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CS Professional · Insolvency and Bankruptcy - Law and Practice · Liquidation of Corporate Person

Himalaya Textiles Pvt Ltd has no default outstanding and its directors wish to wind it up voluntarily. A majority of directors have made full inquiry and formed an opinion that the company will pay its debts in full from the proceeds of assets to be sold. Which further step must accompany their declaration under the voluntary liquidation provisions?

The declaration must be accompanied by audited financial statements and business records for the previous two years or since incorporation, whichever is later, and a registered valuer's report on the assets, if any. No Registrar certificate, unanimous creditor consent or Tribunal order is needed at the declaration stage.

  1. AAudited financial statements and business records for the previous two years (or since incorporation, if later), plus a registered valuer's report on assets, if anyCorrect
  2. BA certificate from the Registrar of Companies confirming that no inspection is pending
  3. CA no-objection letter from every secured creditor of the company
  4. DAn order of the Adjudicating Authority permitting the declaration to be filed

Explanation

Under section 59(3)(b), the directors' declaration must be accompanied by audited financial statements and records of business operations for the previous two years or since incorporation, whichever is later, and a valuation report by a registered valuer, if any. No RoC certificate, unanimous secured creditor consent or prior Tribunal order is required at this stage. The creditor approval is a later step and is two-thirds in value of debt, not unanimous.

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