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CS Executive · Company Law and Practice · Compromise, Arrangement and Amalgamations - Concepts

Bharat Textiles Ltd proposes a compromise with its unsecured creditors. Under Section 230, who may apply to the Tribunal to order a meeting of the creditors?

The application can be made by the company, by any creditor or member of the company, or by the liquidator where the company is being wound up. It is not limited to the company, the Registrar or a creditor with a minimum holding.

  1. AOnly the company through its board
  2. BThe company, or any creditor or member of the company, or the liquidator if the company is being wound upCorrect
  3. COnly the Registrar of Companies
  4. DOnly a creditor holding at least 10% of the outstanding debt

Explanation

Section 230(1) allows the Tribunal to order a meeting on the application of the company, any creditor or member, or the liquidator in a company being wound up. Limiting the right to the company alone or to the Registrar is wrong, and the 10% and 5% thresholds relate only to objections under the proviso to sub-section (4).

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