies, and the Insolvency and Bankruptcy Board of India (IBBI) as part of the final reporting in the liquidation process.

Legal Provisions:

Under the Companies (Winding-Up) Rules, 2020, Rule 185 and 186 outline the format and frequency of the Liquidator’s Account.

Under the Insolvency and Bankruptcy Code, 2016, the Liquidator must file periodic and final reports, including statements of receipts and payments, with the Adjudicating Authority (NCLT) and IBBI.

Contents of the Liquidator’s Statement of Account:

A standard Liquidator’s Statement of Account includes the following components:

1. Receipts Section

This section details the total cash and assets received during liquidation, including:

• Opening cash and bank balances.

• Sale proceeds from fixed assets.

• Realization from current assets (stock, receivables, etc.).

• Income from investments.

• Refunds or recoveries from tax authorities.

• Other income (interest, rent, etc.).

2. Payments Section

This section records all expenditures and distributions, such as:

• Insolvency resolution and liquidation process costs.

• Legal and professional fees.

• Payments to secured creditors.

• Workmen’s dues and employee salaries.

• Government dues (taxes, duties, etc.).

• Payments to unsecured creditors.

• Interim dividend or final dividend to shareholders.

• Miscellaneous expenses (postage, printing, rent, utilities).

3. Summary of Assets Realized and Disposed

• Details of each asset realized (description, book value, sale value).

• Details of assets yet to be realized or written off.

• Any shortfall or surplus generated.

4. Statement of Distribution

• Date and amount paid to each category of stakeholder.

• Particulars of dividends declared and paid.

• Unclaimed amounts and transfer to the Corporate Liquidation Account (as mandated by IBBI).

5. Bank Reconciliation Statement

• Cash at bank and on hand.

• Bank account statement attached to ensure reconciliation with liquidation records.

6. Notes and Observations

• Notes regarding any legal proceedings, disputes, or liabilities.

• Explanation for delays or outstanding recoveries.

• Remarks on books and records maintained during liquidation.

Format and Frequency

Frequency of Submission:

• Half-yearly (for voluntary winding-up) or

• Quarterly (as per IBBI regulations for corporate persons)

• Final Statement at the end of the liquidation process

Format:

The format of the statement is prescribed under Form No. 11 and Form No. 12 of the Companies (Winding-Up) Rules and under Form H of IBBI (Liquidation Process) Regulations, 2016.

Audit and Certification

• The statement must be audited by a Chartered Accountant, especially if the liquidation period exceeds one year.

• Certified true copies are submitted to:

  • NCLT (for compulsory winding-up)

  • Registrar of Companies

  • IBBI (for cases under IBC)

Closing the Liquidation Process:

Once the statement is prepared and submitted, and all obligations are met:

1. Final meeting of stakeholders is held (in case of voluntary winding-up).

2. A final report and accounts are submitted to the NCLT/Registrar.

3. On approval, the company is dissolved and struck off from the records.

If unclaimed funds remain, they are deposited into the Corporate Liquidation Account, managed by IBBI, and reported in the Statement.