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

Meridian Textiles Ltd, a company with no default, passes a special resolution in a general meeting appointing CS Anil Rao, an insolvency professional, as liquidator for voluntary liquidation. The company also owes debts to creditors. Within what time must creditors representing two-thirds in value of the debt approve the resolution?

Creditors holding two-thirds in value of the company's debt must approve the members' resolution within seven days of that resolution. The four-week period applies to passing the members' resolution after the directors' declaration, so it is not the creditors' approval deadline.

  1. AWithin seven days of the resolutionCorrect
  2. BWithin four weeks of the resolution
  3. CWithin fourteen days of the resolution
  4. DWithin thirty days of the resolution

Explanation

Under section 59(3), where the company owes any debt, creditors representing two-thirds in value of the debt must approve the resolution within seven days of that resolution. Four weeks is the period within which the members' resolution must follow the directors' declaration, not the creditors' approval period.

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