At the time of liquidation what happens to the pending litigation
Answers
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it has not committed any default;
a majority of the directors or designated partners of the corporate person make a declaration verified by an affidavit to the effect that:
the corporate person has no debt or can pay its debts in full out of the sale proceeds of the assets under the proposed liquidation; and
liquidation is not initiated to defraud any person;
such declaration is accompanied by the audited financial statements and valuation report of the corporate person;
within four weeks of such declaration, a special resolution (an ordinary resolution would suffice in cases of voluntary liquidation by reason of expiry of its duration or occurrence of any dissolution event) is passed by the contributories requiring the corporate person to be liquidated and appointing an insolvency professional as liquidator; and
creditors representing two-thirds of the total debt (in value) owed by the corporate person approve the resolution within seven days of its passage.
Voluntary liquidation is largely an out-of-court process. Only once the affairs of the corporate person have been completely wound up and its assets fully liquidated can the liquidator apply to the National Company Law Tribunal for its dissolution along with a final report. Pursuant to this application, the tribunal must pass an order for dissolution and the entity will be dissolved from the date of the order.
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