8th November 2024 (10 Topics)
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Liquidation of Jet Airways
Context
The Supreme Court ordered the liquidation of Jet Airways under the Insolvency and Bankruptcy Code (IBC), marking an end to the five-year saga of attempts to revive the airline through the corporate insolvency resolution route.
What is Liquidation of a Company?
- The liquidation of a company happens when company assets are sold when it can no longer meet its financial obligations. Sometimes, the company ceases operations entirely and is deregistered.
- The Companies Act of 2013regulates the liquidation process.
- When a company is liquidated, the shareholders’ interest in the company is extinguished, and the company ceases to exist.
- The company’s assets are sold off to repay its debts and to distribute the remaining funds among its shareholders.
- Reasons for Liquidating a Company
- Insufficient funds
- Lack of business activity
- Fraud or mismanagement
- High debt levels
- Mergers and acquisitions
- Changes in the law
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Insolvency and Bankruptcy Code, 2016 (IBC)
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