Skip to content

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

Directors of Rohini Foods Ltd, which owes debts to banks and suppliers, made the declaration of solvency on 1 March. A special resolution for voluntary liquidation appointing an insolvency professional as liquidator was passed on 20 March. What is the latest the creditors' approval can be obtained?

Since the company owes debt, creditors representing two-thirds in value of the debt must approve the members' resolution within seven days of that resolution. The four-week period applies to passing the members' resolution after the declaration, not to creditor approval.

  1. AWithin seven days of the resolution, by creditors representing two-thirds in value of the debtCorrect
  2. BWithin four weeks of the resolution, by creditors representing a simple majority in value of the debt
  3. CWithin seven days of the resolution, by creditors representing three-fourths in value of the debt
  4. DWithin fourteen days of the declaration, by all the creditors

Explanation

The resolution of 20 March is within four weeks of the 1 March declaration. Because the company owes debt, the proviso to Section 59(3)(c) requires approval by creditors representing two-thirds in value of the debt within seven days of the resolution, i.e. by 27 March. The other options give wrong time or proportion.

Did you get it right without looking?

One question tells you little. A timed set on Voluntary Liquidation shows your real accuracy, how long you take and where you lose marks.

Practise Voluntary LiquidationFree diagnostic mock

More Voluntary Liquidation questions