Powers of Liquidator to Access Information under Section 37 IBC

The Insolvency and Bankruptcy Code, 2016 (IBC) is one of the most significant reforms in India’s insolvency law. It consolidates and simplifies the process of insolvency resolution and liquidation of corporate entities. A key part of this framework is ensuring that the liquidator has complete and lawful access to all necessary information about the corporate debtor.

This access is critical for the fair and transparent administration of the liquidation estate, as it helps in verifying claims, identifying assets, and realising the best possible value for creditors. The power of the liquidator to access information is specifically provided under Section 37 of the IBC, which came into effect on 15 December 2016.

Understanding the Role of the Liquidator

A liquidator is appointed by the Adjudicating Authority (the National Company Law Tribunal) to manage the liquidation process once the corporate debtor enters liquidation. The liquidator’s primary duties include:

• Taking control and custody of the assets of the corporate debtor.
• Verifying and admitting claims of creditors.
• Realising the value of assets and distributing the proceeds according to the priority list under Section 53 of the IBC.
• Submitting periodic progress reports and a final report to the Adjudicating Authority.

To carry out these functions effectively, the liquidator requires unrestricted access to financial, legal, and operational information about the corporate debtor. Section 37 recognises this necessity and provides a detailed framework for accessing such information.

Text of Section 37 of the IBC

Section 37 of the Insolvency and Bankruptcy Code, 2016, titled “Powers of Liquidator to Access Information”, states the following:

(1) Notwithstanding anything contained in any other law for the time being in force, the liquidator shall have the power to access any information systems for the purpose of admission and proof of claims and identification of the liquidation estate assets relating to the corporate debtor from the following sources, namely— 

(a) an information utility;
(b) credit information systems regulated under any law for the time being in force;
(c) any agency of the Central, State or Local Government including any registration authorities;
(d) information systems for financial and non-financial liabilities regulated under any law for the time being in force;
(e) information systems for securities and assets posted as security interest regulated under any law for the time being in force;
(f) any database maintained by the Board; and
(g) any other source as may be specified by the Board.

(2) The creditors may require the liquidator to provide them any financial information relating to the corporate debtor in such manner as may be specified.

(3) The liquidator shall provide information referred to in sub-section (2) to such creditors who have requested for such information within a period of seven days from the date of such request or provide reasons for not providing such information.

This provision clearly sets out both the sources from which information may be accessed and the rights of creditors to obtain financial data through the liquidator.

Purpose of Section 37

The main purpose of Section 37 is to ensure transparency and efficiency in the liquidation process. During liquidation, one of the biggest challenges is locating and verifying the assets and liabilities of the corporate debtor.

By giving the liquidator legal access to various databases and systems, the IBC ensures that the process does not depend solely on the cooperation of the corporate debtor or its management. It also helps in preventing concealment, diversion, or wrongful transfer of assets.

Scope of the Liquidator’s Power to Access Information

Section 37(1) provides a non-obstante clause, meaning it overrides any other law that may restrict access to information. The liquidator is therefore legally empowered to access the following sources of information:

Information Utility

An information utility is a repository of financial information that records debts, liabilities, defaults, and security interests. These utilities, regulated by the Insolvency and Bankruptcy Board of India (IBBI), play an important role in verifying claims and identifying financial relationships of the corporate debtor.

Credit Information Systems

The liquidator can also access databases maintained under laws governing credit information companies, such as the Credit Information Companies (Regulation) Act, 2005. This helps in obtaining details of outstanding loans, repayment history, and security interests.

Government Agencies and Registration Authorities

The liquidator can approach any Central, State, or Local Government agency, including registration departments like the Registrar of Companies, land revenue offices, transport authorities, or other statutory bodies that maintain asset records. These sources assist in confirming ownership and title of properties.

Information Systems for Financial and Non-Financial Liabilities

This category includes systems that record liabilities such as tax dues, statutory contributions, or contractual obligations. Accessing such systems enables the liquidator to determine the full extent of the debtor’s liabilities.

Information Systems for Securities and Assets

These are systems that record securities and charges created on the assets of the corporate debtor. For instance, records maintained under the SARFAESI Act, the Companies Act, or the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) fall within this category.

Databases Maintained by the Board

The liquidator can obtain data directly from the IBBI or any other authorised body that maintains records relevant to insolvency or liquidation proceedings.

Any Other Source Specified by the Board

This clause gives flexibility to the IBBI to notify additional sources as required, ensuring that the law remains adaptive to changing data systems or financial mechanisms.

Rights of Creditors under Section 37(2)

Section 37 not only empowers the liquidator but also recognises the rights of creditors. Under sub-section (2), creditors may request the liquidator to provide financial information related to the corporate debtor. This right ensures that creditors remain informed and can monitor the progress of the liquidation.

Such transparency helps prevent mistrust and promotes fair dealing among all stakeholders.

Timeframe for Providing Information

As per Section 37(3), the liquidator must provide the requested information within seven days from the date of receiving the request. If unable to provide the information, the liquidator must communicate valid reasons for not doing so.

This provision ensures accountability and timeliness in the liquidation process. It prevents unnecessary delays and assures creditors that their interests are being addressed promptly.

Obligation of Stakeholders to Co-operate

The powers granted under Section 37 are complemented by Regulation 9 of the IBBI (Liquidation Process) Regulations, 2016, which places a duty on several stakeholders to co-operate with the liquidator. The following persons are required to assist in collecting information and records:

• Officers, auditors, employees, promoters, or partners of the corporate debtor, whether current or former.
• The interim resolution professional, resolution professional, or any previous liquidator.
• Any person in possession of the property of the corporate debtor.

Failure to co-operate may lead to action under the IBC or even under the BNS for obstruction of legal process.

Conclusion

Section 37 of the Insolvency and Bankruptcy Code, 2016, represents a cornerstone provision that empowers the liquidator to act independently and effectively. By granting access to diverse information systems and ensuring cooperation from stakeholders, the law ensures that the liquidation process is transparent, efficient, and fair.

In a country where corporate structures are often complex and assets may be scattered across jurisdictions, such statutory powers are indispensable. They allow the liquidator to perform duties in a manner that protects creditors’ interests, deters wrongdoing, and upholds the integrity of India’s insolvency regime.