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Liquidation Process - Sec. 230 Of Companies Act

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The timeline of intimation Liquidator of scheme u/s 230 within 7 days and Liquidator to make application for same within 10 days of Liquidation order is mandatory or directory in nature is there any Regulation / Judgement for same?

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6/17/2020 3:13:40 PM Click to view reply

FILING OF SCHEME UNDER 230 OF COMPANIES ACT, 2013

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IF THE LIQUIDATION ORDER IS PASSED IS IT MANDATORY FOR A PERSON TO PROPOSE A SCHEME WITHIN 7 DAYS AND LIQUIDATOR TO FILE THE SAME WITH NCLT WITHIN 10 DAYS OF DATE OF LIQUIDATION ORDER. IS THERE ANY SPECIFIC REGULATION / JUDGEMENT FOR THIS TIMELINE.

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6/17/2020 3:11:04 PM Click to view reply

Request to provide clarification on Regulation 2 (a) (2) of Liquidation Process Regulations

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I give below above regulation for your ready reference: Regulation 2 A (2) "(2) The contributions made under the plan approved under sub-regulation (3) of regulation 39B of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 or contributions made under sub-regulation (1), as the case may be, shall be deposited in a designated escrow account to be opened and maintained in a scheduled bank, within seven days of the passing of the liquidation order." The regulation speaks of Liquidator opening a designated escrow account. In this connection I request for following clarification/s: 1. What should be the title of the Escrow Account? 2. Who would operate the Escrow Account? 3. Who would be the parties (other than Liquidator and Escrow Account maintaining Bank) agreement to open the Escrow Account? 4. How the Escrow Account would be operated, so as to meet liquidation expenses? 5. What would be the terms of the Escrow Account? 6. While on the subject, I would feel obliged if a sample of the escrow account can be shared. As I am a Liquidator in a matter and I have to open escrow account, I request for an early clarification.

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6/17/2020 1:29:58 PM Click to view reply

Voluntary liquidation

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1) A private limited company engaged in the business of land development is undergoing voluntary liquidation process. 2) The company has a large piece of land as its only asset. It has borrowed money from the shareholders and there are no other creditors of the company. 3) The company has passed a special resolution by which it has decided not to sell the land but to distribute it among the shareholders and creditors in proportion of the amount due to them in liquidation and with this condition the resolution for voluntary liquidation was passed. 4) The land is shown as inventory under the head current assets in the balance sheet of the company and its book value is Rs. 1 crore. The market value as per valuation report is Rs. 3 crores. 5) The liquidator invited the claims from the stakeholders and prepared the list of stakeholders. The amount payable to the individual creditors and the shareholders has been finalised and the ratio of their dues in total dues of the company has been worked out. 6) The land has been demarcated in the above ratio and the liquidator is to distribute the same to the creditors and shareholders in the said ratio. 7) Views on the following are invited: a) Is the amount of difference between book value and market value of the land distributed will be considered as profit and whether the liquidator has to pay the income tax on the same? If yes, whether it will be taxed as capital gain or revenue income? b) According to section 46(1) of the Income Tax Act where the assets of a company are distributed to its shareholders on its liquidation, such distribution shall not be regarded as a transfer and will not be considered for calculation of capital gain. Will this section be applicable in this case? c) Whether the said amount of difference between book value and market value of the land distributed to the creditors and shareholders will be considered as deemed dividend under section 2(22) of the Income Tax Act and the liquidator has to pay the dividend distribution tax on the same. d) Whether the liquidator has to file income tax return on completion of these transactions? e) What will be the tax liability of the shareholders and the creditors of the company on transfer of the land in their names in liquidation process? Please respond with your considered views.

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4/6/2020 4:58:16 PM Click to view reply

Liquidation Expenses and Liquidators fee

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After commencement of Liuidation Process, FC-Banksanctioned one time settlement to Corporate Debtor directly. CD paid the amount directly to FC-Bank. FC-Bank instead of crediting the amount to the "Company-In Liquidation" account opened for this purpose, credit to their other account and appropriated entire amount without paying Liquidation expenses and Liquidators fee. On sending mails no reply received from FC Bank. What is to be done now

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3/11/2020 3:35:46 PM Click to view reply

LIQUIDATION PROCESS

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As per Liquidation process liquidator has to preserve a physical as well as an electrinoic copy of report and minutes referred to in sub regulation 5(1) for eight years after dissolution of CD.In this regard please clarify the follwoing: 1.what to do with other records of the CD. whether they are to destroyed or preserved. Any reference guidelines in this respect in the law or regulation. 2.In the liquidation of CDs where investigative agencies like CBI/ED/MCA cases are going on what are guidelines on preservation of records.

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3/5/2020 1:58:50 PM Click to view reply

PF AND GRATUITY IN WATERFALL DURING LIQUIDATION.

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Company is under liquidation which has huge PF dues as well as Gratuity. The company has not sufficient fund for Liquidation and pending CIRP expenses. PF department has submitted claim with default payment interest in the Form as per PF Act. Whether they have to file in Liq Regln. Form ? What would be the position in waterfall for employee contribution to PF payable, Employer Contribution to PF payable , Default interest/ Damages charged by PF department and also of Gratuity payment Due ? Are directors liable to pay for PF or Gratuity . No fund/ trust was created. Any case law is there for personal liabilty of Director for non deposit of PF / non creation of Fund/ Trust ? Thanks

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2/27/2020 3:58:35 PM Click to view reply

LIQUIDATION PROCESS

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Where CoC during CIRP admitted on the application of OC -at the time of approving resolution of liquidation of the CD, did not a) Settle the Liquidator fee b) Estimate liquidation cost and there are no assets to be realised. c) Liquidation order is passed by NCLT How the liquidators fee will be determined? Who will contribute liquidation cost as there is only one stakeholder which is OC? Under which section direction of the NCLT should be sought on these issues

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2/22/2020 2:00:20 PM Click to view reply

LIQUIDATION PROCESS

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In a case CIRP is ordered on the application of Operational Creditor(OC). There is no financial creditor. in the application filed for liquidation, the RP has not given the consent to continues as Liquidator and NCLT appoints the Liquidator on the recommendation of the IBBI. At the time of liquidation order the liquidation cost is not estimated by the CoC and liquidator fee is also not approved by the CoC. There are no assets as per the balance sheet which are to be sold. The application under section 43 & 66 has been filed for relief on the transactions with the related and non related parties. The OC is not coming forward to contribute the liquidation cost. With these facts my queries are- 1.How the liquidation cost is to be met. 2. How liquidator fee will be fixed as the regulation provide it with reference to the assets sold and realised. 3. How to proceed with the applications filed by the RP under section 43 & 66 as advocate who filed the applications on behalf of RP is not ready to take up unless his fee and cost is provided to him. 4. What actions the liquidator should take to resolve the issues.

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2/13/2020 3:47:18 PM Click to view reply

Closing of liquidation account

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In the liquidation proceedings under the Insolvency and Bankruptcy Code, 2016 (Code), the secured creditor opted to realise security interest in the assets of the corporate debtor in terms of Section 52 of the Code. The secured creditor after obtaining the permission from the liquidator realised the security interest in the assets under the provisions of the SARFAESI Act. On sale of the assets TDS was deducted from the consideration by the purchaser of the assets. There is no claim received from Income Tax Department against the public announcement of liquidation inviting claims from the creditors. The liquidator has sent notice to Income Tax Department for refunding the TDS deducted. There is no response to the notice. The process of liquidation is completed after distribution of liquidation proceeds and there is zero balance in the liquidation account.An application for dissolution is to be filed with the AA. The question is: a) The liquidator wants to keep the account active to enable him to deposit the refund of TDS as and when received from the Income Tax Department. b) Is it necessary to close the liquidation account before filing the application for dissolution with the AA? c) If the liquidation account is closed, how to deposit the amount of TDS as and when received from the Income Tax Department?

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12/28/2019 1:31:49 PM Click to view reply

TO FILE APPLICATION UNDER LIQUIDATION PROCESS REGULATIONS 2016

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The factory land of the corporate debtor belongs to promoter's name in revenue record and whereas the factory building constructions and shed thereon belongs to corporate debtor and the liquidator has requested no. of times to the bank (A secured creditor with whom the property is entire property is mortgaged and had 100% voting power in COC) to sell the land and building by the bank itself and/or the give the right to liquidator to sell as the building in emboded to the earth. The bank has not yet sold the factory land and building of corporate debtor in liquidation for more than one and half year and have also not given the permission to sell the said factory land and building to liquidator . Please confirm that What the liquidator should do in such case to resolve it at the earliest. .

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12/16/2019 10:59:18 PM Click to view reply

TO FILE AN APPLICATION U/S 66 IBC 2016 UNDER LIQUIDATION PROCESS

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A firm of chartered accountants having qualified FAFD persons, was appointed as transaction auditor in July,2019 during CIRP with the approval of the COC. The Transactions auditor submitted draft report on 24.10.2019 and the same was laid before COC on 07.11.2019 in which transactions auditor was also present for discussions and was later on directed on give final transactions audit report. In the same coc meeting, the COC with more than 66% voting power decided to liquidate the corporate debtor and the intimation of liquidation and liquidation application was filed before AA, the case was listed on 21.11.2019 and the same is reserved so far. The transactions auditor submitted his final transaction audit report dated 14.11.2019 on 17.11.2019 in person and the same was filed by RP with AA with event report on 20.11.2019. The CIRP expiry date is/was 23.11.2019. Now, pls. note that CIRP period has been expired on 23.11.2019 and order on liquidation application u/s 33(2) of IBC,2016 is reserved on 21.11.2019. Please confirm whether the liquidator can file an application u/s 66 IBC,2016 whereas the said section says only about that the AA on the application of resolution professional pass an order, u/s 66(1) and not on the application of liquidator. My querry is that when liquidation order is passed , the section 66(1) does not empower the Liquidator to file application u/s 66 so in which Section or Regulations of Liquidation Process Regulations the Liquidator may file an application u/s 66 IBC,2016 on the basis of observations in transaction audit report. .

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12/16/2019 10:49:58 PM Click to view reply

Financial Statement and compliance under Income tax act and Co's Act

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Liquidation order passed by AA on 03.09.2019 , received by liquidator on 27.09.2019 and RP handed over charge to liquidator on 03.10.2019 . Now as the Finalisation for FY 2018-19 is going on as the RP did not do it who will sign the Balance Sheet ? Does Liquidator need to sign or only Director would sign and filing Income tax return and Co's Act compliance is necessary , if the company is under liquidation ?

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11/23/2019 1:58:47 PM Click to view reply

Emplyee Worker claim

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If employee / worker does not give claim can it be taken and admitted from books of accounts

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11/23/2019 12:29:57 PM Click to view reply

Clarification on Retaining / preserving of books of Accounts post dissolution of Corporate Debtor

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Whether I am required to preserve documents only for the period of Liquidation, if yes than can the other records of the Corporate Debtor be destroyed upon order of dissolution? or b. Whether I am required to preserve all the documents of Corporate Debtor including documents for the period of liquidation for Eight Years. c. What will be the position, in case application under Section 45, 66 and invoking others sections of IBC has been filed and pending adjudication. d. Are there any registered/empaneled agencies which provide such depository services? If yes, please provide contact details of such agencies.

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11/13/2019 1:48:03 PM Click to view reply

Income tax on capital gains on sale of assets in liquidation under section 52 of the Code by secured creditor,

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In the liquidation proceedings under the Insolvency and Bankruptcy Code, 2016 (Code), the secured creditor opted to realise security interest in the assets of the corporate debtor in terms of Section 52 of the Code. The secured creditor after obtaining the permission from the liquidator realised the security interest in the assets under the provisions of the SARFAESI Act. On sale of the assets TDS was deducted from the consideration by the purchaser of the assets. In this situation, please clarify the following: 1) The sale of assets has resulted in capital gains to the corporate debtor as realised value was higher than cost of acquisition (adjusted as per the index). Whether the said capital gains will be liable to income tax payment considering the waterfall mechanism under section 53 of the Code? ( On realisation of the assets of the corporate debtor, even secured creditors dues could not be settled). 2) If the income tax is payable, who is liable to pay the same? The secured creditor or Liquidator? 3) How the TDS deducted by the purchaser will be treated in liquidation account? 4) Whether the liquidator shall wait till the tax issues relating to the aforesaid transaction are settled with the Income Tax Department? 5) Is there any judgement on the subject?

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11/4/2019 11:52:17 PM Click to view reply

Liquidation- Distribution of Realised value under section 53

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Under liquidation process- 1. Under section 53(b)(ii) whether secured creditors have any priority of distribution amongst themselves on the basis of priority of their charge or they will be ranked equally irrespective of their 1st , 2nd or subservient charge.

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8/21/2019 12:40:09 PM Click to view reply

Liquidation- Distribution of Realised value under section 53

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What will be priority of distribution among the financial creditor both secured and unsecured as they are at par in CoC under CIRP. 1.Whether secured creditor having 1st charge and 2nd charge holder will be at par 2. Or the 1st charge holder will have priority over 2nd charge holders.

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7/30/2019 4:25:14 PM Click to view reply

Interest on Interim Finance taken during CIRP

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Whether, interest on Interim Finance taken during CIRP freezes on the date of Liquidation Order or payable till the repayment of the Interim Finance during liquidation process?

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6/13/2019 2:46:34 PM Click to view reply

Liquidation FEE under Regulation 4(3)

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Are Liquidation Fee as tabled in Regulation 4(3) & 4(4) of the Liquidation Process for realisation and distribution are separate? Example - If the realisation and distribution is say Rs. 100 Lacs within 1st 6 months, then liquidator shall get a fee of 5% of the amount realised and also 2.50% on distribution of the same, so the total fee to liquidator is 7.50%. Request fellow professionals and IPA officials to clarify as the issue has been raised by Secured Financial Creditors.

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6/13/2019 2:43:08 PM Click to view reply

Liquidation - Sec. 230 of Companies Act

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In case of approval of plan u/s 230 of CA, 2013 by Tribunal, what will happen to the Liquidators’ Fees and how will he get it as per plan ?

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6/10/2019 3:49:02 PM Click to view reply

Liquidation as a Going Concern

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In case of Liquidation u/s 33 of IBC, 2016, there is way forward for “Going Concern Sale” under regulation 32 of the Regulations. In case the sale is done under regulation 32(e), the CD will not be dissolved and it will be transferred along with business, assets & liabilities, including all contracts, licenses, concessions, agreements, benefits, privileges, rights or interests to the acquirer. Question:- Who would be required to meet the claims / liabilities as per section 53 of IBC, 2016 ? The Acquirer or the Corporate Debtor or they shall be waived ?

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6/10/2019 3:47:56 PM Click to view reply

Liquidation Process - Sec. 230 of Companies Act

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While making the compromise or arrangement with the creditors and members u/s 230 of CA, 2013, can the dues of other creditors like Unsecured Financial Creditors and Operational Creditors including workers, income tax dues, etc. be waived as per section 53 of IBC, 2016 ?

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6/10/2019 3:45:31 PM Click to view reply

During liquidation, can the liquidator approach the financial creditor for haircut?

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Liquidation Process

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5/30/2019 6:12:01 PM Click to view reply

Liquidation regulation specified claim form. Interchange claim form with correct particulars accepted . Whether it will amount to non-compliance?

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Liquidation process

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5/30/2019 6:08:39 PM Click to view reply

Corporate Debtor is having investment in its books of accounts – investment in shares. The status of the investee company is strike off and another is under liquidation. The said investment will not fetch value or not saleable. Reg.10 of IBC (Liquidation Process) Reg.2016 speaks about onerous property. Whether the liquidator need to get make application to NCLT to consider it as Onerous property.

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liquidation process

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5/25/2019 5:05:45 PM Click to view reply

Sec 33 (5) of IBC states that when a liquidation order has been passed, no suit or other legal proceedings shall be initiated by or against corporate debtor. Whether these provisions apply to the suits / legal proceedings already in existence prior to CIRP / liquidation?

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Liquidation Process

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5/23/2019 7:50:25 PM Click to view reply

Corporate Debtor is having investment in its books of accounts – investment in shares. The status of the investee company name is strike off and another is under liquidation. The said investment will not fetch value or not saleable. Reg.10 of IBC (Liquidation Process) Reg.2016 speaks about onerous property. Whether the liquidator need to get make application to NCLT to consider it as Onerous property.

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LIQUIDATION PROCESS

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5/23/2019 7:49:51 PM Click to view reply

During liquidation Process, Claim form are required to be submitted by EPF, ESI, Income Tax, GST, VAT, Customs - i.e.central government and state government. Which claim Form specified under Schedule II of IBC(Liquidation Process)Reg.2016 is to accepted?

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Liquidation Process

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5/23/2019 6:58:06 PM Click to view reply

liquidation process

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Builder executed agreement with Home buyers, took major part of agreement amount in cash not reflecting in accounts. Company under liquidation. Will the liquidator sell all the property even where agreements are available and settle the creditors as per waterfall mechanism, home buyers being treated as unsecured creditors. or the home buyers will get possession of property as per the agreements executed even below DLC prices and thereafter settlement of all the remaining creditors as per waterfall mechanism

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5/18/2019 3:35:32 PM Click to view reply

Claim Not Filed by Income tax during Claim Period , Income tax Demand of the old income tax Matter due to Re Open of the case

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Income tax did not file the Claim in the prescribed fromat only send the income tax Demand letter Whether such Demand notice be taken while finalising Claim list ? Plz guide Thanks IP Manish Buchasia

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5/16/2019 11:49:22 AM Click to view reply

Under Liquidation: Can the Liquidator move application for fixation of minimum fees on monthly basis of the Liquidator before the Hon'ble NCLT if Liquidator fees not decided by COC and the regulations only says about Liquidator fees as % of realisation value of Liquidation estates, Kindly confirm, pl.

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NCLT, Chandigarh

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5/16/2019 9:38:42 AM Click to view reply

Under Liquidation the set off rules or relevant provisions are clear. Whether Advances given by Corporate Debtor as 25% EMD can be adjusted by the Creditor while submitting claim.

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NCLT, Chandigarh

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5/16/2019 9:20:28 AM Click to view reply

Liquidation Process

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Fee of the Liquidator forms part of Liquidation cost and that will be paid at the time of distribution. Whether in any circumstances, fee can be paid to Liquidator during the liquidation on monthly basis or in Lump-sum. Further, if cash available, during liquidation whether other Liquidation expenses like Notice in Newspapers, Audit fee can be paid as and when due or Liquidator will have to pay it after liquidation of all assets.

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5/15/2019 8:40:43 PM Click to view reply



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