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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. Its members pass the special resolution for voluntary liquidation on 10 March. Creditors holding two-thirds in value of the debt approve it on 15 March. From which date are the voluntary liquidation proceedings deemed to have commenced?

Commencement is deemed to be 10 March, the date the members passed the resolution. Section 59(5) links commencement to the members' resolution, subject to creditor approval. The later creditor approval on 15 March is a condition for that commencement and does not shift the date.

  1. A10 March, the date of the members' resolutionCorrect
  2. B15 March, the date of creditors' approval
  3. CThe date of the directors' declaration
  4. DThe date of the public announcement by the liquidator

Explanation

Section 59(5) says that, subject to creditor approval, the proceedings are deemed to have commenced from the date of passing the members' resolution under section 59(3)(c). Creditor approval is a condition, but it does not move the commencement date to 15 March.

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