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CS Professional · Corporate Restructuring, Valuation and Insolvency · Liquidation on or after Failing of Resolution Plan

On appointment of liquidator Mr. Desai for Himalaya Agro Ltd, the managing director claims he still controls day-to-day decisions as a director. What is the legal position?

The claim fails. On the liquidator's appointment, all powers of the board of directors, key managerial personnel and partners cease and vest in the liquidator, and the company's personnel must give the liquidator all assistance and cooperation he requires.

  1. ADirectors keep operational powers while the liquidator handles only asset sales
  2. BAll powers of the board, key managerial personnel and partners cease and vest in the liquidatorCorrect
  3. COnly the powers of the board cease; key managerial personnel retain theirs
  4. DPowers pass to the liquidator only after creditor claims are verified

Explanation

Section 34(2) provides that on appointment of a liquidator all powers of the board of directors, key managerial personnel and partners cease to have effect and vest in the liquidator. Personnel must also extend assistance and cooperation under section 34(3). The managing director's claim therefore fails.

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