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

Sundaram Textiles Pvt Ltd, a Chennai company, has never defaulted on any debt. Its board wishes to begin voluntary liquidation under the IBC. Which statement correctly describes the basic eligibility requirement?

A corporate person can start voluntary liquidation only if it intends to liquidate itself voluntarily and has not committed any default. No prior insolvency admission, default threshold or minimum period of incorporation is required under the Code.

  1. AThe company must first be admitted into the corporate insolvency resolution process
  2. BThe company must have committed a default of at least one crore rupees
  3. CThe company must intend to liquidate itself voluntarily and must not have committed any defaultCorrect
  4. DThe company must have been incorporated for at least five years

Explanation

Section 59(1) allows a corporate person that intends to liquidate itself voluntarily and has not committed any default to initiate voluntary liquidation. A default bars the route, and no CIRP admission or minimum age is required.

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