Vol 22 (2025) - Issue 5

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Revival vs. Liquidation: The Tug of War over Section 33 in India’s Insolvency and Bankruptcy Code

Synopsis
The article critically examines the growing tension between revival and liquidation under India’s Insolvency and Bankruptcy Code, 2016 (IBC), focusing on Section 33 and its 2019 amendment. While the Code prioritises resolution and going concern over liquidation, the added explanation to Section 33(2) allows the Committee of Creditors (COC) to initiate liquidation any time after its constitution – even before the Information Memorandum (IM) is prepared. The article argues that such premature liquidation often lacks a full assessment of the corporate debtor’s viability and contradicts the Code’s rehabilitative intent. It highlights that the judiciary has largely refrained from intervening in COC decisions, despite theoretically allowing review for arbitrariness. The piece calls for procedural safeguards, including mandatory preparation of at least a preliminary IM and recording of detailed reasons before opting for early liquidation. The author warns that unchecked liquidation powers risk transforming the IBC into a debt recovery tool and urges for amendments that ensure informed, transparent, and accountable decision-making by COC in line with the Code’s spirit.