Chapter III - Liquidation Process
Section 34
Section 34: who becomes liquidator, and how is the liquidator paid?
Section 34 governs appointment of the liquidator once the tribunal orders liquidation under Section 33. From 26 May 2026, the resolution professional no longer continues as liquidator by default. The tribunal refers the matter to IBBI, which proposes a different insolvency professional within ten days. On appointment, the powers of the board, key managerial personnel and partners vest in the liquidator. The liquidator's fee is paid from the liquidation estate as specified by IBBI.
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This article is for general information. Refer to the Insolvency and Bankruptcy Code, 2016 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Where the Adjudicating Authority passes an order for liquidation of the corporate debtor under section 33, it shall refer to the Board for making recommendation of an insolvency professional to be appointed as the liquidator and on receipt of the recommendation, appoint such insolvency professional as the liquidator.
(2) On the appointment of a liquidator under this section, all powers of the board of directors, key managerial personnel and the partners of the corporate debtor, as the case may be, shall cease to have effect and shall be vested in the liquidator.
(3) Any person who is or has been a personnel of the corporate debtor, or its promoter, or associated with the management of the corporate debtor, or engaged in a contract for service with the corporate debtor, shall extend all assistance and cooperation to the liquidator as may be required by him for the purposes of managing the affairs of the corporate debtor or performing the duties conferred on him under this Chapter and the provisions of section 19 shall apply in relation to liquidation and voluntary liquidation process as they apply in relation to corporate insolvency resolution process with the substitution of references to the liquidator for references to the interim resolution professional and resolution professional and references to the corporate insolvency resolution process with liquidation and voluntary liquidation process, respectively.
(4) Notwithstanding anything contained in this section and section 34A, an insolvency professional appointed as a resolution professional for the corporate insolvency resolution process under Chapter II, shall not be appointed or replaced as the liquidator for the liquidation process of such corporate debtor.
(5) After an order of liquidation has been passed, the resolution professional shall forward to the liquidator, all records relating to the conduct of the corporate insolvency resolution process.
(6) The Board shall propose the name of an insolvency professional, other than the resolution professional appointed for the corporate insolvency resolution process under Chapter II, along with written consent from such insolvency professional in the specified form, within ten days of the reference made by the Adjudicating Authority under sub-section (1).
(7) The Adjudicating Authority shall, on receipt of the proposal of the Board for the appointment of an insolvency professional as liquidator, appoint such insolvency professional as the liquidator.
(8) An insolvency professional proposed to be appointed as a liquidator shall charge such fee for the conduct of the liquidation proceedings and in such proportion to the value of the liquidation estate assets, as may be specified by the Board.
(9) The fees for the conduct of the liquidation proceedings under sub-section (8) shall be paid to the liquidator from the proceeds of the liquidation estate under section 53.
Introduction
Section 21 of the Insolvency and Bankruptcy Code (Amendment) Act, 2026, in force from 26 May 2026 under S.O. 2625(E), substituted subsection (1) and subsections (3) to (6), and removed the words "by an order" from subsection (7). Before the amendment, the resolution professional acted as liquidator, subject to written consent, unless replaced by the tribunal. Now the tribunal refers to IBBI for a recommendation. Subsections (4) and (6) bar the resolution professional of the same corporate debtor from being appointed liquidator.
Section 22 of the same Act inserted Section 34A. It allows the committee of creditors, by at least 66% of voting share, to resolve to replace the liquidator with another insolvency professional who has given written consent, and to apply to the tribunal for the appointment. Section 21(11), also inserted in 2026, makes the committee of creditors supervise the liquidation.
Key takeaways
IBBI recommends the liquidator
On a liquidation order, the tribunal refers to IBBI, which proposes an insolvency professional with written consent within ten days. The tribunal then appoints that professional.
RP cannot become liquidator
Subsection (4) bars the resolution professional of the corporate debtor's CIRP from being appointed or replaced as its liquidator, notwithstanding anything in Section 34 or 34A.
Powers vest in the liquidator
On appointment, all powers of the board of directors, key managerial personnel and partners cease and vest in the liquidator (subsection (2)).
Fee from the liquidation estate
The liquidator charges the fee specified by IBBI, paid from the proceeds of the liquidation estate under Section 53.
Committee recommendation under the Liquidation Regulations
Regulation 3A of the Liquidation Process Regulations, in force from 2 June 2026, states that it applies for the purposes of Section 34(1). Before the liquidation order, the committee recommends an insolvency professional from IBBI's panel, by at least 66% of voting share, and the tribunal considers that recommendation when appointing the liquidator.
Section 34(1) itself refers the appointment to IBBI's recommendation. How the tribunal reconciles the committee's recommendation with IBBI's proposal is not spelt out in either text, so check current tribunal practice in each case.
Eligibility and replacement
Regulation 3 of the Liquidation Process Regulations requires the liquidator, and every partner or director of their insolvency professional entity, to be independent of the corporate debtor, and requires disclosure of any pecuniary or personal relationship. Regulation 8B lets the committee, by at least 66%, propose replacement with the written consent of the proposed liquidator in the format notified by IBBI. The outgoing liquidator continues until replaced.
Liquidator's fee
Regulation 4 of the Liquidation Process Regulations, substituted from 2 June 2026, lets the committee fix the liquidator's fee in its first meeting after the appointment. If it does not, a default scale applies: a percentage of the amount distributed to stakeholders, tapering by slab and over time. The regulation applies to liquidation processes commencing on or after the commencement of the Liquidation Process (Fourth Amendment) Regulations, 2026.
Cooperation and records
Subsection (3) applies Section 19 to liquidation and voluntary liquidation, so former personnel, persons associated with management and service contractors must assist the liquidator. Regulation 9 of the Liquidation Process Regulations lets the liquidator apply to the tribunal for directions after reasonable efforts to obtain information have failed. Under subsection (5), the resolution professional must forward all CIRP records to the liquidator.
Practical checklist
Do
- As committee members, consider the Regulation 3A recommendation before the liquidation order is passed.
- As resolution professional, organise CIRP records for handover to the liquidator under subsection (5).
- Fix the liquidator's fee at the committee's first meeting after appointment, or note that the default scale in Regulation 4 will apply.
Avoid
- Do not plan for the resolution professional to continue as liquidator; subsection (4) bars it.
- Do not rely on the pre-2026 replacement grounds in old subsections (4) and (5); replacement is now under Section 34A.
Glossary
- Liquidator
- An insolvency professional appointed under Chapter III or Chapter V of Part II to conduct liquidation (Section 5(18)).
- Liquidation estate
- The assets held by the liquidator for the benefit of creditors under Section 36, from which proceeds are distributed under Section 53.
Frequently asked questions
Can the resolution professional become the liquidator?
Not since 26 May 2026. Subsection (4) bars an insolvency professional appointed as resolution professional for the CIRP from being appointed or replaced as liquidator of the same corporate debtor.
How long does IBBI have to propose a liquidator?
Ten days from the tribunal's reference, under subsection (6). IBBI must also supply the professional's written consent in the specified form.
Can creditors replace the liquidator?
Yes. Section 34A, inserted in 2026, lets the committee of creditors resolve by at least 66% of voting share to replace the liquidator, and apply to the tribunal to appoint the proposed liquidator.
Need help applying this provision to your situation?
Contact BizeneedLast updated 11 October 2026