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CS Professional · Insolvency and Bankruptcy - Law and Practice · Voluntary Liquidation of Companies

Banyan Pharma Ltd, which owes debts, passed its special resolution on 10 June. Creditors holding two-thirds in value of the debt approved it on 14 June. When is the voluntary liquidation deemed to have commenced, and by when must the Registrar and the Board be notified?

Liquidation is deemed to commence on 10 June, the date of the members' resolution, once creditors approve. The Registrar of Companies and the Board must be notified within seven days of the creditors' approval on 14 June, as Sections 59(4) and 59(5) provide.

  1. ACommenced 10 June; notify within seven days of the creditors' approvalCorrect
  2. BCommenced 14 June; notify within seven days of the creditors' approval
  3. CCommenced 10 June; notify within four weeks of the resolution
  4. DCommenced 14 June; notify within fourteen days of the creditors' approval

Explanation

Section 59(5) deems commencement from the date of the members' resolution under clause (c), subject to creditor approval, so 10 June. Section 59(4) requires notice to the Registrar and the Board within seven days of the resolution or the subsequent creditor approval, here 14 June. Treating 14 June as commencement is the key error.

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