Voluntary Liquidation Process of LLP

Introduction

A Limited Liability Partnership being an artificial person cannot die a natural death. It comes into existence through legal proceedings and hence ceases to exist in the same manner.

Winding up of a company means closing up of a company's concerns, which may be by reason of insolvency or otherwise, by the realization of assets, payment of liabilities and distribution of surplus if any amongst the partners of LLP.  The LLP can be wound up either Voluntary or by Tribunal.

Voluntary Winding up of LLP

If the members or creditor wishes to wound up the LLPs for their concern, they have authority to do it. Following are the ways for voluntary winding up of LLPs:

      ·         Passing of Resolution

A resolution needs to be passed with at least 3/4^th of the members of LLP. A copy of this resolution needs to be filed with Registrar of Companies within 30 days of passing it in FORM 1.

      ·         Declaration of Solvency

The designated partners of the LLP have to make a declaration in FORM 2 verified by an affidavit that the Limited Liability Partnership has no debt or debt shall be paid within 1 year of its commencement.

The Declaration in FORM 3 has to be filed with the registrar within 15 days along with Valuation Report and Statement of Assets and Liabilities.

      ·         Creditors Consent

If the creditors of the company are available at the time of winding up, their approval is required. A copy of the declaration, amount due to be paid to such creditors and an offer for such creditors to accept such amount needs to be mentioned in such offer.  The creditors shall within 30 days of acceptance of offer have to intimate the LLP and to give their consent.

For voluntary winding up of the company, at least 2/3^rd in the value of creditor should accept the offer. If the LLP is unable to pay the debt of creditor with the proceeds of assets, the creditor can file an application for winding up.

      ·         Publication of Resolution

If the creditors of the company accept the offer, an advertisement needs to be published in a local newspaper within 14 days of receipt of intimation.

      ·         Appointment of Liquidator

Once the creditor accepts the offer, a liquidator needs to be appointed within 30 days. The liquidator needs to be appointed with the consent of the partner too. A notice within 10 days of the appointment of the liquidator shall be given to Registrar by the LLP. Once the Liquidator is appointment the powers and rights of all Partners comes to an end.

      ·         Liquidators Report

The Liquidator has to prepare a report in FORM 9 explaining the manner of dissolution and how to dispose of the assets and liabilities. At least 2/3^rd of the partners have to approve and account satisfied by the Liquidator. A resolution of such approval needs to be passed within 30 days of receipt of the report, winding up of accounts and dissolution scheme.

      ·         Dissolution of LLP

Once the resolution is passed the Liquidator within 15 days shall file with the registrar the final winding up of accounts, documents, and filling of application with the tribunal for dissolution. Once the Tribunal is satisfied with the legal requirement, can pass an order for dissolution of LLP within 60 days. Finally, the Registrar will publish a notice in the Official Gazette regarding dissolution.