The Insolvency and Bankruptcy Board of India (IBBI) (Liquidation Process) Regulations, 2016, lays down the framework for the liquidation of a corporate debtor under the Insolvency and Bankruptcy Code, 2016 (IBC).

Chapter II of these regulations deals with the Appointment and Remuneration of the Liquidator, covering provisions related to the eligibility, appointment, powers, and remuneration of the liquidator.

Remuneration of Liquidator

Regulation 3: Eligibility for Appointment as Liquidator

• The liquidator must be an insolvency professional (IP) registered with IBBI.
• A person is ineligible for appointment if:
  • He/she is not independent of the corporate debtor.
  • He/she is a related party of the corporate debtor.
  • He/she represents a creditor in the corporate insolvency resolution process (CIRP).

The resolution professional (RP) appointed during CIRP is usually appointed as the liquidator unless replaced under Regulation 3(2).                 

Regulation 4: Liquidator’s Fees & Remuneration

• The remuneration of the liquidator is fixed by the Committee of Creditors (CoC) before liquidation is initiated.
• If the CoC does not fix the fee, it shall be determined as per Regulation 4(2), based on the percentage of realized and distributed assets.
• The remuneration shall be paid from the liquidation estate.
• The liquidator shall not be entitled to any additional fee or claim any compensation other than what is determined under this regulation.

Fee Structure as Per Schedule II

• The liquidator’s fee is calculated on a percentage basis of the amount realized and distributed to stakeholders.
• If the liquidator is removed, he/she is entitled to fees only for the work completed.                                                                                       

Summary & Key Takeaways

✔ The resolution professional (RP) from CIRP is typically appointed as the liquidator.
✔ The liquidator must be independent, conflict-free, and a registered insolvency professional.
✔ The fee structure is determined by the CoC or as per IBBI regulations.
✔ Transparency is ensured through mandatory disclosure of interests.

These provisions are crucial for ensuring a fair, efficient, and transparent liquidation process, protecting the interests of creditors and stakeholders.