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

Kaveri Agro Pvt Ltd owes Rs 10 crore in total to its creditors. Its members passed the special resolution for voluntary liquidation on 10 June. Within what time, and by which creditors, must the resolution be approved?

Creditors representing two-thirds in value of the company's debt must approve the resolution within seven days of the members' resolution. The four-week period relates to the members' resolution after the directors' declaration, and no simple-majority or three-fourths test applies.

  1. AWithin seven days, by creditors representing two-thirds in value of the debtCorrect
  2. BWithin four weeks, by creditors representing two-thirds in value of the debt
  3. CWithin seven days, by creditors representing a simple majority in value of the debt
  4. DWithin fourteen days, by creditors representing three-fourths in value of the debt

Explanation

The proviso to section 59(3)(c) says that where the company owes debt, creditors representing two-thirds in value must approve the resolution within seven days of the resolution. Four weeks is the period for the members' resolution after the declaration. Simple majority and three-fourths are not the thresholds in the Code.

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