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

Kaveri Polymers Ltd owes Rs 90 crore to its creditors in total. Its members passed a special resolution on 10 June for voluntary liquidation and appointed an insolvency professional as liquidator. Which creditor approval is needed, and by when?

Where the company owes debt, creditors representing two-thirds in value of the debt must approve the members' resolution within seven days of that resolution. A simple majority or a longer period is incorrect under section 59(3)(c).

  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 creditors representing two-thirds in value of the debt to approve the resolution within seven days of the resolution. A simple majority is not enough, and four weeks is the period for the members' resolution after the declaration.

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