Liquidation Process and Liquidation Waterfall

 

Liquidation Process and Liquidation Waterfall

If a resolution plan is not approved, the company moves into liquidation. The liquidator is appointed, and the company’s assets are sold to repay creditors.

A. Liquidation Waterfall

In liquidation, the proceeds from asset sales are distributed in the following order:

1. Secured creditors (first priority).

2. Workmen’s dues (second priority).

3. Unsecured creditors (third priority, including operational creditors).

4. Government dues (fourth priority).

5. Residual payment to shareholders (last priority).