Liquidation Estate and Distribution of Assets- Waterfall Mechanism

This research reviews the arrangement of liquidation process in India that particularly the estate of liquidation and asset distribution from Waterfall Mechanism which is mentioned in the Insolvency and Bankruptcy Code, 2016 (IBC) It provides an overview of IBC and National Company Law Tribunal’s legal framework governing the liquidation which explains their role in the process. The process discusses the entire liquidation estate’s composition, looking at the successive responsibilities of the liquidator, critical for managing the whole estate. It is important here to note that the Waterfall Mechanism sets forth the sequence of claims, which determines the order in which the assets goes to creditors and stakeholders. To understand how various creditor and credit holder types, as well as the specifics of the payment and recovery process, are handled with regard to the payments and payments process throughout the distribution process, it is necessary to examine the tiers of the eco-system Waterfall Mechanism. The mechanism is underpinned by practical issues such as the asset valuation, issues relating to the law, and the calculation of the distribution of assets, which will be discussed using practical cases. Additionally, the paper criticizes the existing framework, including commonly perceived outcomes of unfairness and practice in the case of liquidation, and gradually suggest potential legislative and operational methods to solve the problems leading to fairness and efficiency .This study not only explains the complexity involved in the asset distribution process but in addition, it provides forward-looking perspectives on the wider policy implications for the financial stability and creditor rights in India.