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CS Professional · Insolvency and Bankruptcy - Law and Practice · Voluntary Liquidation of Companies

Kaveri Agro Ltd owes Rs 6 crore to its creditors and its members pass a special resolution for voluntary liquidation, appointing an insolvency professional as liquidator. Under Section 59, what further approval is required and by when?

Because the company owes debt, creditors representing two-thirds in value of the debt must approve the members' resolution within seven days of its passing. This is the proviso to Section 59(3)(c); a simple majority or longer period is incorrect.

  1. ACreditors representing two-thirds in value of the debt, within seven days of the resolutionCorrect
  2. BCreditors representing a simple majority in value of the debt, within seven days of the resolution
  3. CCreditors representing two-thirds in value of the debt, within four weeks of the resolution
  4. DCreditors representing three-fourths in value of the debt, within fourteen days of the resolution

Explanation

The proviso to Section 59(3)(c) requires approval by creditors representing two-thirds in value of the debt within seven days of the members' resolution. A simple majority or a four-week window is not what the Code says.

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