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

Meghdoot Foods Ltd owes debts to several creditors but its directors have declared it can pay in full from asset sales. Members passed the special resolution on 10 June appointing CS Anil Rao, an insolvency professional, as liquidator. What further approval is needed under the proviso to Section 59(3)(c)?

Creditors representing two-thirds in value of the company's debt must approve the members' resolution within seven days of its passing. A simple majority by number, a three-fourths threshold or Adjudicating Authority approval is not what the provision requires.

  1. AApproval by creditors representing two-thirds in value of the company's debt within seven days of the resolutionCorrect
  2. BApproval by a simple majority of creditors by number within thirty days
  3. CApproval by the Adjudicating Authority within fourteen days
  4. DApproval by creditors representing three-fourths in value within four weeks

Explanation

Where the company owes any debt, creditors representing two-thirds in value must approve the resolution within seven days of the resolution, i.e. by 17 June. Majority by number or three-fourths are not the statutory thresholds.

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