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ACCA Applied Skills · Corporate and Business Law (Global) · Insolvency and administration

Brannock Ltd's directors have made a statutory declaration that the company will be able to pay all its debts in full within a stated period after the winding up begins, and the members then pass a resolution to wind up. What type of liquidation is this?

This is a members' voluntary liquidation. The directors' declaration of solvency, saying debts will be paid in full within the stated period, is what distinguishes it from a creditors' voluntary liquidation. No court order is involved, so it is not compulsory.

  1. AMembers' voluntary liquidationCorrect
  2. BCreditors' voluntary liquidation
  3. CCompulsory liquidation

Explanation

A declaration of solvency by the directors, stating the company can pay its debts in full within the stated period, is the feature of a members' voluntary liquidation. Without it the winding up is a creditors' voluntary liquidation. No court order is involved here, so it is not compulsory.

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