Winding Up Procedures IBC vs. Companies Act
The Companies Act focuses on liquidation for debt repayment or closure, while IBC provides a structured insolvency resolution, prioritizing creditor recovery and time-bound processes.
Under the Companies Act, members or directors can initiate voluntary winding up, whereas IBC requires a default in payment or insolvency petition filed by creditors or the company.
Grounds include inability to pay debts, expiration of company term, special resolution by members, or tribunal orders due to public interest or just reasons.
Companies can choose voluntary liquidation under IBC if they are solvent and the members pass a special resolution, following the Fast Track or normal CIRP route.
Under the Companies Act, creditor claims are settled post-liquidation at the liquidator’s discretion, while IBC ensures a clear hierarchy of creditor payments and faster resolution under a structured process.
