1,148 liquidation orders and the priority cascade that decides who gets paid first when the plan does not work
The IBC was designed with a preference for resolution over liquidation. Section 33 of the Code provides for the initiation of liquidation only after CIRP has failed — because no plan was received, or the CoC did not approve a plan, or the AA rejected the plan that was approved.
In this corpus, 1,139 orders end in a Liquidation ordered outcome. For comparison: 1,665 end in Plan approved. The ratio, across eight years, is 1.46 plans for every 1 liquidation — the Code’s resolution preference is visible in the data, but barely.
Why are liquidations declining every year since 2019?
| Year | Liquidations ordered |
|---|---|
| 2017 | 28 |
| 2018 | 166 |
| 2019 | 214 (peak) |
| 2020 | 136 (COVID-suspended fresh CIRP) |
| 2021 | 171 |
| 2022 | 164 |
| 2023 | 160 |
| 2024 | 105 |
Liquidations peaked in 2019 — driven by the first wave of RBI Dirty Dozen cases that failed to attract viable resolution plans — and have declined every year since. The 2024 figure (105) is roughly half the 2019 peak. Either resolution outcomes are improving, or the cases that would have liquidated are now being filtered out at admission, or both.
What is voluntary liquidation, and how is it different?
A separate stream — voluntary liquidation under Section 59 — accounts for 604 orders in this corpus. These are solvent companies winding down by choice: typically subsidiary restructurings, group consolidations, or end-of-life asset disposals. The voluntary-liquidation regime is procedurally lighter than CIRP-failure liquidation, and the orders are correspondingly briefer.
A reader interested in voluntary liquidation should treat it as a mostly-separate subdomain. The doctrinal questions that animate CIRP-failure liquidation — Section 53 waterfall priorities, secured-creditor opt-outs, government dues priority — barely arise in voluntary liquidation. The case law is thinner and more procedural.
Which provisions actually run a liquidation?
| Section | Citations | What it does |
|---|---|---|
| 33 | 3,222 | Initiation of liquidation |
| 52 | ~1,000 | Secured creditor in liquidation (right to enforce or relinquish) |
| 53 | 1,329 | Distribution waterfall — order of priority |
| 35 | ~700 | Powers and duties of the liquidator |
| 54 | ~600 | Dissolution of the corporate debtor on completion |
| 59 | ~500 | Voluntary liquidation |
Section 53 is the distribution waterfall: it sets the order in which proceeds from the liquidation estate are distributed. It is one of the most-litigated provisions in liquidation jurisprudence, because the waterfall determines who gets paid and who does not.
Who actually gets paid first when the money runs out?
Section 53(1) of the Code prescribes the following order:
- Insolvency-resolution-process costs and liquidation costs (in full).
- Workmen’s dues for 24 months preceding liquidation + secured creditors who have relinquished their security (these two ranks pari passu).
- Wages and unpaid dues to employees other than workmen, for 12 months preceding liquidation.
- Financial debts owed to unsecured creditors.
- Government dues (Central and State) + secured creditors whose enforcement remains uncovered (shortfall after enforcement of security) — pari passu.
- Any remaining debts and dues.
- Preference shareholders.
- Equity shareholders or partners.
The waterfall is — to put it mildly — unfavourable to the Crown. Government dues sit at rank 5, below workmen, unsecured employees, unsecured financial creditors, and below secured creditors who opted to relinquish their security.
Did Rainbow Papers actually elevate state tax dues?
This priority arrangement has been challenged repeatedly. In Rainbow Papers Ltd. v. State of Gujarat (SC, 2022) — cited in 2023 onwards as the recent doctrinal wrinkle — the Supreme Court appeared to elevate certain “first charge” statutory dues to higher priority.
The 2024 Supreme Court has been pulling back on Rainbow Papers; the question is not closed. A reader interested in the latest is best served by following the live cause-list — this magazine reports the state as of the corpus cutoff.
Why is Section 52’s election irrevocable?
Section 52 of the Code gives a secured creditor in liquidation a binary choice:
- Relinquish the security to the liquidation estate and join the Section 53 waterfall at rank 2 (above workmen), or
- Enforce the security outside the liquidation estate, and stand for any shortfall at rank 5 (below most other creditors).
The choice has to be made within 30 days of liquidation commencement and is irrevocable.
In practice, secured creditors with high-quality, easily-realisable security (mortgaged real estate, equipment with active resale markets) tend to enforce. Those with low-quality or hard-to- realise security (specialised plant, intangibles, working-capital receivables) tend to relinquish and join the waterfall.
Which companies actually got liquidated — and why?
The largest-by-corpus-volume corporate debtors that ended in Liquidation ordered outcomes include:
- ABG Shipyard Ltd. — liquidator Sanjay Gupta — one of the largest manufacturing-sector liquidations.
- Aircel Ltd. — large telecom liquidation.
- Lanco Infratech — power-sector liquidation following failure of multiple resolution plans.
- Educomp Solutions Ltd. — failed plan (eventually approved after re-litigation; see the Ebix Singapore v. Educomp line).
- Punj Lloyd Ltd. — infrastructure-sector liquidation.
The pattern across these cases: specialised industrial assets with limited buyer pools. The Code’s resolution preference works well for going concerns with multiple potential buyers (steel, cement, real estate). It works less well for highly specialised assets where the universe of credible bidders is thin (heavy shipbuilding, distressed telecom infrastructure, EPC contractors with dependent receivables).
The 2019 liquidations spike, and the slow decline thereafter, is substantially driven by this category of asset getting flushed out of the system. By 2024, the residual liquidations are smaller and more procedural.
Can the ED still attach a corporate debtor’s assets after liquidation begins?
A recurring doctrinal question in 2022-24 SC and HC orders: does the Section 53 waterfall override claims by enforcement agencies (the Enforcement Directorate, the Income Tax Department) to specific assets of the corporate debtor under stand-alone statutes?
The cleanest answer is in the Bhushan Power Section 32A litigation and in Manish Kumar v. Union of India (cited 68 times in this corpus): post-plan-approval, the corporate debtor’s assets are shielded from PMLA attachments for pre-resolution conduct. The same shield, by extension, applies to liquidation estate assets being distributed under Section 53.
But the pre-plan and during-liquidation positions are less settled, and 2024 saw multiple HC orders attempting to reconcile Section 53 priorities with statutory first charges (state VAT, customs duty). Sundaresh Bhatt v. Central Board of Indirect Taxes (SC, 2022) held that customs dues do not have priority over the resolution plan, but the position for liquidations is still being worked out.
What this article shows
Liquidation, in this data, is declining as a share of CIRP outcomes. From 214 in 2019 to 105 in 2024. The ratio of plans to liquidations has improved from roughly 1.1:1 in 2019 to roughly 2.8:1 in 2024.
Section 53’s waterfall is the centre of liquidation jurisprudence, with government dues sitting uncomfortably low and the Rainbow Papers doctrine adding further complication.
And specialised industrial assets are the IBC’s liquidation- prone category — the cases that did not find a resolution applicant tend to share an industry profile: heavy manufacturing, infrastructure, telecom, EPC. The Code’s resolution machinery works well for going concerns with multiple buyers; for specialised assets, it has been historically inclined to liquidate.
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