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

Ganga Foods Pvt Ltd owes Rs 4 crore to its creditors and its members pass a special resolution on 10 March for voluntary liquidation. Creditors representing two-thirds in value of its debt approve it on 15 March. The company notifies the Registrar and the Board on 20 March. From which date is the voluntary liquidation deemed to have commenced?

Commencement is deemed to be 10 March, the date of the members' resolution. Creditor approval is a condition that must be satisfied, but once given, the proceedings relate back to the date the resolution was passed rather than the approval or notification date.

  1. A10 March, the date of the members' resolutionCorrect
  2. B15 March, the date of creditor approval
  3. C20 March, the date of notification
  4. DThe date the liquidator files the dissolution application

Explanation

Section 59(5) says that, subject to creditor approval, the proceedings are deemed to commence from the date of passing the members' resolution under 59(3)(c). Creditor approval on 15 March is within seven days and is a condition, but it does not move the commencement date. Notification on 20 March is within seven days of the approval.

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