Siddhi Singh, Amity University, Lucknow
ABSTRACT
The process of liquidation and insolvency is not unknown in the corporate world. In order to promote and encourage the ease of doing business, it was imperative, that, a legislation which strictly caters to the present needs of the business and economic environment, be established. Despite the existence of various insolvency legislations and regulations, a unified Insolvency and Bankruptcy Code, 2016 was passed. The Code brought about several amendments in various laws including The Companies Act, 2013. The Code not only brings about various insolvency laws under one umbrella but also reduces the burden of courts, protects stakeholders, provides a strict liquidation procedure and an order of priority in payment of proceeds during liquidation.
The process of the payment of proceeds during liquidation and the order of priority in which the proceeds shall be distributed is called Liquidation Waterfall Mechanism as provided under section 53 of the code. It also establishes the position of secured and unsecured creditors. The following article elaborately describes the aforesaid mechanism along with relevant case laws.
