Section 35 of the Insolvency and Bankruptcy Code, 2016: Powers and Duties of Liquidator
Section 35 defines the liquidator's powers and duties during the liquidation of a corporate debtor. The liquidator acts subject to the directions of the Adjudicating Authority, generally the National Company Law Tribunal (NCLT), and must comply with the Code and applicable IBBI regulations.
Key legal terms and definitions
Liquidator: An insolvency professional appointed under Section 34 to conduct corporate liquidation. Corporate debtor: A corporate person that owes a debt, as defined under Section 3(8). Adjudicating Authority: For corporate persons, the NCLT under Section 5(1). Board: The Insolvency and Bankruptcy Board of India (IBBI), under Section 3(1). Actionable claim: A claim enforceable by civil action, as understood under applicable property law. Liquidation estate: The pool of assets constituted under Section 36 for liquidation purposes.
Section 35(1): Powers and duties of the liquidator
Subject to the directions of the Adjudicating Authority, Section 35(1) sets out the following powers and responsibilities. The descriptions below retain the substance of each statutory clause and explain its practical operation.
- Clause (a): to verify claims of all the creditors;
Examine and verify creditors' claims under the claims-adjudication framework.
- Clause (b): to take into his custody or control all the assets, property, effects and actionable claims of the corporate debtor;
Secure possession or control of the corporate debtor's assets, including actionable claims.
- Clause (c): to evaluate the assets and property of the corporate debtor in the manner as may be specified by the Board and prepare a report;
Value assets and prepare reports in accordance with applicable IBBI requirements.
- Clause (d): to take such measures to protect and preserve the assets and properties of the corporate debtor as he considers necessary;
Safeguard assets against loss, damage or dissipation.
- Clause (e): to carry on the business of the corporate debtor for its beneficial liquidation as he considers necessary;
Continue operations only where necessary for beneficial liquidation.
- Clause (f): subject to section 52, to sell the immovable and movable property and actionable claims of the corporate debtor in liquidation by public auction or private contract, with power to transfer such property to any person or body corporate, or to sell the same in parcels in such manner as may be specified; Statutory proviso: The liquidator shall not sell the property or actionable claims to a person who is not eligible to be a resolution applicant.
Sell eligible assets, subject to secured creditors' rights and statutory purchaser restrictions.
- Clause (g): to draw, accept, make and endorse any negotiable instruments including bill of exchange, hundi or promissory note in the name and on behalf of the corporate debtor, with the same effect with respect to the liability as if such instruments were drawn, accepted, made or endorsed by or on behalf of the corporate debtor in the ordinary course of its business;
Execute negotiable instruments for the corporate debtor where necessary.
- Clause (h): to take out, in his official name, letter of administration to any deceased contributory and to do in his official name any other act necessary for obtaining payment of any money due and payable from a contributory or his estate which cannot be ordinarily done in the name of the corporate debtor, and in all such cases, the money due and payable shall, for the purpose of enabling the liquidator to take out the letter of administration or recover the money, be deemed to be due to the liquidator himself;
Recover amounts owed by contributories, including through estate administration where legally required.
- Clause (i): to obtain any professional assistance from any person or appoint any professional, in discharge of his duties, obligations and responsibilities;
Engage legal, valuation, accounting or other professional assistance as permitted.
- Clause (j): to invite and settle claims of creditors and claimants and distribute proceeds in accordance with the provisions of this Code;
Invite and settle claims and distribute realisations according to the Code.
- Clause (k): to institute or defend any suit, prosecution or other legal proceedings, civil or criminal, in the name of or on behalf of the corporate debtor;
Initiate or defend legal proceedings for the corporate debtor.
- Clause (l): to investigate the financial affairs of the corporate debtor to determine undervalued or preferential transactions;
Examine transactions that may be avoidable, including preferential or undervalued transactions.
- Clause (m): to take all such actions, steps, or to sign, execute and verify any paper, deed, receipt document, application, petition, affidavit, bond or instrument and for such purpose to use the common seal, if any, as may be necessary for liquidation, distribution of assets and in discharge of his duties and obligations and functions as liquidator;
Execute instruments and documentation necessary for liquidation.
- Clause (n): to apply to the Adjudicating Authority for such orders or directions as may be necessary for the liquidation of the corporate debtor and to report the progress of the liquidation process in a manner as may be specified by the Board; and
Seek directions from the NCLT and report progress in the prescribed manner.
- Clause (o): to perform such other functions as may be specified by the Board. (2) The liquidator shall have the power to consult any of the stakeholders entitled to a distribution of proceeds under section 53: Provided that any such consultation shall not be binding on the liquidator: Provided further that the records of any such consultation shall be made available to all other stakeholders not so consulted, in a manner specified by the Board. The Insolvency and Bankruptcy Code 2016
Perform further functions specified by IBBI.
Section 35(2): Consultation with stakeholders
Section 35(2) permits the liquidator to consult stakeholders entitled to distribution under Section 53. The statutory text states that such consultation is not binding on the liquidator and requires records of consultation to be made available to other stakeholders not consulted in the manner specified by the Board.
Consultation and decision-making must also be read with the current IBBI (Liquidation Process) Regulations, including the framework for creditor or stakeholder consultation applicable to the particular liquidation and any operative 2026 amendments.
How Section 35 interacts with other IBC provisions
Section 33 deals with initiation of liquidation; Section 34 addresses appointment and replacement of the liquidator; Section 36 concerns the liquidation estate; Sections 38 to 42 address claims and their adjudication; Sections 43 to 51 deal with certain avoidable transactions; Section 52 governs secured creditors' rights in liquidation; and Section 53 establishes the statutory distribution priority. Sale restrictions also require attention to Section 29A and the proviso to Section 35(1)(f).
Practical significance
The liquidator is responsible for collecting and preserving the estate, verifying claims, arranging compliant sales, investigating transactions, dealing with litigation, distributing proceeds and reporting to the Adjudicating Authority. These powers are not unrestricted: the liquidator must observe statutory priorities, procedural safeguards, eligibility requirements, regulatory timelines and tribunal directions.
Official legal sources and further reading
Ministry of Corporate Affairs - Insolvency and Bankruptcy Code, 2016
IBBI - updated Liquidation Process Regulations (including 2026 amendments)
IBBI - legal framework, notifications and amendments
The Insolvency and Bankruptcy Code, 2016 - LawDadi guide
This article is an explanatory guide. For a particular liquidation, consult the current enacted text, commencement notifications, regulations and applicable orders of the NCLT or appellate courts.