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

Vindhya Cement Ltd's directors have made a declaration for voluntary liquidation, and the company owes debts to banks. Which of the following correctly states how the IBC treats the process once the liquidator is appointed?

Sections 35 to 53 of Chapter III and Chapter VII of the IBC apply to voluntary liquidation proceedings of corporate persons, with such modifications as may be necessary. The liquidator therefore uses the liquidation framework of the Code, adapted to the voluntary process, rather than relying on another statute.

  1. AThe provisions of sections 35 to 53 of Chapter III and Chapter VII apply with such modifications as may be necessaryCorrect
  2. BOnly Chapter VII applies, and the liquidator has no powers under Chapter III
  3. CThe liquidation process is governed entirely by the Companies Act, 2013 and the IBC provisions do not apply
  4. DChapters III and VII apply only if the creditors reject the resolution

Explanation

Section 59(6) provides that sections 35 to 53 of Chapter III and Chapter VII apply to voluntary liquidation proceedings for corporate persons with such modifications as may be necessary. Applying only Chapter VII or only on creditor rejection is not what the text says.

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