Close the LLP

Procedure for winding up of LLP in India

The following is a step-by-step procedure:

• 1

  Adopt a resolution authorising the winding up of the firm with the approval of three-fourths of the total number of partners.

• 2

  Submit a copy of the Resolution to the registrar in Form No. 1 within 30 days.

• 3

  Declaration of Solvency

  A declaration of solvency must be made in Form No. 2 by a majority of designated partners, accompanied by an affidavit stating that the LLP is capable of paying its debts or will be able to do so within one year of the commencement of winding up. Declarations must include the following:

  • Include a statement that the LLP was not formed with the intent of defrauding any person or persons.
  • Accompanied by a Statement of Assets and Liabilities in Form No. 4 for the period ending on the date the accounts are prepared, fully attested by two authorised partners.
  • Accompanied with a report of asset valuation prepared by a valuer.

• 4

  Within 15 days after the resolution's passage, the declaration must be filed with the registrar in Form No. 3.

• 5

  Clearance from Creditors

  Obtain clearance from Creditors (Secured and Unsecured) for winding up and send them a copy of the above-mentioned declaration along with the amount owed to each creditor and an offer for acceptance.
  
  Creditors shall provide their consent or opinion within 30 days of receipt of the declaration, unless Creditors representing two-thirds of the total value of the declaration provide consent that-

  • In the interest of Creditors and Partners, the LLP should be wound up by Partners.
  • If the LLP is unable to repay its debts through the sale of its assets in winding up and creditors recommend that the LLP be wound up, the LLP will be wound up by creditors.
  • If the LLP is unable to repay its debts through the sale of its assets in winding up and proposes to be wound up by the Tribunal, the LLP will be wound up by the Tribunal and an application for the same must be submitted with the Tribunal within fourteen days.

• 6

  Within 15 days of receiving creditors' consent, the Declaration must be filed with the registrar in Form No. 5.

• 7

  Within 14 days of getting creditor consent, a notice of voluntary winding up must be published in a newspaper.

• 8

  Such newspaper must be circulating in the district in which the LLP's registered/principal office is located.

• 9

  Appointment of Liquidator

  Within 30 days of
  - Adoption of a resolution in the absence of creditors; or
  - Obtaining creditors' consent
  
  Although partners appoint the liquidator, if the approval of two-thirds of creditors is not obtained, creditors may nominate another liquidator and fix the compensation, and the liquidator appointed by the creditors will be the liquidator.
  
  However, if creditors do not consent to or select another liquidator, the liquidator appointed by the partners is assumed to be the liquidator. Additionally, the Tribunal may appoint the liquidator and establish the liquidator's compensation. The tribunal has the ability to remove the liquidator following a sufficient opportunity for hearing.
  
  Following his appointment, the Liquidator is required to file Form No. 6, declaring any conflict of interest or lack of independence to partners or creditors, if applicable.

• 10

  The liquidator is responsible for settling the creditors' or partners' list, maintaining books and records of accounts, paying debts, and distributing assets among the partners.

• 11

  The liquidator shall report to the partners or creditors quarterly (on the 31st March, 30th June, 30th September, and 31st December) on the status of the winding up in Form No. 8.

• 12

  Upon the liquidation of the LLP's assets and affairs, the liquidator shall provide the partners and creditors with a report in Form No.9 detailing the assets and debts that have been disposed of.

• 13

  Within 30 days of receipt of the liquidator's report, two-thirds of the total number of partners or total value of creditors, as applicable, must approve the winding up.

• 14

  The liquidator shall deliver to the registrar and to the tribunal a final copy of the accounts and report in Form No. 10.