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ACCA Applied Skills · Corporate and Business Law (Global) · Insolvency and administration

Which statement best describes a members' voluntary liquidation as distinct from a creditors' voluntary liquidation?

A members' voluntary liquidation is used for a solvent company, where the directors declare it can pay its debts in full within a stated period. Members appoint the liquidator. Insolvent voluntary liquidations are creditors' voluntary liquidations, and court-ordered ones are compulsory.

  1. AIt is used where the directors state the company will be able to pay its debts in full within a set periodCorrect
  2. BIt is ordered by the court on a creditor's petition
  3. CIt is used where the company is insolvent and creditors choose the liquidator

Explanation

A members' voluntary liquidation requires a declaration of solvency by the directors, stating the company can pay its debts in full within a stated period. The members appoint the liquidator. A court order is compulsory liquidation, and insolvency with creditor control is a creditors' voluntary liquidation.

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