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CS Professional · Corporate Restructuring, Valuation and Insolvency · Voluntary Liquidation

Arjun Components Ltd owes Rs 6 crore to its creditors and passes a special resolution for voluntary liquidation on 10 June. Creditors representing two-thirds in value of the debt approve it on 15 June. From which date are the voluntary liquidation proceedings deemed to have commenced?

The proceedings are deemed to commence on 10 June, the date the special resolution was passed. Creditor approval on 15 June is a condition that must be met, but the commencement date relates back to the resolution date.

  1. A15 June, the date of creditor approval
  2. B10 June, the date of the special resolutionCorrect
  3. CThe date the Registrar is notified
  4. DThe date the declaration of solvency was sworn

Explanation

Under section 59(5), subject to creditor approval, proceedings are deemed to have commenced from the date of passing the resolution under section 59(3)(c). That is 10 June. The creditor approval date is wrong because it only conditions the commencement and does not fix its date.

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