Winding up of a company in India: types, CIRP and IBC

What winding up of a company means

Before a petition is filed or an insolvency professional takes charge, check what the company's records are worth. AI developers now pay for the operational records of closing and insolvent companies, such as tickets, work orders, email and chat archives and code (public deals). Once an interim resolution professional or liquidator is appointed, those records are company assets they control for creditors, so knowing their value first means they are counted rather than deleted. A free valuation takes six questions about the business and no files.

Winding up is the process that ends a company's life. A liquidator takes custody of the company's assets, sells them, pays the debts in the order the law sets and then applies for the company to be dissolved (IBC sections 35, 53 and 54). In the Companies Act 2013, "winding up" means winding up under that Act or liquidation under the Insolvency and Bankruptcy Code 2016, as applicable (section 2(94A)). That is why Indian law uses winding up and liquidation almost interchangeably.

Winding up is not the only way to close a company. A solvent company that has stopped business and paid every liability can ask the Registrar to strike its name off the register under section 248 instead (section 248(2), as quoted by the NCLAT; MCA C-PACE). Strike off, Form STK-2 and the step-by-step closure checklist are in how to close a private limited company in India. This guide covers the formal routes: the Tribunal, voluntary liquidation and the insolvency process.

Source: Insolvency and Bankruptcy Code 2016, Eleventh Schedule: amendments to the Companies Act 2013, including sections 2(94A), 271, 272 and 275 (India Code)

Types of winding up of a company in India

There are three ways a company is wound up today, and which one applies depends on who starts it and whether the company can pay its debts. Strike off is included for comparison because it is the usual alternative for a solvent company with nothing left to sell.

• Voluntary winding up: the Companies Act 2013 used to provide for it in sections 304 to 323, which the IBC omitted (Eleventh Schedule). A solvent company that wants to wind itself up now uses voluntary liquidation under section 59 of the IBC. The steps, documents and timeline are in the closing checklist.
• Compulsory winding up: what older texts call compulsory winding up is, under the 2013 Act, winding up by the Tribunal on a petition under section 272. A company can also be forced into liquidation through the IBC, when its creditors start a CIRP and no resolution plan is approved (IBC section 33).
• Since 26 May 2026 a voluntary liquidation can also be terminated: members pass a special resolution and, if the company owes debt, creditors holding two-thirds of it by value approve within seven days, before the liquidator applies for dissolution (section 59(5A) as inserted in 2026).

Source: Insolvency and Bankruptcy Code 2016, Eleventh Schedule: amendments to the Companies Act 2013, including sections 2(94A), 271, 272 and 275 (India Code)

Winding up under the Companies Act 2013: the Tribunal petition

Section 271 lets the Tribunal wind up a company on five grounds, from a special resolution of the company to five consecutive years of missed financial statements or annual returns; the full list is in the closing checklist. The petition itself is governed by section 272 as substituted by the IBC (Eleventh Schedule):

• Who can petition: the company, any contributory or contributories, the Registrar, any person authorised by the Central Government, or, where the company has acted against the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality, the Central Government or a State Government.
• Contributories: a shareholder can petition even if the shares are fully paid or the company has no assets, provided the shares, or some of them, were allotted to them or held and registered in their name for at least six months during the eighteen months before the winding up starts, or passed to them on a former holder's death.
• The Registrar: can petition on any section 271 ground except a special resolution or the just and equitable ground, and needs the previous sanction of the Central Government, which must first give the company a reasonable opportunity to make representations.
• A company petitioning for its own winding up: the petition is admitted only with a statement of affairs in the prescribed form.
• The Registrar's view: a copy of every petition is filed with the Registrar, who submits views to the Tribunal within sixty days of receiving it.
• The liquidator: the provisional liquidator or Company Liquidator is appointed by the Tribunal from among insolvency professionals registered under the IBC (section 275(2)).

Source: Insolvency and Bankruptcy Code 2016, Eleventh Schedule: amendments to the Companies Act 2013, including sections 2(94A), 271, 272 and 275 (India Code)

Corporate insolvency resolution process (CIRP) step by step

CIRP is the IBC's rescue process for a company that has defaulted. It applies where the minimum amount of the default is ₹1 crore, the threshold the Central Government set on 24 March 2020 (S.O. 1205(E)). Creditors get a fixed period to agree a resolution plan; if they do not, the company is liquidated. The steps, from the IBC as amended by the 2026 Amendment Act:

• Withdrawal: an admitted application can be withdrawn only with the approval of 90% of the committee's voting share, on an application by the resolution professional, and not before the committee is constituted or after the first invitation for resolution plans (section 12A as substituted in 2026).
• Who proposes the interim resolution professional: the one named in a financial creditor's application is appointed if no disciplinary proceedings are pending against them. When the company applies under section 10, the NCLT asks IBBI to recommend one (section 16 as amended in 2026).
• Who cannot bid: section 29A bars, among others, undischarged insolvents, wilful defaulters and a person whose account, or the account of a company they manage or promote, has been a non-performing asset for at least a year, unless the overdue amounts are paid before the plan is submitted (IBC).
• Since 26 May 2026, most of the 2026 amendments are in force; the creditor-initiated insolvency resolution process in the new Chapter IV-A (section 40 of the Amendment Act) is not among the provisions notified (S.O. 2625(E)).

Source: IBBI: Insolvency and Bankruptcy Code, 2016 (consolidated text, amended up to 12 August 2021)

How long CIRP takes: the 180-day and 330-day limits

The process must be completed within 180 days of admission. The committee can, by a 66% vote, instruct the resolution professional to apply for more time, and the NCLT can extend the process once, by up to 90 days. Including any extension and the time taken in legal proceedings, CIRP must be completed within 330 days of the insolvency commencement date (IBC section 12).

IBBI's regulations set a model timeline that fits inside the 180 days (regulation 40A). T is the day the process starts and the interim resolution professional is appointed:

Source: IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, amended up to 30-10-2026

What an insolvency professional does, and IBBI registration

An insolvency professional is a person enrolled as a member of an insolvency professional agency and registered with the Insolvency and Bankruptcy Board of India (IBBI) (IBC section 3(19)). Every formal winding up route puts one in charge:

• Becoming one: an individual must pass the Limited Insolvency Examination within 24 months before applying to enrol with an insolvency professional agency, complete a pre-registration educational course, and have either completed an IBBI-approved insolvency programme or have the experience the regulations set, such as ten years as a chartered accountant, company secretary, cost accountant or advocate, ten years in law after a law degree, or fifteen years in management after a bachelor's degree (regulation 5).
• Taking assignments: an insolvency professional cannot accept or undertake an assignment without a valid authorisation for assignment on that date (regulation 7A).
• Who picks them: a financial creditor names a proposed professional in its application; when the company applies, or an operational creditor proposes nobody, the NCLT asks IBBI for a recommendation (section 16). For a liquidation after CIRP, IBBI proposes a name within ten days of the NCLT's reference (section 34(6) as substituted in 2026).
• Penalties: an insolvency professional who deliberately contravenes Part II of the Code can be imprisoned for up to six months or fined ₹1 lakh to ₹5 lakh, or both (section 70(2)).

Source: IBBI (Insolvency Professionals) Regulations, 2016, amended up to 20-11-2025

Company liquidation under the IBC: section 33 onwards

The NCLT orders liquidation when it receives no resolution plan within the CIRP period, rejects the plan, is told the committee of creditors has decided by at least 66% to liquidate, or finds that an approved plan has been contravened (IBC section 33). Since 26 May 2026 the committee can also decide to dissolve the company without a liquidation, and the NCLT must pass the liquidation order within thirty days of the intimation or application (section 33 as amended in 2026). What follows:

• The liquidator: the NCLT asks IBBI to recommend an insolvency professional, and the resolution professional from the CIRP cannot be appointed (section 34 as amended). On appointment, all powers of the board of directors and key managerial personnel vest in the liquidator (section 34(2)).
• Supervision: the committee of creditors from the CIRP supervises the liquidation and can replace the liquidator by a 66% vote (sections 21(11) and 34A, inserted in 2026).
• Staff: the liquidation order is deemed a notice of discharge to the officers, employees and workmen, except when the liquidator continues the business (section 33(7)).
• Selling the assets: the liquidator takes custody of all assets, property, effects and actionable claims, values them, may carry on the business for its beneficial liquidation, and sells property by public auction or private contract (section 35). The regulations allow an asset to be sold on a standalone basis, in a slump sale, as a set of assets collectively or in parcels (regulation 32).
• The liquidation estate: the liquidator holds it as a fiduciary for all the creditors (section 36(2)).
• Secured creditors: each either relinquishes its security to the estate or realises it itself; one that intends to realise must tell the liquidator within fourteen days of the liquidation commencement date, or the security is deemed relinquished, for liquidations started after the 2026 amendments (section 52(2) as substituted).
• Deadline: the liquidator must completely liquidate the assets and apply for dissolution within 180 days of the liquidation commencement date; the NCLT can extend this by up to 90 days (section 54(1) as substituted in 2026). The NCLT passes the dissolution order within thirty days, and a copy goes to the authority with which the company is registered within seven days (IBC section 54).

Source: IBBI: The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026)

Who gets paid first: the section 53 waterfall

Proceeds from selling the liquidation assets are paid in a fixed order that overrides any other law made by Parliament or a State Legislature (IBC section 53). Each rank is paid in full before the next; where a rank cannot be paid in full, everyone in it is paid in equal proportion.

• Contracts between recipients of equal rank that disrupt this order are disregarded. Since 2026 the Code gives two illustrations: an agreement that secured creditors are paid before workmen is disregarded, but an agreement between two secured creditors about which of them is paid first is not (section 53(2) as amended).
• The liquidator's fees are deducted proportionately from the proceeds payable to each class (section 53(3)).
• Shareholders rank last, so they receive something only if every creditor above them has been paid in full.

Source: IBBI: Insolvency and Bankruptcy Code, 2016 (consolidated text, amended up to 12 August 2021)

The NCLT's role in winding up, and appeals

The National Company Law Tribunal was constituted under section 408 of the Companies Act 2013 with effect from 1 June 2016 (NCLT). It sits as a Principal Bench in New Delhi and fifteen regional benches across the country (NCLT benches). For insolvency and liquidation, the Adjudicating Authority is the bench with territorial jurisdiction over the company's registered office (IBC section 60(1)).

• What it decides: whether to admit a CIRP application, whether to approve a resolution plan, liquidation and dissolution orders, applications to avoid preferential or undervalued transactions, and contribution orders for fraudulent or wrongful trading. It can hear any application or proceeding by or against the company and any question of priorities arising in the insolvency (section 60(5)).
• Under the Companies Act, it hears petitions to wind up a company under section 272 (Eleventh Schedule).
• Frivolous filings: since 26 May 2026 the NCLT can impose a penalty of ₹1 lakh to ₹2 crore on anyone who starts a frivolous or vexatious proceeding under Part II of the Code (section 64A).
• Appeals: an appeal to the National Company Law Appellate Tribunal must be filed within 30 days, extendable by up to 15 days for sufficient cause (section 61(2)), and since 2026 the Appellate Tribunal must dispose of it within three months (section 61(6)). A further appeal on a question of law goes to the Supreme Court within 45 days, extendable by 15 (section 62).

Source: National Company Law Tribunal: About NCLT

Directors' exposure: fraudulent and wrongful trading under section 66

Insolvency moves control away from the board, but it does not end the directors' exposure. Section 66 has two limbs (IBC), and since 2026 a liquidator, not only a resolution professional, can apply under both (section 66 as amended):

• Fraudulent trading: if the business was carried on with intent to defraud creditors or for any fraudulent purpose, the NCLT can order anyone who was knowingly a party to it to contribute to the company's assets.
• Wrongful trading: the NCLT can order a director or partner to contribute if, before the insolvency commencement date, they knew or ought to have known that there was no reasonable prospect of avoiding a CIRP and did not exercise due diligence in minimising the potential loss to creditors. Due diligence means what was reasonably expected of a person carrying out the same functions.
• Look-back for avoidance: a preference given to a related party in the two years before, and to anyone else in the one year before, can be reversed; since 2026 those periods are counted back from the initiation date, when the application was made (the first one, if several were pending), and run to the insolvency commencement date (sections 5(11) and 43(4) as amended). Undervalued and extortionate credit transactions can be reversed too, and if the professional does not act, a creditor, member or partner can apply (section 47 as substituted).
• Co-operation: anyone who is or has been part of the company's personnel, its promoters or management, or engaged under a contract for service, must give the insolvency professional or liquidator all assistance and co-operation they need (sections 19(1) and 34(3) as substituted).
• Offences: an officer who does not disclose the company's property or deliver its books and papers to the resolution professional, and anyone who destroys, alters or falsifies the company's books or papers after the insolvency commencement date with intent to defraud or deceive, faces imprisonment of three to five years or a fine of ₹1 lakh to ₹1 crore, or both (sections 70(1) and 71).
• Personal guarantees: the moratorium does not apply to a surety in a contract of guarantee to the company (section 14(3)(b)), so creditors can still pursue directors who guaranteed its loans.
• Buying the business back: the liquidator cannot sell the company's property or actionable claims to anyone ineligible to be a resolution applicant under section 29A (section 35(1)(f); regulation 32).

Source: IBBI: Insolvency and Bankruptcy Code, 2016 (consolidated text, amended up to 12 August 2021)

What happens to company assets, records and data

From the insolvency commencement date the interim resolution professional takes control and custody of the assets the company owns, as recorded in its balance sheet or in registries, including intangible assets such as intellectual property, and the company's officers must give access to its documents and records (IBC sections 17 and 18). In liquidation, the estate includes intangible assets including but not limited to intellectual property, securities, financial instruments, insurance policies and contractual rights (section 36(3)). The Code defines property to include every description of property (section 3(27)).

The exclusions from the liquidation estate include assets owned by third parties, provident, pension and gratuity funds owed to workers and employees, assets of subsidiaries and shareholders' personal assets (section 36(4)). Records, databases and code the company owns are not on that list, so they are dealt with alongside the other assets, and a liquidator can sell an asset on its own or with others (regulation 32). Proceeds go into the estate and are paid out in the section 53 order.

• Information for bidders: in a CIRP, the resolution professional gives resolution applicants access to relevant information only if they undertake to keep it confidential, protect the company's intellectual property and not share it with third parties (section 29(2)).
• Records of the process: the resolution professional keeps an electronic copy of the CIRP records for at least eight years and a physical copy for at least three (regulation 39A).
• Destroying records: altering or destroying the company's books and papers after the insolvency commencement date with intent to defraud or deceive is an offence (section 71). Deleting systems on the eve of the process also removes assets the professional is meant to control.
• Personal data: the Digital Personal Data Protection Act 2023 is coming into force in stages. The Data Protection Board provisions, sections 18 to 26, have applied since the commencement notification was published in November 2025. Most of the substantive provisions, sections 3 to 17 on processing, notice, consent and the duties of data fiduciaries (section 6(9) starts after one year), and section 44(2), which omits section 43A of the Information Technology Act, come into force eighteen months from that publication (G.S.R. 843(E); DPDP Act). Archives that hold staff or customer details should be de-identified before any licence; see how to de-identify company data.

Source: IBBI: Insolvency and Bankruptcy Code, 2016 (consolidated text, amended up to 12 August 2021)

Before you delete company systems, check what the records are worth

A company running out of cash cancels its software subscriptions, and that deletes the email, chat, ticketing and code archives with them. In a winding up there is a second reason to stop: the records belong to the company, and the insolvency professional or liquidator will need them, both to run the process and to sell what has value.

Checking the value takes minutes: see what your company's records are worth from six questions about the business, before any system is switched off or a petition is filed.

• Value: AI labs are buying data from dead startups to train their models, MIT Technology Review reported in October 2026. As part of Spirit Airlines' US bankruptcy, the winning bid for decades of the carrier's data, including 100 million emails, 500 million Teams messages and 176,000 employee records, was $10 million. The proceeds of such sales typically flow to senior creditors and investors, not employees, the magazine added. The deals tracker lists public prices as reported.
• Timing: once appointed, the professional decides what is sold and how. Tell them early that the records may have value, so the systems are kept long enough to be valued.
• Hands off: do not sell or copy the records yourself before an appointment; transactions in the look-back period can be reversed, and directors must co-operate with the professional.
• Inventory: list each system, what it holds, the years covered, the approximate volume and who holds the admin logins. The data inventory template gives the columns, and exporting company records before closing covers the exports.
• Privacy: suppliers employ data scientists to scrub personally identifiable information and exclude HR records, according to MIT Technology Review. For how licensing works for Indian companies, see selling company data from India and business liquidation and data assets.

Winding up timeline: from default to dissolution

Each rule is sourced in the sections above. The fixed points of an IBC insolvency, from a creditor's first demand to the dissolution order:

Next step

Start with the route. A solvent company with assets to sell can use voluntary liquidation, and one with nothing left can be struck off; both are in how to close a private limited company in India. A company that cannot pay its debts should speak to an insolvency professional before paying some creditors ahead of others or selling assets. Either way, make one list of every system and archive the company holds and keep it intact; no export is needed to find out whether the records are worth licensing. See selling company data after closing and how Origin helps companies winding down.

Origin Data Partners is independent and is not affiliated with any AI data buyer. We help owners compare buyers and find the best fit for their records; a buyer may pay Origin when a deal closes. See what your data is worth.