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

Himalaya Hydro Ltd's articles fix a duration of 25 years, which has expired. Directors made a valid declaration and the company owes debts. Which statement about the members' resolution and creditor approval is correct under section 59(3)(c)?

For expiry of the articles' duration, an ordinary resolution of members is enough, appointing an insolvency professional as liquidator. But because the company owes debt, creditors representing two-thirds in value must still approve it within seven days under the proviso to section 59(3)(c).

  1. AAn ordinary resolution of members suffices, and creditor approval is not needed because the duration has expired
  2. BA special resolution is mandatory, and creditors must approve it by two-thirds in value within seven days
  3. CA resolution of members suffices for the expiry of duration, but two-thirds in value of creditors must still approve it within seven days as the company owes debtCorrect
  4. DThe resolution need not appoint a liquidator, but creditors must approve it within four weeks

Explanation

Section 59(3)(c)(ii) allows a resolution of members, not necessarily special, where the duration fixed by the articles has expired, and it must appoint an insolvency professional as liquidator. The proviso on creditor approval applies to the resolution under sub-clause (c) generally, so two-thirds in value must approve within seven days since debt is owed.

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