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

Tulsi Pharma Ltd owes Rs 6 crore to its creditors in total. Members passed the special resolution for voluntary liquidation on 10 June. Creditors holding Rs 3.5 crore in debt approve it on 15 June. The company notified the Registrar and the Board on 20 June. What is the position?

Approval fails because creditors representing two-thirds in value of the debt must approve within seven days. Two-thirds of Rs 6 crore is Rs 4 crore, and Rs 3.5 crore is less, so the resolution lacks the required creditor approval.

  1. ACreditor approval is valid and notice is timely, since two-thirds is not required
  2. BCreditor approval is insufficient, as Rs 3.5 crore is below two-thirds of Rs 6 crore (Rs 4 crore), though notice timing would be fineCorrect
  3. CCreditor approval is sufficient but notice was late
  4. DBoth approval and notice are valid since the debt exceeds half

Explanation

The proviso requires creditors representing two-thirds in value of the debt to approve within seven days of the resolution. Two-thirds of Rs 6 crore is Rs 4 crore, and Rs 3.5 crore (about 58%) falls short. Timing of the 15 June approval was within seven days.

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