Voluntary Liquidation: Strategic Subsidiary Closure

 

The successful closure of a subsidiary of a parent company headquartered in the United States, wherein the client engaged us to strategically plan and seamlessly execute the business closure process. Given that the Company was solvent, the objective was to facilitate an orderly exit while enabling the recovery of surplus funds.

After an intense discussion & comprehensive assessment of available exit mechanisms for the Company, the Liquidator finds Voluntary Liquidation under Section 59 of the Insolvency and Bankruptcy Code, 2016 was the most appropriate course of action, considering the Company's sound financial position and the intent to efficiently realize and repatriate the surplus funds through the liquidation process under Section 59 of the Insolvency and Bankruptcy Code, 2016.

In view of the subsidiary’s declining commercial relevance and business prospects, the Board commencement of voluntary liquidation proceedings in accordance with the Insolvency and Bankruptcy Code, 2016.

The Challenge: Managing Outstanding Trade Payables

While the Company continued to demonstrate financial stability, the subsidiary faced a key operational challenge in the form of significant trade payables owed to foreign parties attracting FEMA Compliances. These outstanding obligations had the potential to impede the timely and orderly closure of the Company if not addressed effectively, because unresolved trade payables could have resulted in regulatory delays in completing the closure process, complexities in financial reconciliation, and potential regulatory and compliance concerns.

Accordingly, a structured and strategic approach was adopted to identify, reconcile, and settle all outstanding dues. Through meticulous documentation, stakeholder coordination, and financial alignment, the Company was able to address these liabilities efficiently, thereby ensuring a smooth, compliant, and seamless closure process.

The Firm Strategic Approach and Execution Framework

The Firm undertook the engagement through a methodical, solution-driven approach & legal planning, leveraging its technical expertise and strategic insight to facilitate an efficient and compliant closure process. The key measures implemented included:

• Strategic Set-off of Trade Receivables and Trade Payables: In accordance with Regulation 28 of the IBBI (Voluntary Liquidation Process) Regulations, 2017, the Firm conducted a detailed review of the Company's outstanding receivables and payables and effected a mutual set-off between trade receivables and trade payables. This strategic exercise streamlined the settlement process, optimized recoveries, and significantly reduced the Company's net liability position, thereby contributing to an orderly and efficient voluntary liquidation.

This approach converted what initially appeared to be a liability-intensive balance sheet into a streamlined and compliant financial framework, thereby facilitating a smooth and efficient voluntary liquidation process.

This engagement serves as a notable example for No cash flow issued. The Company achieved a clean and orderly financial closure, with its balance sheet comprehensively reconciled and all liabilities duly resolved. Furthermore, what initially presented as a liability management challenge was transformed into a compliant and efficient financial restructuring exercise that enhanced value realization. Throughout the engagement, strict adherence to the provisions of the Insolvency and Bankruptcy Code and applicable regulations ensured complete regulatory compliance and procedural integrity.

Conclusion

This matter highlights the Firm’s ability to transform a complex liquidation scenario into a seamless and efficient closure process. Through a combination of legal acumen, strategic financial planning, and proactive stakeholder engagement, the Firm ensured a compliant, dispute-free, and commercially effective exit, enabling the client to realize maximum value while maintaining operational integrity throughout the process.

Factum Legal awarded at the EU Chambers' 34th Foundation Day

 

We are honoured to announce that our Firm “Factum Legal” has been awarded as Runner-Up in the Legal & Regulatory Sector at the EU-India Business Excellence Awards 2026, held on the occasion of the EU Chambers of Commerce 34th Foundation Day in India. The ceremony, convened under the theme "Celebrating 34 Years of Bridging EU-India Relations," brought together eminent diplomats, senior government representatives, industry leaders, and corporate members, reaffirming the institutional ties between India and the European Union.

This recognition holds a very special place in our hearts, as it is not merely an award but a validation of the years of relentless effort, professional integrity, and unwavering dedication that our Firm has poured into every case, every client, and every cause we have championed.  Since the beginning of Factum legal we have made relentless efforts towards India EU corridors. We have collaborated with various EU Firms & have dealt in Cross-border, M&A, Dispute resolution, and Corporate regulatory compliance. Being recognized on such a distinguished & celebrated platform is a moment of immense pride for us, and we are deeply grateful to the Indo EU Awards for considering us worthy of this honour.

The event was graced and awarded by Mr. Rajeev Sharma, President, EU Chambers; Dr. Rajesh Gawande, Secretary – Protocol, FDI, Diaspora & Outreach and Chief Protocol Officer, Government of Maharashtra; Mr. Erik af Hällström, Consul General of Finland; and Mr. Sven Östberg, Consul General of Sweden.

The firm extends sincere gratitude to its Clients, Organizers, EU Partners and Friends, whose continued confidence has been the foundation of this journey. Equally, this recognition belongs to every member of the Factum Legal family whose daily commitment to rigorous, principled practice makes achievements of this kind possible.

The India-EU Free Trade Agreement signed in January 2026 reinforces this direction as bilateral trade deepens and cross-border transactions grow, that defines our practice in legal advisory. This evolving landscape doesn't just create opportunity; it validates the corridor we've been building, and positions Factum Legal to guide clients through this chapter in more evolved way with confidence and clarity.

Successful Closure and Navigation of a Software Designing Company

The successful closure and navigation of a Software Designing Company, where after the client engaged us to design and execute a smooth business closure process. Since the Company was solvent, it opted to recover the available surplus funds through the closure process.

Following a detailed evaluation of the available exit routes for the Company, the Firm found Voluntary Liquidation under Section 59 of the Insolvency and Bankruptcy Code, 2016 to be the most suitable option, considering that the Company was financially stable and intended to reclaim and recover the surplus funds through the said process.

Recognizing the company’s diminishing commercial viability, the Board approved the initiation of voluntary liquidation proceedings in accordance with the Insolvency and Bankruptcy Code, 2016.

The Distress: Continuous Losses

The company was in the business of providing Software designing services including services like development, customization, implementation, maintenance, testing, benchmarking, designing, dealing in computer software solutions and Database management. Despite facing no major operational problems, recurring losses made it unviable to continue the business.

Role of the Firm and Strategic Execution

The Objective of the Client was to distribute the surplus fund to the shareholder so after careful consideration and sustained efforts by the Firm, persistent follow-ups were undertaken to safeguard the financial position of the Company in the interest of its stakeholders. As the Company was incurring substantial losses that adversely affected its overall asset health, the Liquidator, through continuous and diligent effort, succeeded in releasing the Company from its liabilities, thereby bringing an end to further losses & help in dissolution.

The cessation of these losses strengthened the Company's asset pool and proved beneficial to the shareholders. Through the Firm's strategic adjustments, the Company was rendered free from losses and was subsequently dissolved in accordance with the applicable legal provisions. Importantly, the entire process was concluded without prolonged litigation, regulatory penalties, or disruption to stakeholder relationships.

Conclusion

This case exemplifies how a well-planned exit strategy, backed by the Firm’s technical expertise and disciplined execution, transformed a complex business closure into a smooth and value-driven process. The Firm’s ability to align legal frameworks, financial restructuring, and stakeholder management underscores the importance of strategic advisory in corporate exits.

Turning Closure into Opportunity: Navigating a Strategic Voluntary Liquidation for a Solvent Indian Company

The successful closure and navigation of an Indian company, having several foreign investors, was undertaken after the client engaged us to design and execute a smooth business closure process. Since the Company was solvent, it opted to recover the available surplus funds through the closure process.

Following a detailed evaluation of the available exit routes for the Company, the Firm found Voluntary Liquidation under Section 59 of the Insolvency and Bankruptcy Code, 2016 to be the most suitable option, considering that the Company was financially stable and intended to reclaim and recover the surplus funds through the said process.

Recognizing the company’s diminishing commercial viability, the Board approved the initiation of voluntary liquidation proceedings in accordance with the Insolvency and Bankruptcy Code, 2016.

The Distress: Income Tax Refund

Despite everything looking clean after thorough checking, the Balance Sheet of the Company originally reflected an income tax refund relating to the financial year 2008–2009. Subsequently, upon detailed examination and reconciliation of the Company’s financial and tax records, it was observed that further refunds pertaining to the assessment years 2018–19 and 2020–21 were also due and recoverable from the concerned authorities.

Role of the Firm and Strategic Execution

After careful consideration and extensive efforts undertaken by the Liquidator, persistent follow-ups were made with the concerned authorities to secure the realization of these amounts for the benefit of the stakeholders of the Company.

Further, the Company was also entitled to recovery of certain VAT guarantees, which had remained pending for a considerable period. Through continuous and diligent efforts of the Liquidator, the said guarantees were successfully released, resulting in the recovery of a requisite sum. The realization of these refunds and guarantees ultimately enhanced the asset pool of the Company and proved beneficial to the shareholders.

Through Firm’s strategic adjustments, Income Tax refund were effectively recovered, enabling the company balance sheet clean. The company was subsequently dissolved in accordance with legal provisions. Importantly, the entire process avoided Prolonged litigation, regulatory penalties & disruptions to stakeholder relationships. 

Conclusion

This case exemplifies how a well-planned exit strategy, backed by the Firm’s technical expertise and disciplined execution, transformed a complex business closure into a smooth and value-driven process. The Firm’s ability to align legal frameworks, financial restructuring, and stakeholder management underscores the importance of strategic advisory in corporate exits.

Successful Exit of European Ship Management Company from India

 

We are delighted to announce the legally compliant exit of a European - owned company engaged in ship management services, from the Indian market. The client engaged our services to navigate the exit strategy, closure of business operations, and facilitate the remittance of surplus funds to their shareholders in various parts of Europe.

Following a detailed evaluation of available exit routes for the Company, Liquidator finds Voluntary Liquidation under Section 59 of the Insolvency and Bankruptcy Code, 2016 as the most suitable option with the company being financially stable and to also reclaim/recover the surplus funds through Voluntary Liquidation under Section 59 of the Insolvency and Bankruptcy Code, 2016.

Recognizing the subsidiary’s diminishing commercial viability, the Board approved the initiation of voluntary liquidation proceedings in accordance with the Insolvency and Bankruptcy Code, 2016.

The Distress: Bank Account

The foreign shareholder did not have a valid bank account capable of receiving the remittance, due to which the company was unable to transfer the funds directly to the shareholder concerned. This created substantial procedural and regulatory difficulties, as the remittance could not be processed through the conventional banking channels.

Role of the Firm and Strategic Execution

The Firm approached the engagement with a structured and detail-oriented methodology, combining conceptualization, documentation, legal advisory, technical expertise with strategic foresight.

The situation required extensive deliberations, multiple rounds of trial and error, and careful strategy formulation to ensure compliance with applicable regulatory and banking requirements. Considerable time was spent evaluating various alternatives and coordinating among stakeholders to identify a legally and operationally viable solution before a workable structure could be finalized.

Ultimately, the foreign shareholder transferred his shares to an eligible shareholder within the compliance requirement, upon completion of the share transfer and fulfillment of the relevant formalities, the remittance was successfully made to the eligible shareholder in accordance with the agreed structure and applicable regulations.

Conclusion

This case exemplifies how a well-planned exit strategy, backed by Firm’s technical expertise and disciplined execution, turned a complex business closure into a smooth and value-driven process. The Firm’s ability to align legal frameworks, financial restructuring, and stakeholder management underscores the importance of strategic advisory in corporate exits.