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

Orchid Pharma Ltd's members passed a special resolution on 5 June for voluntary liquidation and appointed an insolvency professional. The company owes debts, and creditors holding two-thirds in value approved the resolution on 10 June. The Registrar and the Board were notified on 16 June. Which statement is correct under the IBC?

The proceedings are deemed to have commenced on 5 June, the date of the members' resolution, once creditors approve it. Notification to the Registrar and the Board is due within seven days of the resolution or of the later creditor approval, so 16 June was within time.

  1. AProceedings commenced on 10 June, the date of creditor approval, and notification was late
  2. BProceedings are deemed commenced on 5 June, and the notification on 16 June was within timeCorrect
  3. CProceedings commenced on 16 June, the date of notification
  4. DProceedings commenced on 5 June, but notification was due by 12 June

Explanation

Under section 59(5), subject to creditor approval, proceedings are deemed to commence from the date of the resolution, 5 June. Under section 59(4), notification is due within seven days of the resolution or the subsequent creditor approval, so up to 17 June. Notice on 16 June was in time; option 4 wrongly counts from the resolution only.

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